All Forum Posts by: Paul Choi

If your current property has achieved max value and it is just following the market trends, I would sell IMO. and reinvest in something with more upside, like a value add. Overall, never stop playing the REI game - buying and selling. People have said market has peaked for 5 years and they missed out on 5 years of growth.

You don't need any seminars or training programs and pay thousands of dollars to do real estate.  You need the right mindset and perseverance to succeed in this business.

Stockton is a great MF market. We have around 50 units spread among 3 buildings in the market.  Cap rates have been compressing and we are still making acquisitions in Stockton.  Rents have been climbing as new inventory coming online is basically nil.  Current stock on class b and c MF assets need a good amount of proper value add to get the best upside.

Just to add, 5+ multifamily units will need 25% min. down typically.

Multifamily is one of the safest asset class in a downturn.  Like someone has said, it is very market specific.  Class B and C are best.  Class A will get hit.

How many units are your mutifamily residential?  1-4 unit, prices will drop since it's based off of comps.  larger multifamily will fare much better.

Here is the data to back it up:

https://www.cbre.us/research-and-reports/US-Multifamily-Research-Brief-February-2019

Great post but for me, I would not consider appreciation gambling, given the blanket statement.  Yes, if you buy a property, don't do anything and bet you can sell a year later at a higher price is a form of gambling.  

On the other side, you can buy a value-add 20 unit multifamily, rehab units as you go, bring rents to market, thereby increasing income and with efficiencies reducing expenses, appreciation will happen. 

We have models to manage risk and all possible outcomes of future income and values.  We stay away from "middle America" as macro data in job growth and population migration tends to favor the coasts and the south/southwest.  Great sources of data are Yardi Matrix, Costar, broker quarterly and annual reports (Marcus and Millichap, CBRE, Colliers, etc.)

Great question and I bet alot of folks in expensive markets are struggling with this decision.  Like @Matt Ward mentioned, there are many ways to skin this cat and it depends on personal preferences, family dynamics, funds available, time and experience available to invest, manage, rehab in REI, etc.

For me, I drank the Grant Cardone/Kiyosaki cool aid a few years ago and followed their model and thinking. Never went to their "courses" but just read up on their books and podcasts. With a wife and little kid, I decided to rent a SFH wherever we wanted to live in the Bay Area and pushed my savings and down payment money to multifamily and retail commercial real estate that produce income and returns, all located in the Bay Area or within 2 hours drive. I didn't want to househack because we did not want to live in or near construction nor near our tenants.

In a little over a year and with great partnerships, we have almost a 8 figure real estate portfolio that produce returns and essentially pay for some of my expenses, including rent. And we are still acquiring more value-add multifamily as we come across some great deals, all within that 2 hour drive.  I'm glad I didn't buy a personal residence or else it would have been difficult to push capital towards income producing investments.  Sure, I may buy a personal residence down the road but I would want my investments to pay for it.  Also, I may want to live in multiple places throughout the year - hawaii, NY, other countries, etc.  Freedom of time and choice is powerful!   

2 quotes that may be controversial to some but helped me guide my decisions:

"Rent Where you Live - Own What You Can Rent" - Grant Cardone
“An asset brings cashflow into your pocket. A liability takes money from your pocket.” - Robert Kiyosaki

$1 billion for 20k homes is $50k a pop.  They will need a considerable amount more to hit that 20k homes target with other investors, developers, capital partners etc.  

I'm guessing there hasn't been much buzz because it feels more like a marketing stunt IMO.  Yes, the motive is great but California is notorious for killing housing projects and NIMBY-ism.  This will drive up costs per unit and reduce the overall delivered units.  I read on the news regularly about developers spending millions of dollars to build a few hundred units and in most cases, the jurisdictions and residents killing off multifamily projects that developers want to build.  Sad but true.

 My first MF property was a 16 unit acquired about a year ago.  I was learning and binge watching BP, Kiyosaki and Cardone so I guess I drank the cool aid LOL!.  In California, 16 units and up requires an on site manager, which is an extra cost but provides  eyes and ears on the property and keeps it maintained.  I do have MF properties in the 14-15 unit range and there is a slight difference in property management and maintenance.

That said, that first 16 unit was the best decision I made and am glad I listened to him a year ago.  It was a value add play and with all the work complete, will be selling it soon.  Cash flow is there but with nearly a $1 million to be made net before taxes, would like to trade up to larger deals.  The power of the # of units multiplying the value is very true.  Cardone has his style but alot of what he says has truths.

 but same building?  if not, try a lot split?