All Forum Posts by: Joe J.

@Jacky Hung.  I have Hippo insurance for primary residence and rental.  I used to have AAA, but they're underwriting is very conservative and they would constantly drop my home policies based on updated underwriting criteria without exceptions.  So far I've been happy w/o Hippo (given that I have not had a claim yet).  They definitely do more preventative measures by providing certain sensors for leaks and door/windows to help mitigate the # of future claims.

They are relatively inexpensive compared to the big box carriers, but they do not offer many other kinds of insurance (ie auto), so you get any kind of bundled discount.

The clay sewer pipe may create additional issues in the future.  It is a relatively large investment to fix it (rather than treat it), but I would recommend fixing if you plan on holding onto the property for a while.  You may want to look at a liner as well which is more cost effective than full replacement.

Hi Seung.  There seems to be a perpetual debate on BP for California investors of OOS vs. in state (Appreciation v cash flow).  There seems to be success on both ends, just different characteristics to each.  I invest in California but am not opposed to OOS.

My opinion is that if you want to invest in high-priced areas, you should have a long-term horizon to mitigate risk.  The ups and downs are quite profound (esp on leveraged $$).  I have had the value of a property decline 50% in 3 years, and I've had other properties appreciate 40% in 2 years.  I think rental properties in your area would satisfy items 2-4 you mentioned above (long-term).  Although there are some tax advantages to rental properties, you most likely won't be able to write-off the passive loss if you make over 100k (single or jointly).  You can carry the losses forward to eventually offset gains or realize at time of sale.  In other words, the rental property itself doesn't affect my annual tax return if I'm not selling.

I hear you though, California is tricky to navigate because of such a high capital requirement to get in.  But everyone I know who has invested in California real estate long-term seems to be doing just fine.  Best of luck to you!

Totally agree here.  I will absolutely be hit with the MID change but bigger than that will be the SALT deduction cap.  My buddies with qualifying pass through entities are ecstatic while I'm being hit pretty hard as a dual income W-2 in California.  I need to "break free" as well.

I think I got the short end of the stick.  The only prediction my crystal ball gives out is that I'll be 20lbs heavier in 10 years.

Only item I'll add is my anecdotal experience getting a pre-approval for way more than I can afford. There is no way living in Los Angeles with a wife and 2 young kids that I can reasonably afford a loan using a 50% DTI, unless I project my income to rise sharply going forward (which I will not bank on).

@Jason Ong Thanks for the chart!  I have to say, the Investor profile looks incredibly boring.  Should I be concerned that the Gambler profile is by far the most appealing?

@Sharon B. Sounds like you've received some solid (albeit expensive) education.  I'm sure you'll be able to leverage that in the future.  Feel free to shoot me a message if you have any questions.  I'm a newbie myself but I'm familiar with the Pasadena area.

@Sharon B. I put a lot of weight on tenants who have proven to be low maintenance.  I would definitely opt for less-than-market rent for ease of management.  

Having said that, I would be concerned of the tenants continuing to say they plan to move at the end of the year.  That would not give me a lot of confidence that they will continue to be long-term tenants.

How confident are you on your market rent projection?  I would try and do more comparative analysis to pinpoint what fair market rent is.  This will help determine how much "wiggle room" you have.  Is you rental $50 under market or $500?

I think setting a precedent is important as well.  Setting a pattern of manageable/reasonable rental increases will help set expectations.  If they prove to be good tenants, you can always increase less than market increases.

Good luck!

@Roger S. Water loss claims seem to be tricky.  If the costs far exceed your deductible then there would be a stronger case to make a claim.  I had 2 water loss claims in the past 5 years on two SEPARATE properties and my insurance carrier dropped me.  I had to get a new policy with a 2nd tier carrier and am paying a bit more.  I'd call your carrier to see what their policy on water loss claims are.  I was surprised that none of the major insurance carriers would insure me: either resulting from my previous claims or other logistical reasons on their end.

Agreed, that's why I mentioned "on paper".  I was just making a point to how discouraging even a paper loss is.  And in my situation, I eventually did lose some money on it as I had to move and it would've made a horrible rental.