All Forum Posts by: Edward Liu

Both my wife and I are self-employed, it is not a problem getting loans, as long as you have at least 2 years of data doing the same thing and showing good income.  At least 2 years of tax returns.  Obviously it helps if you have high net worth.

2nd option is purchase multi-plex with more than 4 units, thus commercial loans (not personal loans).  For commercial loans, their approval depend more on the value and cash flow of the property.  Your high credit score would help, but loan is more tied to the property income, not your income.  Terms of commercial loans are different, usually review by bank every 5 years.  Try to understand it first before sign on.

It is not just Indianapolis, many cities are showing slow down.  Don't believe this is August affect. 

HOA cost and what it covers is the key. Some people don't like it because even if vacant, you are still on the hook for HOA. In many places, SFH also has HOA, so P&L is really the determining factor.

If you only buy 1 condo/townhouse, make sure the HOA association is NOT controlled by 1 owner (1 owner owns more than 50% of the units). I have heard bad stories of such arrangement for other owners.

You are on the borderline whether to sell vs. keep as rental.  When you sell, there are listing fees, etc., so you are not going to get $250k.  With it being close, probably better to keep it as rental.  No point to go through that much hassle.  

If your townhome is more than $350k, I would probably say better to sell, unlock the value, and invest somewhere else.

As a buy and holder investor, I do NOT pay more.  It is tougher to find deals in some areas, but decision to buy must be supported by numbers.  If numbers don't work out, just walk away, does not matter if I want to buy and hold or not.  

Look outside of CA and you will get better returns.  Not sure how much the commercial is worth.  If more than $300k, you should consider sell it and look outside of the CA to trade for better cash flow. I am pretty sure you can get much better than $2700 per month gross.   You don't even need to get into multi-units.

You can still find tenants during down turn and there is always demand, but lower cash flow due to higher turn over (rent lost during turn), lost rent during eviction process, and additional turn over cost.  I have found cash flow will be lower during down turn (not because of lack of tenants) for many areas.  

There are always good deals on the market at any time, just more of them during down time.  Even during up time, you might still buy and sell at the same time due to local market differences.  For example, I just put an 35-unit building for sale last week in one city, but still active looking in another city.  

With more signs of slow down, I am holding more and more cash now and more reluctant to jump into deals (unless deal too good to pass up).  Cash is the king, especially during recession.  To prepare for the next recession, I want to have cash to scoop up more properties, but at the same time also handle the inevitable loss of rents (with tenants losing their jobs).  I make assumption that during recession, I will have negative cash flow for my rentals.

I don't own property in Price Hill, but looked at many properties over there before.  Numbers look good on paper, but generally low rents, a lot of section 8, low quality tenants, etc.  To buy there, must have very strong property management and knows how to deal in this type of area.

As landlords, we must consider rentals as a business.  Sometimes we have to be cold hearted, although we might feel bad for tenants, previous owners (in this case), etc. So many times my Property Managers told me stories of tenants behind on rent due to job loss, drug issue, family death, you name it.  Half of the stories are likely true, but we still evict them.  Only time we allowed tenant to laps on rent for long period was one tenant had medical emergency and was in the hospital for nearly 3 months (obviously no rent).  I did not evict him so he has home to go to after hospital, allow nearly 18 months for him to catch up on rent.

I would only offer what I would normally offer for this type of deals, no different vs. other deals.  If you treat this seller differently, then you probably will treat next tenant as your cousin, and treat next buyer of your property as in-law, etc.  Just trying to be brutally honest.