All Forum Posts by: Chingju Hu

What is stopping you from investing in real estate? Is it time? Money? Lack of experience? Or maybe even limited deals?

My husband and I have been there. Done that. Failed. And then…. kept going to our recent close on a $5M property. It’s been a long road but well worth it.

In the past 6 years, we have self-funded and “traded up” from a 4-plex purchased for less than $100K to now owning a mid-sized hotel. Our path included: 4-Plex → 7-Plex→ 28 Unit → 50 Unit→ 80 Room Hotel.

Our journey started 17 years ago when we attended our first real estate seminar and then found 3 owner financed properties. We had zero money for down payments, so we leveraged credit card cash advances. And then…. lost money, sank into debt, gave back the properties, sold our house and moved in with parents to repair our finances.

You may think… isn’t this supposed to be a success story? Are you trying to discourage me? Not at all. Sometimes the best success stories come from the biggest failures. Not everything is perfect and easy. So what was wrong? What did we fix when we got back into the business in 2011?

1. Location. What is happening in your market? What are the prospects for job growth? Back in 2000, we lived in a dying small Midwest factory town and those 3 properties weren’t in the best areas. It was hard to keep some of the units rented and vacancies hurt our profitability. We now live in Phoenix and are specific regarding the areas where we buy properties.
2. Price. Have you leveraged the property analysis tools on Bigger Pockets? 17 years ago, we didn’t understand how to do a full analysis of the property to calculate cash flow and opportunities for value-add. We understand now how to determine the right purchase price. This is why when we sold our 50 unit property in late 2016 we pivoted into hotels as the numbers do not work for many multi-family properties in Phoenix right now.
3. Operations. Are you planning to self-manage? Or use a property manager? Either way, do you understand what levers you have to gain the greatest return? We didn’t understand these fundamentals back in 2000. During our break from owning properties, we learned about the operational side of the business when my husband worked in both property management and commercial real estate sales. To avoid making the same mistakes with the hotel due to lack of experience, we’ve partnered with an experienced hotel operator.

Are you struggling to find a good deal? Worried that your property will not provide the cash flow needed? Where do you stand with these three fundamentals? Which one can you effect right now? Would love to hear comments on your current challenges.

I borrowed $120k from a family member to buy a primary residence for me and my family (I will pay him back $1k/m for the next 10 years, starting next month, or refinance if needed).

Last night I was talking to my wife, and we just realized that maybe we can come up with something better (even if she really want little place with a little yard for the kids).

Live in flip? Duplex? Turnkey out of state? Foreclosure? I really like the BRRR strategy but it's "impossible" to find sealant here.

I live in South Florida, everything I see expensive and market always hot, market uber competitive.

What would be the advice of an experienced investor to a newbie with a young family?

Hello BP members in Cincinnati or those investing here. Please be careful of who you invest with. I had the unfortunate experience of investing with someone here and it ended up being a scam. 

True Story of How my First Real Estate Investment was a Scam

10 Steps to follow to Avoid Getting Scammed in Real Estate 

Love this.  I have 11 doors, mix of residential and commercial, and my better half and I rent our primary.  I self-manage in addition to my day job, so not having personal home maintenance was key for me.  

That, and where I live, we rent a $400k home for $2k/month with pool service and landscaping included, and a 3 car garage.  As a landlord, that sounds like the worst deal ever to own, so I chose to take the other position in the trade, so to speak.  

I won't buy a primary until the rentals will comfortably pay for it.  Big mortgages on primaries sound like a prison sentence.  @Chingju Hu FWIW, I think you're making a great call, especially in the bay area. 

@Chingju Hu Wow, congrats Chingju Hu. Thanks for sharing your story. I have a really similar situation too (I live in Sunnyvale also, what a coincident) , and I'm thinking of doing the same thing. I listened to lots of podcasts and tried to read as much as I could, but not any action yet. Your story really keep me going. Maybe we should hang out for a cup of coffee sometimes if you are interested. You are a kind of person I look up for. Please keep posting.

@Sarah R. Memphis Invest is one of the turnkey companies that I am looking to buy my first investment home right now. I'm glad you say good thing about them. Please share more if you don't mind. Thanks a lot.

@Chingju Hu My only 2 cents here is that you do not quit your job as soon as you make that much in passive. I would suggest 2x-3x your income and this way you are not losing out on a big factor which is the compound interest of your properties. Good Luck!!!

Peace of mind is also something to think about. The world is changing and I think a lot of jobs may change or disappear. 

If I had a mortgage on an expensive bay area house and lost my job, that house is now a monster. This happened to me. I had a successful business that due to changes in the world went belly up. People will say just go get a job. But for me I was at an age where I was not at the top of the hiring list. I've had friends experience difficulty getting a good job because of age. If you are renting you have more flexibilty in housing and don't have the monster over your head. In my case I never did go back to work because I had cash flow from all the little rentals out of state. But the point is I have the CHOICE to work or not work.

If you lose your job and think you can tap out equity from appreciation to live on, you probably can't because you now have no income so the bank will not loan you money. So you might be rich, but it is trapped until you can sell. Even then, how long will that last?

In my situation I always have rental income and if things got tight, it's easy for me to rent a smaller cheaper place quickly.

Hi Chingju Hu I'm new to BP too and I live in a highly priced market that rarely cash flows, NYC.

Let me ask you what type of financing do you obtain if not FHA (3.5% down) for your out of state rentals if you're not occupying them (e.g, house hacking)?

I'm in a similar situation where I don't own, I still love at home. I am hesitant to just buy a primary residence and pay to live. I would like to house hack but my local area houses cost $600-800k and rents average $2500-$3000 for 3 bedroom house and $1000-$1500 for 1 bedroom.

Hi Chingju Hu
congrats on the insight! So many people just don't see or understand the potential in REI, they are content with their 9-5 corporate JOB and will continue on till retirement. Hopefully at that point they can enjoy what life has to offer.

I am new to BP as well but have been investing since 2011 when I purchased a 6-plex and moved into a unit with my wife when we got married. We then moved out and split our year between a family owned 3-season lake front cottage and spent winters at my parents house (rent free) to capitalize on the added rental income. At this point my friends and family did think I was a little CRAZY and joked that I was a "homeless landlord" Well, then I bought a short sale 3-plex all cash, and just recently purchased a single-fam foreclosure, rehab'd it in my free time for our primary residence. Let's just say that the joking has stoped and the question is "how many houses do you have now Mike?" I'm looking forward to my next purchase in the next 3 mos.
Life is yours, don't let the nay-sayers get you down or make you question your goals. It seems that you have a solid plan and have put a bit of time into figuring it out. Congrats on taking the first step!

Chingju Hu your family and friends aren't crazy, they are just not as "financially literate" as you are. Do everyone a favor and succeed at what your doing, then reach out to your family and friends and help them. Also you should document this whole process per Gary Vaynerchuck and for BP nation