All Forum Posts by: Jay Y.

I'm waiting for then next cycle, whenever that is. I snatched up more goods this round than I could have ever expected to win when I first started in 2012.

Greed knows no bounds. I'm good :)

@Mark Shaffar I know right? Instead, I wish I knew 3 people who all bought a turnkey and found a pot of gold tucked away in the basement, or something like that...

@Brandon Low Wow, same (similar) thing happened to me with one of my turnkey rentals in Indy... And I also know someone else with a turnkey in Indy who had the same thing happen to him!

Is this all a coincidence? Maybe... But I do know that I am spending a ton more on maintenance to service these types of properties (relative to my Bay Area rentals which I own a lot more of), so maybe we're investing in the same neighborhood, price point, etc.

Wishing you all the best as you get over this hurdle!

@Harry Zhou Well, to do well out of state (in general), will require you to build a sound team out there and you'll need to accumulate a good number of units... otherwise, why bother?

From your profile, I can tell you're very ambitious (20 properties in 5 years) and from what you already said above, you are plenty cash strong.

The Bay Area is usually not an option for those with a capital problem, but that doesn't apply to you. There's no barrier to entry you have to overcome, so why not just invest in your own backyard (doesn't have to be right this instant, but markets are cyclical so there will always be opportunities).

Cash flow may not be as readily apparent on Day 1, but there's almost nothing capital can't fix! Your capital will go a long ways here and help you win/renovate value add opportunities (forced appreciation). Buy a junker, fix it up, and raise rents to make the cash flow "numbers" work...

DRIP cash flow out of state can work, sure, but it won't build wealth like Bay Area appreciation; both in terms of property value and rent... Within a few years, your cash flow locally will easily trump what you're getting out of state as well since rents are mostly STATIC in turnkey markets.

Unless you can work the grounds out there like a TRUE local, you will be paying a premium every step of the way (acquisition, rehab, PM, etc)...

I guess what I'm saying is don't take for granted what you've got going for you in your own backyard. Bay Area real estate has made a countless number of people very successful and wealthy; it can probably do the same for you.

@Harry Zhou You live in a wonderful market, so you might want to explore the local one a bit more before going out of state...

In general, the markets are a bit overheated and I'm not sure how many good deals are left out there... You most likely will pay a premium investing out of state, especially going turnkey. I really don't see the point in rushing into any investments at this time, and I'm sitting on cash myself for now.

Markets are cyclical; what goes up always comes back down. Patience will be rewarded.

@Pyrrha Rivers Congrats! Sounds like a great learning experience and hopefully the next one goes a lot smoother now that you've gotten a crash course on the good, bad and ugly.

Wishing you all the best on #2! 

My own background is in high-tech, and although I don't agree with a lot of the brainwashing they make you endure during 4 years of university (and afterwards in industry), I will have to say that becoming an engineer/software developer is one of the best majors you can graduate with because you get a lot of "bang for your buck". For one, you only need 4 years before you can hit the ground running and start making a lot of money. It's a lot easier to become an engineer than say a doctor, or lawyer (with tuition these days, a whole lot cheaper too!). In the Bay Area, software developers are easily clearing $100,000+ directly out of college, on salary alone. It isn't unheard of to get a package around $150,000, once you factor in signing bonuses, RSUs, etc. That, and I think overall as a nation, there is a huge shortage of talented engineers, so demand is very strong right now... But the caveat is you must really like the subjects to do well... It'll be tough to grind out if you have no interest for it... As a whole, getting an engineering degree is not a walk in the park either, so it'll take a lot of hard work and perseverance... But if you can suck it up for 5-10 years, you can probably build a strong enough financial foundation (capital for rentals) to retire from that career prematurely... hmm, sounds kind of like my own plan!

With that said, @Rochelle Wilkinson your son is in a unique situation; you and your husband both own your own companies, so it looks like the entrepreneurial spirit is strong in your family. That, and coupled with the fact that you now have a 60 unit apartment and have plans on expanding the portfolio, it just seems to make logical sense for your son to follow in your footsteps (provided he has a strong, growing interest in REI). How about giving him some light tasks to perform on the rentals and gauge how he likes it? I think the books are a great starting point as well... If he's consuming those like air and water, then it's most definitely the right path for him... Maybe then, he can consider getting a real estate license?

All the best!

@Rochelle Wilkinson Yup, there are many paths one can take to succeed in life -- you don't always have to follow the same yellow brick road as everyone else.

Sometimes, I think too much education can be a bad thing... You stop thinking outside the box and confine yourself to only what you already know. I've seen it time and time again in industry... people will slave away at their day jobs and work increasingly harder trying to climb the corporate ladder, thinking it's the path to riches... Successful real estate investors and entrepreneurs have already figured out that it's a whole lot less work and effort to just own the freekin' ladder, instead.

Real education comes from LIFE EXPERIENCE. Being book smart is great, but being LIFE smart will get you a lot farther...

I got started when I was 27, picking up my first property in San Jose. I'm 30 now and these last 3 years have been surreal... I'm at 10 units now.

Everyone around me was talking about "low interest rates" so I finally got tired of hearing that everyday and decided to entertain the thought of REI. I was doing dividend growth investing at the time (earning 3-4% yield), and when I ran cash flow numbers on investment properties in 2012, my jaw dropped... Those returns look astronomical now, but even back then they were incomprehensible to me... 10%+ CoC returns in the Bay Area! So, even as a newbie I knew it was too good to be true.

When I think back to my life moves... 

B.S degree? That was worth it as it gave me the career and means to invest in REI. M.S. degree? Totally overrated, I think... I got that in 2009 but wish I would have used those tuition dollars to buy property, instead... or AAPL stock. I would be even further along than I am now. ROI was not worth it and it's unfortunate too many in the workforce drink the academia "higher education" kool aid...

Best financial decision I ever made in life was to get started in REI!

If it's different this time... then, well... GREAT! That means these bidding wars will continue, homes will keep selling for well over listing, and my properties and overall investment portfolio will keep increasing in value. :)

If not, well, then trouble could be brewing if you're ill-prepared...

I'm not smart enough to figure out what will impact what causing what, but I do believe in cycles and what goes up usually comes back down again...

If an investor got in at an opportune time (like you did @J. Martin), chances are you loaded up and acquired a bunch of assets during the ripe-for-the-picking peak recovery period between 2009-2012... But even in 2013, 2014 it wasn't too late and good deals were still pretty plentiful... The last deal I closed was earlier this year, when I finally went ahead and said, "NO MORE!"

Could this thing keep inflating? Sure, it could... But I look at it from a risk/reward angle -- Trying to leverage more and winning "one last deal" can end up being the straw that breaks the camel's back.

When it comes down to it, it's fueled by greed... In the Bay Area, even if you only won a SINGLE house during the recovery, you're still coming out miles ahead and that SINGLE property has probably appreciated by a minimum $100,000...

Why keep pushing your luck? I'd rather preserve what I've got and stash cash from this point on (I completed two cash out refis recently to pull equity out for the next round!); I'm ok with missing out on whatever deals remain in 2015, 2016, 2017, etc., should this bubble keep expanding.

I'm happy with the progress I made this round (ain't contentment a wonderful thing???); now I just wanna live to fight another day...