All Forum Posts by: Collin Chan

Great list!  Thanks for compiling as it's very helpful for all of us to tap into that equity to leverage for more properties.

@Matt J. there are a bunch of good recs shared here so thanks for asking the question and getting this community response.

1) Rent by the room has been recently discussed multiple times on recent podcasts and works. Given you have SFH, if you were to rent by the room, you could significantly increase your cashflow on existing properties you already have. Some property managers may be able to work with you on this if they are able to profit from the extra work for them.

I'm currently working with a partner out of state using this strategy and the CoC is significantly higher than where I live. I put down the capital and he manages the properties. But have as system that works with a proven track record and then start finding investors that can help you build your portfolio.

2) The seller financing strategy is interesting and I've met with someone who has done this successfully to generate cashflow essentially being the mortgage company.  Definitely something you might look into.

3) I'm in the Bay Area and while cash flow is more difficult, it's not impossible as others have highlighted it just takes more value add opportunities. 

1. 1. I have a newer construction home with an in-law suite I can rent out separately from the main house. Thus I essentially have a 2 unit property where the main house covers PITI and the in-law unit is all cash flow. (Bay area appreciation and rent increases have helped). Low interest rates allowed us to pull out all our down plus more for additional investments
2. 2. Bought a property with a lot of value add. Large lot with a dated home. Was able to purchase below market since it was old and dated but has an unfinished basement and large lot for a second home. With CA ADU laws, we are able to convert the basement to a JADU and also add an $1000 sq/ft ADU in the back. The existing house with small updates will cover PITI and the rent from the JADU and ADU which will be new construction and low maintenance can generate $6000 per/mo income. For the construction costs we do have the capital but then can refi it all out and still cashflow well and put that money into something else or just keep that cashflow if we want to be conservative.

High cost of living areas can simplify the quantity of units but require more capital.  I wouldn't say ours is a short term approach since we have always lived in the Bay Area buying properties here and there along the way but are now just tapping equity to switch to cashflow.

Being more specific, look at value add opportunities to increase the number of rooms, in-law units, dens to bedrooms, unfinished basements/attics, garage conversions to ADU, large land + ADU. You can do it but could require a certain amount of personal sacrifice (sleeping on the couch and renting out all the rooms) or capital to build an ADU. But there are ways.

Sorry i missed it.  Had work meetings.  How'd it go?

It depends.  Ca is more about appreciation however, people can house hack and actually do quite well.  It all depends on your comfortability if you watch/listen to the latest BP show. ;)

There are ways to add value so try searching for those options as well as it can greatly help your return.

I'm not in LA but enjoy chatting about real estate if you do a virtual meet up!

I too will be building from scratch but it's because we have unique constratints and personal interest in the layout design.  While researching ADUs, here are the ones I reasearch but was at the time lookin at 2 bedrooms which has changed.

Blu Homes

Method Homes

Stillwater Homes

Honomobo

Living Homes

Connect Homes

Dvele

Thanks

Collin

Maybe 2 other items to add.  Generally I'd like to spend my retirement without thinking about too much stuff that needs to be done to the place and I don't know but maybe visiting your rental properties instead of keeping them as a business item and less personal might be difficult.  You might look at all the things renters have done in terms of damage to your vacation property.

Also, for the vacation rental side, you might explore adding an ADU to it as another rental unit and swapping that instead of to main vacation house. This could allow you to maximize revenue but give you flexibility into the swap you are looking to do.

@Craig Lillard I too have thought about this even up until last night looking at possible retirement places we'd want to visit.  Just looking at the Philippines in fact and buying a resort condo for part of the year use and renting it out when not using it.

One thing that keeps pulling me back is too much diversification and many more people to work with for each location instead of focusing on my current teams for real estate investment.  I would equate it to long distance real estate investing.  The other thing is (and this is unique to me) I travel a lot for work and have lifetime status for many travel brands which usually get me free food, drinks, and upgrades to suites for the lowest room rates.  Also, we like to travel to many different places so a vacation home in a few location might not work for us well but may for you if that's what you enjoy.  We've experienced this with my parents timeshares (bad ideas) and we don't always want to go to the same place over and over again.

Instead, another angle I've looked at is house-swapping (there are a couple sites that help connect people).  Having one good property in a good tourist area can allow you to swap your place for one in another high demand city both domestic and internationally.  For example, properties and hotels in Singapore are very expensive but if I can find someone who wants to swap for a month or two for our vacation property in Napa Valley, then I don't have to use tax dollars to pay for a place.  And it would make a great jump off point for other cities in South East Asia (Bali, Bangkok, Penang, etc.)  I must admit I haven't deep dived into it too much, just another idea to be able to travel a lot without having huge expenses in retirement but I can continue to focus on what I'm building and use this strategy to achieve our retirement goals.

Collin

Welcome @Allen L.!  Let us know if you have any questions as you peruse the forums.

Collin