All Forum Posts by: Jason Ong

@Arthur Yu I was in your situation last year. While I don't know what's your goal, here are some things that I did that helped me in my journey.

- Set up BP keyword alert for "bay area". Great way to learn from the bay area veterans.  

- Go to as many RE meetups as possible. Every knowledge acquired is like an onion peel.

After awhile, you'll quickly arrive at a conclusion that'll work for your situation. This post might help too.

All the best!

@Joseph M. I came across this interesting well written article on Highland Park, LA gentrification during my last LA trip.

My thesis is one can kickstart gentrification by focusing on low end markets with hipster flips and attracting millennial focused retail shops. Wondering if any veterans here have done something similar?

@Joseph M. Great summary. LA is diverse indeed. Neighborhoods are a lot more distinct from each other. Even AirBnB has dedicated pages on them. 

Investing in Wynwood early sounds like investing $1k in Bitcoin when they first traded. Small play money that can make a fortune. Hard to justify the risks if it's hard earned savings.

@Joseph M. My recent work trip to LA turned into a fascinating study on LA gentrification. As a local investor, would you agree on the following?

- Asian neighborhoods are entrenched. Hard for hipsters to penetrate.

- Latino neighborhoods are low hanging fruits due to low income, ease of displacement and relatively lower crime rate.

- Afro American neighborhoods are susceptible but will take a longer time.

@Javier D. Nothing wrong with that. If I'm investing my hard earned savings I would prioritize cashflow over appreciation. If it's my play money then it's a different story. I know investors from Singapore who only want to invest in appreciation plays. They're already wealthy and can afford to lose. Bay Area is full of wealthy speculators investing their play monies in high risk startups hoping to get spectacular returns from a unicorn.

Funny how long threads tends to become Cashflow vs Appreciation shootout.

Here's a recent presentation on Bay Area Health Check by Neal Bawa. It's Bay Area only so not representative of other CA markets.

https://www.dropbox.com/s/0vh2koj412xjrig/SF%20bay...

TL;DR

- Mortgage interest rates acting weird. Ok for now.

- Flattening job growth. Downturn offset by new tech industries (IoT, Autonomous Vehicles, AI).

- The Chinese are still buying but focusing on commercial properties.

- Supply still outstrips demand. NIMBY-ism is strong.

- Affordability poses biggest risks and something to watch closely. Good news for landlords.

@David Song I understand your point about investing in land value. 

I come from a tiny little city state called Singapore. It's only 40x20 miles. Land value there has multiplied many times over ever since becoming a shipping and financial hub in southeast Asia. Well over thousand per square feet. 

The country has one of the most millionaires per capital. A lot of people have gotten rich through real estate. Houses and condominiums here are all cookie cutter and relatively new. There's very little opportunities for flips. The play there is appreciation, either waiting for land value increase through national population growth or investing where the infrastructure puck is heading. 

I see parallels between the bay area and Singapore where geographical constraints, ie. Water, coupled with population growth, forces land value appreciation in short span of time. Desirable neighborhoods and waterfront properties gets the most appreciation. Seattle has same effect. I think Vallejo is undervalued because of the above. Davis / Sacramentato does not benefit from geographical constraints, therefore land value tapers drastically away from core. 

Great thread. Forces me think about my own investment strategy.

TLDR; I may not have million dollar houses but I feel just as wealthy. Invest in things today that will make me feel wealthier tomorrow.

I mean literally tomorrow. Delayed gratification is great virtue… only if I get to enjoy them... Some things are beyond my control, therefore I don't optimize my investments for the long term.

In my case, I arrived in the bay area in early 2012 which was the perfect time to buy a house. If I had bought one then and would have gotten good equity by now. At that time I didn’t want to be held down by a mortgage and wanted to invest my resources into my tech career instead.

Fast forward to 2016 and I had reach a point in my career that I felt it couldn't make me feel wealthier. That was when I started seriously looking at real estate. Again I could have bought a nice house in the peninsula but then I would have tied myself to four walls which wouldn't make me feel wealthier. Instead I bought a house away from the peninsula which allowed me to force some cash flow. Since it can take care of itself with minimal work from me, I'm allowed to move around as I please tomorrow and that makes me feel wealthy! ;)

I've rented a big house before in San Carlos and stayed in many nice big houses through AirBnB so can understand the appeal of a nice million dollar house with a nice curb appeal, big backyard, double garage and the whole shebang. Some people are homies and enjoy hanging out at home so that's a great investment vehicle for them... Just not for me... coz I love heading out, meeting people and flying to other parts of the world. Kinda like @J. Martin. :P

Furthermore I prefer investing in people. Much of my resources has been invested into my wife who have since produced a film, wrote books and did crazy awesome things that no equity in a house can replace. :D

Speaking of cars, I love to drive! Peak hour traffic aside, the views of rolling fog over the mountain while driving a nice car with great music for company is still an incredible feeling. Instead of a gas saver like a Prius, I've opted for a high mileage (crossed major depreciation), not so gas saving sporty 1 series that drives like an M3 on those mountain roads… because I don’t wanna die driving a Prius tomorrow...

TL;DR - Consider all options and drive one that fits our habits, personality and investment strategy.

I drive a BMW 128i coupe and a 328i wagon because:

- I believe in investing in daily experiences. My commute should make me smile.

- I commute a lot and love to drive, especially on scenic highways and mountain roads.

- I've driven many cars before and still prefer BMW handling.

- I want the power to overtake on the highways, especially on steeper roads.

- I buy cars that has already hit major depreciation - 1 yr, 5 yr, 100K miles.

- I know BMW cars intimately. Not at the mercy of mechanics.

- I see MPG as a variable cost that I can control. Today I drive more, tomorrow I drive less.

- I don't want to die while driving a Prius.

Electric cars are interesting and it's definitely the future. It's still too expensive and too much work to own. When rapid charging becomes ubiquitous then I'll wait for one that has depreciate enough.

@Zach Thomas My wife and I did considering moving to Sacramento for a house hack but decided against it. We still like hanging out there though and do so on a regular basis. I agree with @Matt K. on renting first and get a good feel of the city, community and its pros and cons. Maybe even AirBnB a place for short term.