All Forum Posts by: Collin Chan

Hi! I've been trying to diversify my investments personally but a key thing right now I would recommend is to hold the current properties and refinance them to pull out equity for your investments with interest rates being so low.  I've talked to a number of investors local who are doing this strategy as a way to be ready for any market shifts that might happen short term.

After much research, I feel for us it's ok to do both OOS investing as well as continue investing here in the Bay Area. Much of our OOS investments are passive with pretty high CoC returns although I'm still feeling out the numbers. Being in tech, I'm already heavy in the stock market and don't feel like I need to add more due to our W2 personal taxes but that's specific to me and not sure about your situation.

Also, determine your goals and what you want to go. I'd like to be able to retire early in 7 years or at least be able to decide to do so at that time so building up multiple streams of income in real estate is what we are focused on which comes in the form of OOS rentals, local LTRs, and STR vacation rental in our retirement.

I think each market will be different in terms of reaction to the COVID-19.  In the Bay Area, many tech companies have implemented work from home policies as their jobs usually have business tools that allow video conferencing, shared docs, etc to be able to do work from anywhere. However, I read an article that 85% of employees in the Bay are service workers and won't have that luxury of being able to work from home.  Many of the lower income population will be affected with less business demand and reduced hours are already in effect for many hourly workers who need the income.

The Bay Area real estate has historically been driven by Tech stocks going up.  With that slowing down, the money used for the high down payments will be put on hold to some degree as they wait for stocks to go up again unless they have been sitting on vesting stocks for awhile.  I personally know some buyers that have backed out.

Also, everyone knows that Californian's have been moving out at a rapid pace over the past few years including 690k in 2018.  I wouldn't be surprised if that went up to over 700k in 2019. Some have sold houses to move to more affordable areas like Texas, Arizona, Oregon, and Nevada.  Others were renters looking to find a place they could afford.  There will be a reaction of some sort to what is happening in CA for other areas as part of the trickle down affect.  Not sure what that will be.

My concern is not for my wife and kids as based on the data, the younger population seems to be less at risk for and deaths related to the COVID-19 however, people like my parents are in the higher risk bracket as are people with pre-existing medical conditions which is a significant population.  If this spreads through the community, they will be at risk so I encourage everyone to just be aware of their elderly friends and family or those with health related issues.

Welcome @Clayton Kuhn!  I'm also from the Bay and have met some great people here on Biggerpockets already.  Glad to see your getting started on your real estate experience.  I too am partnering with someone and would be interested to hear more about your structure.  I will add you and message offline for further discussion.

@Ephraim V Sison Jr Yup I belong to the East Bay Real Estate Investors.  They meet up at the Dublin Wave and have guest speakers and events.  There is also a meet up in Oakland called "Crushing it in Real Estate Bay Area Meet Up" and they meet up at a wine bar in Oakland on some Thursdays.  You can find a lot on meetup.com

@Ayla Quesada There are a bunch of meet ups in the Bay Area if you want to find one closer to you.

@Elizabeth Goff I think you're referring to a JADU?

@Chan K. I would agree with Lucas.  It might be a little early to decide on where you want to retire unless you're only a year or 2 away?  If you still have some time, I would say continue to invest for the long term return and build cash flow since you could easily build enough cashflow for covering rent in some Florida areas or elsewhere as you decide what you would want to do in retirement.

Personally, we have bought in a place we would like to retire however, the economics of our future STR is in a very profitable vacation area already. Our plans are still to build an ADU on the large lot and live in that as we want to stay mobile and travel a lot when we retire. It's not a bad idea to have an STR as an investment as it if it does well for cashflow and it could also keep your costs low if you decide to home swap in the future when you travel but I haven't fully looked into this option yet.

We did look at Hawaii since we go there at least every 2 years being on the west coast however, you'll need to consider if being on an island is for you.  Thailand is generally inexpensive for renting and has a very low cost of living.  I know some people that have bought there but if you have a focus area already, it might be better to continue to focus in what you know and locations that you know to get better returns.

Collin

No, we had lived in silicon valley for about 7 years at that point and new the better areas that we could afford to live in which was our initial motivation, while minimizing commute time, and maximizing beds/cost.  Also, we generally benefited by just buying a place in San Jose in 2003 as rental demand is through the roof now.

Collin

@Paul Wolfson If you buy out of state and invest in cashflow, will that also help you cover your current $2500 rent?  Otherwise you're still losing money in rent which will increase over time.  I believe LA rents will increase faster than out of state so your gap might increase.

We moved out of our house after owning for 6 years and rented it out so technically it was our first rental property but at that point, it had positive cash flow ;)