All Forum Posts by: Geo Tan

@Matt R.

Hey Matt!

Thanks for the explanation. I definitely get a better understanding of what you meant in terms of profits. I did hear about Detroit being number one but I definitely want my first property in my portfolio relatively close to where I reside so I can understand a bit easier in terms of the city's growth, population, employment, etc. I feel like I can connect a bit better with the statistics when it's within a few hour driving radius. I also have to admit it is a bit nerve wracking to start out of state even though I know how much better the deals are!

@Fay Chen

Hi again Fay!

Sorry for the late response, I've had a crazy week at work and am now able to catch up on the weeks worth of helpful posts! I am definitely interested in meetups in LA and am totally bummed I wasn't able to make it. I'll be sure to try to clear my schedule next time!

I did hear a little bit about commercial loans through the Bigger Pockets podcasts but still don't know the majority of information to completely comprehend it. It overall sounds like a higher risk higher reward system for commercial. But at the same time, the loans look more into cash flow rather than the other criteria you mentioned. I'll definitely look into that.

Thanks again and I'd love for you to keep me posted on events near the area!

@Dave Foster

Thanks for the amazingly fast response Dave!

That first part you responded with totally makes sense to me now. If I did house hack it would technically be me using a investment to investment purchase method to buy personal property which is basically cheating the system in terms of taxes?

So if I understand properly, it would pretty much mean that the only way to go around 1031 and personal properties is to use the profits from 1031 to pay for the portion of a multi-unit that I will not be personally living in. So ultimately I'm still paying someone else (the loaner in this case) to rent in my own property?

And I love the comparison to a bed n breakfast. That makes it much easier to understand. So from what I'm understanding, it seems like house hacking with a 1031 is possible, but it doesn't seem that smart of a move to me since that's the same result with more headache. Definitely feel free to correct me if I'm wrong.

Thanks again for all the awesome information and feedback Dave!

@Jerry Padilla

Hey Jerry!

Thank you for the encouraging words. Means a lot and helps every bit.

You kind of lost me with all those numbers and terms on the financing and loans. I'm still learning the terms and formulas but I'll dive more in detail with you on that after I learn about it (hopefully soon)! But in terms of the 1031 which I did get a chance to learn a tiny bit about, there are definitely pros and cons to it in my opinion. From what little I read into, it sounds like it's harder to house hack and like you mentioned you do have to give that cash for another entity to hold while you're selling and investing. I do know a great pro for that is that you don't have to pay taxes on the profits you get for selling the initial property. That's the main reason most people go with the 1031. So if I were to pocket the profits from the sale I'd get taxed on it quite a bit. But if I'm re-investing that cash into another property, I can avoid these taxes. I THINK that's how it works. The more I interact with people here at Bigger Pockets the more I realize I need to definitely step up my research game. But from what I know so far, that seems to be the case.

I'd definitely love to talk more about the mortgage and loan side to it so as soon as I read into it I'll reach out to you again!

Thanks again!

@Fay Chen

Hey Fay!

That would definitely be awesome to pull off!

Correct me if I'm wrong but I heard that there's a difference in investment property regulations from 2-4 unit properties and 5+ properties? I think it had something to do with the loans or something along those lines. Not too sure though so I would love to hear more about that!

Thanks again for reaching out!

@Matt R.

Hey Matt!

Thank you for the warm welcome! I'm glad I took the dive into the Bigger Pockets community. Best investment of time spent by far.

I totally agree with you that there are cities outside LA that are much better for cash flow. I think it definitely is more of a challenge than some other states in the US though.

A quick question I had was the top three cities that provide profit being LA, SF, and SD.

Is that in terms of property value or with cash flow from rent or both? I'd think those 3 cities may be best in terms of property value profits but I feel like it would be quite hard to make it highest profit for cash flow from rent? I definitely don't know enough to make a solid statement on that but that's how I feel it would be. Definitely let me know if that is totally incorrect though!

Thank you for wishing me luck and hope to keep in touch!

@Dave Foster

Hey Dave!

That's what I'm starting to find out on my end as well! Glad to be on the same page. Someone suggested that I go that route so I did some research and I have to agree, I don't think it's possible to do fha financing with a 1031. That wasn't my current plan though but I'm glad I got the chance to learn about fha financing in general. Currently from everything I've learned (which is the tip of the iceberg), I'm leaning towards sit and hold on a multi unit(s) that's in a 3 hour radius from LA. It just seems extremely hard finding a spot in LA that gives a positive cash flow but at the same time, since it is my first hands on investment I want to be able to drive to the property if needed be. Thank you so much for the heads up though! I'm glad to know I wasn't misunderstanding what I was learning.

I hope @Mark Creason, @upenpatel, and @Steven Gesis do get a chance to read into my situation! Everyone's been such a great help on here and I'd love more feedback from anyone here I can get in touch with!

Thanks Dave, it definitely did help a ton!

@Logan Allec

Hey Logan,

I get your logic but I feel like that would be even harder of a task to do for obvious reasons. Lower down means higher mortgage payments which in majority of CA would be quite hard to get a property that has higher rent than the expenses no? I'm sure there's ways to get around that and find right properties but that overall sounds like high risk high reward? I personally feel like I don't know enough yet to do something that risky. But that's just me.

Another issue is from what I understand with a 1031, there are certain regulations I need to follow if I want to house hack with a 1031? Not too sure if that holds any truth to it or not but that's what I always thought. I'll definitely message you to talk more about this. I honestly did not think I'd get this much good feedback with my post and since I'm working full time and my job is picking up it's hard to keep up with these awesome responses!

Thanks as always!

@Ali Boone

Hi Ali!

Thank you for the compliments! It's always great hearing motivational comments from veteran real estate professionals.

I'm totally bummed to hear about all of California being on the same boat as LA in terms of hard to turn a profit. I still have a ton of research to do on other cities outside of LA but I do have to agree with you that most of what I'm finding is exactly as you mentioned in terms of making a positive cash flow. I still do think it's still a tiny bit better than LA so I still have my fingers crossed.

My long term goal is to definitely invest outside of California. I feel like there's a gold mine waiting to be tapped. But since this is my first investment, I would love to be more hands-on and be involved to better learn the process. That's pretty much the only reason why I am hoping to keep my first few properties in a few hour driving distance. Even if the cash flow is much more limited here.

To be honest I am not even remotely considering appreciation profits in my research for now. I know I should be but I'm already overwhelmed with learning all about basic buy and holds with rent as a main source of cash flow. I also am completely lost as to where to start out in terms of researching past and current housing market values and such. I feel like that's a whole other monster to tackle and I am trying my best not to overwhelm myself and get discouraged.

Definitely let me know if that is a completely wrong way of thinking or if you have any other suggestions on getting started or which direction I should be going!

I'm glad you think there is still a possibility of making my goal happen. I'm sure I will get more specific with my goal as I learn more but one common suggestion from everywhere seems to be setting a goal. It's definitely helpful and motivation just to have a goal though.

Thanks again for your response and I'll definitely keep you posted as I find out more on my end!

@Anthony Johnson

Hey Anthony!

Thanks for the motivation, I could use all the pats on the back I can take.

I was definitely leaning much more on house-hacking in the beginning exactly for those reasons you mentioned: paying myself rather than paying someone else money for rent, and the tax break reasons. 

But now I'm currently leaning more towards out of LA for investments purely just because the numbers I'm crunching aren't really adding up as a profit in LA. I definitely should look more into the tax breaks though since I only heard that from an associate of mine but never really had the chance to look into how much of a benefit that would give me.

I'll keep you posted on as I find out more and thanks again for the motivation!