All Forum Posts by: David Gotsill

@Charlotte Dunford - And while it could be any of those scenarios, I think scenario (1) is least likely.  If they owned the assets, it's likely they would use "own" rather than "control".  By the very use of the word "control" you can infer they don't own it.  How often can you think of a person who says "I control my own home!"  Never.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Huntsville.

I partnered with a small group of investors, most of us who met here on BP, for the acquisition and financing (through Fannie Mae) of portfolio of six modern duplexes in Huntsville. This deal is a testament to the real potential of relationships that begin on BP. Thanks guys!

@Henrique Barbieri - Fortunately for me, the tenant vacated on their own early on in the eviction process.  Costs to me were minimal, since all we did was send one letter, I believe.  As you note, lost rents is the biggest thing.

I would echo much of what @Daniel Mills said.  I'm also a customer of MSHB. (I heard about them on the Real Estate Guys Radio Show podcast)

I have 2 properties, the first for nearly 2 years now.  For that one, I did have a problem tenant and we started the eviction process just a few months after they moved in.  However, the communication from MSHB was very quick and forthcoming, and they pro-actively tackled the process and resolved it quickly.  I'm guessing that an eviction so soon is highly unusual, since MSHB worked with me to reduce fees to get ready for tenant #2.  The result is I felt even better about MSHB after an eviction than before.

Additionally, it's not uncommon for my tenants to be late on payments.  Again, however, MSHB pro-actively makes contact and let's me know the catch-up plan.  So far the tenants have always caught up.  I have  sufficient reserves allocated, so some late payments don't really cause any stress.

For some people this might arise to a "headache" level, but compared to other properties I've been involved with, this is on autopilot.  I like to think about them in terms of capacity.  In terms of my brain capacity, my MSHB houses take up about as much as my mutual fund investments, leaving me more bandwidth to think about more complicated investments and what to have for dinner.

I'll likely continue to pick up properties through MSHB as my turn comes around, because they are so headache-free and consistent.  I would not ONLY invest through MSHB since, as Dan says, the waiting list is so long. But if you can come up with $20k every 9-11 months, I think it's an easy and safe investment.

Re-reading my post, I may have come off a bit too strong.  What I should have said is this:

I agree with you @Miho Hatanaka.  I am bothered by those landlords in Japan that have a small island/closed-minded mentality.  In exactly the same way, I am bothered by similar landlords here in the US (and presumably other countries as well) that have a similar closed-minded mentality.  In some ways it's more open in the US, because discrimination is often talked about and is rightfully looked down upon.  I don't think it's out in the open as much in Japan, and so the victims of discrimination there may have a more difficult time dealing with it.  But as we all are/become landlords, it's something we should keep in mind, and it's a small way that we can have a positive impact.   

Those are some interesting questions @Miho Hatanaka.  

I have also had some foreign friends tell me about the difficulty of renting an apartment in Tokyo.  In some cases the reasoning makes sense to me, as a property owner myself: it's not a smart business practice to rent to a tenant who is only in the country under a short-term status, who does not have proof of sufficient employment, who does not have a guarantor (we'd often just call them a co-signer in the US), and with whom the landlord cannot communicate (if the tenant doesn't speak good Japanese).  In other cases, I think landlords are being close-minded, as you say.

From personal experience, I was definitely turned away from units the moment the real estate agent told the landlord I was foreign.  There's no rule against refusing to rent to foreign persons.  It was frustrating, but I tried not to let it bother me, and I was always able to find something nice.  The same thing as if someone said they wouldn't rent to me because I'm obnoxious or I smell.  It's not nice, but it's kind of true...

