I've gotta say, meeting up with @Account Closed was a really valuable experience. Minh is a funny, and approachable guy, and shared major wisdom with the 3 of us that were there on Sunday.
If I had to distill my learning down into one single takeaway above all others, that would be this:
The rent control ordinance (or absence of one) in each city in the Bay Area represents an opportunity to find strategies created by the ordinance itself to buy real estate and add value. Read the ordinances in each city, find the RE deals that allow you to create value by strategically leveraging the rules in the ordinance to your benefit. Some examples of this idea:
- In Oakland, an owner in a 2-3 unit multi-family building is not subject to rent control after living in the building for 2 years. This allows that owner to raise low rents up to market rate.
- Before 2017 in San Jose, the ordinance allowed Minh to pass thru 80% of the difference in monthly debt payment, between the owner selling a property and the owner buying a property, as a rent increase. That rent increase is permanent, but one can leverage a high interest/high monthly payment loan product, and later refinance out of it. Thus creating increased positive cashflow after a small period of low or negative cashflow.
There are other opportunities like these out there. I think part of what separates good buy and hold investors from the others is, willingness to read, digest, synthesize, and strategize against the ordinances that exist in each city around us. No small task, but absolutely worth doing. And reflecting on this learning, it's what I stumbled into doing here in Oakland.
I hope that helps anyone who's interested. And for real! Go talk to Minh and @Arlen Chou - these guys are wicked smart, doing really well, and they're turning around and pulling the rest of us up with them, by sharing their knowledge freely with us newer investors.
