All Forum Posts by: David Song

Originally posted by @Pete Perez:

@Don Gouge 

@Evan Polaski

I took Don's advice and did it myself. It was one of those things that seemed more daunting that it really was. All it took was a phone call to my trash provider for a dumpster + 6 hours of my time. 

It is faster to just do it than getting 3 quotes. 

 I have not been back to Columbus for 20 years now. Pretty sure there will be some changes. 
Columbus is probably the best city to invest in Midwest area. But I will not invest in Linden, even if it changed.

The main tenant pool in Columbus is the student population around OSU. Therefore, I was looking at the area east of high street directly across from OSU, the university village area north of campus. In the last few years, their prices has appreciated quite a bit. 
couple years ago, there was an apartment building for sale in the university village area. I called the listing agent and did some due diligence. Did not move forward simply being lazy.

Now, I can not find any commercial property around OSU at a reasonable cap. 

If I am living in Columbus, I will just buy directly across high street for some old houses. Those are the real investment properties in Columbus. Their value will keep moving up. 

I lived in Columbus for 5 years, many years ago. The good neighborhood, area around OSU, upper Arlington, Dublin, etc, are pretty expansive now. Their price point is similar to east Bay Area.

Linden, a definitely F area, somehow was touted as a b/c area by TK providers. If you never lived in the city, do not invest there. 

The major issue is the permit process, and sometimes variations between various cities and jurisdictions on their particular requirement. Permit process takes a long time, with many unexpected unpleasant surprises. That is why CA is expansive.

Ideally, city can adopt a few standard Plans, or preapprove some free fab models.  But most cities do not have that. They intentionally make the process lengthy and difficult, maybe to justify the head counts in the city departments.

It will not be a surprise when one planner approves a design, but next day another planner says no. Or some trees need to be preserved.

Two years ago, I built an ADU in San Mateo. The city fire department wanted a fire sprinkler system whereas the state law clearly exempted it. Remember a fire sprinkler oftentimes requires a larger size water supply line and can get pretty expansive.

When I presented the state ADU law to the fire department, they still insisted on it and said that we can only resolve this in a lawsuit. I did not want to delay any longer so went ahead with fire sprinkler.

However, when the permit was issued, the building department stamped on the plan that fire sprinkler is exempt. I guess people in city departments do not talk to each other. So I got away without the fire sprinkler. 

Many of those appraisers are under qualified and simply incompetent. There should be a objective real world test on those appraisers before they can take on their job. Let a group of them appraise a few sample homes, and then compare the actual sold price vs their appraisal value. Rate them based on their accuracy, and disqualify those at the bottom.

This small kitchen demo requires one guy 1-2 days maximum, and a garbage trailer. In ca Bay Area, this is about 1k job. If you are not local, they can over charge you quite a bit.

You are probably better off hiring a kitchen contractor for demo and kitchen install. This is too small a job to separate.

LOL. A lot of people were making those smart predictions last year, including so called experts. I saw a YouTube video in 2020 from a guy called ken, who tells people there will be a huge crash after forebearance expires in fall 2021.

Everyone makes mistakes, but those experts never admit they make any mistake.

Life lesson, if someone tells you he knows everything, he knows nothing. If someone tells you he never makes any mistakes, he always makes mistakes.

As an update, I kept this property as a rental for 7 years now, took out about 350 k loan. Current rent: $2950, same tenant for 7 years. No drama at all. Rent check in mailbox.  Cash flow neutral or only slightly positive with the loan.
current Zillow estimate: 900k.
about 500 k appreciation.
net cash invested about 40 k. 

@Samuel Eddinger you are a smart man. I picked up from one guy who mentioned the spread on BP a long time ago. This is the best method for evaluating rental properties, not the 1% rule. As long as we remain humble and are willing to learn from others, those little things will manifest their true power.

As interest rate move up, in general, the cap also shall move up. Then price will drop. However, in the same time, when interest rate goes up, there tends to be an inflation pressure building up, which may push the rents higher. Therefore, it is a very complicated mathematical model.

@Samuel Eddinger This is not new. A lot of people have used this exact evaluation method for many years. The spread between cap rate and interest rate. I use this method all the time. 3% spread is very good for my criteria. 2 % is marginal. 1%is bad.