I think it's a different story when you talking about sales, however.  Not sure about the woman in Saitama, but my guess is there's more to the story than her just being Chinese.  Some could be cultural.  To use a common example, bargaining/haggling is not common in Japan.  It's the norm (I hear) in China.  Suppose the Chinese buyer was constantly haggling to lower the price for this and that?  It would certainly turn off a seller.  Still, Japan has no rules against foreigners owning real property, unlike some other countries, particularly in south east Asia.  The difficulty that most foreign buyer's have, I think, is with financing.  Most Japanese lenders won't lend to foreigners who aren't long-term residents or permanent residents.  That's different from the US.  A non-US person can still get a loan for investment property in the US.  Of course, the terms are tighter - for example, 50% down and 2% higher interest rate.  But it's possible.  My understanding is that non-Japanese buyers who aren't long term residents have only one real choice: an all-cash purchase.  That may work for some wealthy non-Japanese people (for example, it's popular among affluent Chinese), but it's not a strategy that makes sense for most.  Most Americans would be much better off to invest in the US with a loan than to invest in Japan all-cash.  To me, this is more the investment background than the opinions of individuals.  I'm willing to bet most Japanese sellers would be fine to sell to foreigners, that it wouldn't really matter to them.  Plus, property rights in Japan are strong, and there is very little corruption.  So foreign buyers can be very confident of what they are getting.  It's a pretty safe bet.

I'm going to ping @Kiley N. and ask his thoughts.  

One last thought: It's not a purely Japanese problem.  I'm not sure how things are in Portland, but I'm pretty sure there's some discrimination  based on national origin in a lot of places in the US too.  Granted, there can be better chances for remedy/compensation here, I think.

Hey @Sujan Ghale - I've heard that Fukuoka is a great market.  One of the few areas in Japan that is consistently experiencing population increases, I think, and a fantastic outlook for foreign tourism, particularly from China and Southeast Asia.

I'm tying to piece together what you're looking for, tell me if this sounds right.  You're trying to raise money (you're looking for an investor) to purchase property in Fukuoka, that you will then rent out and manage (you can fix problems that occur).  

Are you looking to borrow money from a bank?  Or instead looking to raise private money?  Do you intend to put in some of your own money (most investors would hesitate to invest with you if you didn't have some of your own money in the deal)?  Do you have an eye on any particular type of property in Fukuoka?  Starting with one apartment/condo or looking at a whole building?  Do you have connections for a real estate agent or broker there?  Taking a step back, do you speak Japanese?  The answers to these questions and others will inform what kind of guidance is best for you.

I think you'll find that the BP community is very supportive - I would suggest you take @Bruce Crawford's advice and try to attend the BP meetups when you can.  

I'll tag a few more Japan-based investors, just to help you grow your network.

@Daniel Mills @Shu Matsuo Post

Hey @Sujan Ghale - welcome to BP.  

Your introduction was a bit brief - where are you in your investment journey?  What are you hoping to do next?  What are you hoping to learn/glean from BP?  

I was in Tokyo for a bit and recently moved back to the US.  I'd be happy to share thoughts on investing in either of those places.  Where are you looking to invest?

In any event, I'd be happy to connect.

Hi @Miho Hatanaka - would also love to connect and learn about what you're doing in Portland.  I'll reach out to you on IM.

Thanks,

David

Hey @James York welcome to BP. I left Tokyo last year, but met great people at BP Tokyo.

I’m happy to share any of my experiences, but how can I top @Daniel Mills? He’s the master.

Let’s connect soon.

General shout-out to everyone who posts here and attends meetups for tremendous impact it's had on so many investors, including myself.  What a great community.

In looking for my next deal I've realized my team and I will have to be creative, both in how we find the deal and how we finance it.  I thought we had done well in arranging an owner-financed portfolio acquisition, but I think we're going to need even more for the next one.  

That got me thinking - how creative can we be?  Better yet, how creative have you been?  

Would love if you could share what you think have been creative sourcing and financing strategies.  

As background, a small group of partners and I have been looking to expand our portfolio, which currently consists of about 20 value-add duplexes.  Ideal target is multifamily (scale to be determined), but we're open to other property types as well.  We're going to need to bring in any necessary capital, in the form of either loans or investors (or something else?).  

Thanks all!