All Forum Posts by: Edward Liu

Invest outside of California in real estate.  It is very hot market for multi-plex in most markets, but still way better deals vs. CA.  For all of my multi-plex in other states, last 12 month value increase is between 25%-75%.  

For more than 4 units, it is commercial loans - usually 20 years loan, 25% down, fix rate for 5 years.  Many large banks don't do small commercial loans less than $2M, so need to find local banks who will do loan for out of state investors.  Commercial loans rely more on the merit of the property (positive cash flow) and your total net worth (you guarantee the loan), less on your personal FICO score (although high FICO score helps) and personal income.  I have found commercial loans are easier to obtain than your home mortgage, if you have $1M cash.

Based on price of 1.75M with rents at 12k, highly unlikely you can get 5 CAP even with a near new building considering property tax, insurance, utilities, vacancies, property management, etc. With 100 year old building, 5 CAP for sure is made up. Would not touch this as it will be a huge money sucker.

I would suggest Leavenworth, KS or Liberty, MO (all in the Kansas City area), which might still have some properties that meet most of your criteria. But you are unlikely to find things built after 1985.  Late last year I brought some duplexes (built around 1975) in Leavenworth, including rehab cost, total about $110k per duplex.  Getting $1500+ in total rent per duplex.  Many tenants are military, veterans, or people work at the military base there, seems rent payment are very prompt.  Current deals might not be as good, but should get 1%.

I am not sure if above data is true.  Late last year I made an offer on a 8-plex in Pawtucket where owner brought it in 1997.  I did not get the property due to multiple offers.  The final price is more than 7x than original price owner paid in 1997. 

My advice is not to convert just because of 1 tenant and especially this conversion does not match your long term goals.  I am sure you can find another good paying tenant (with proper screening).  Recently I converted a 2BR to 3BR (in Hartford) and was able to get a good tenant very quickly.  Of course, this depends on location.

Many contractors offer lower price if certain portion of the bill can be paid in cash (no 1099).  Likely the contractor your colleague used requires cash payment.  Just yesterday, a contractor who is working on my properties in Kansas City offered 20% discount on quoted price if cash is used.

My wife is a partner at San Jose CPA firm with office in San Jose downtown. She is very good at negotiating with IRS (they do a lot of them). Without saying, to me she is the best CPA in the bay area.  Contact me if you need her contact.

I purchase properties with LLCs.  LLCs are each 100% owned by our trust.  You get better of all worlds.  I have done a number of commercial loans and lenders actually prefer this set up