All Forum Posts by: CK Hwang

@Account Closed, given your desire to have a house of your own, start up a property management company and the desire to own rental property, have you thought about perhaps buying a duplex or fourplex in the LA area, living in one unit and renting out the rest? 

To me, that seems like the best way right now to get started and crosses off the most checks on the to do list. 

When I first started out, I used to do out of state investments (i still have a out of state rental), but personally, I felt I was so detached form my investment, my education was fairly limited (nothing wrong with that if you want hands off), but if you're wanting to start a property management company, I would be hands on It's not easy starting up a business being hands off. I can see so many ways you can go about doing this in LA. Lots of inventory there to work with. It's a huge city. Not sure where you are located, but I see good fourplexes in Long Beach for sale. 

Also if you are dead serious about doing the LA market, we should talk more when you have time. I am trying to expand my business into LA, and I think we could work on some opportunities together. 

Just my thoughts. 

Erin, personally, I think your question is going to start debate that will runs for 50 pages or more but 99% of the debate will have no relevance to really answering your question. Why not try this. Tell us exactly what you're trying to achieve financially, lifestyle wise, business wise, etc, etc, then it's easier for us to tell you based on our experience if investing locally or out of state makes sense. 

Hi Lena, 

welcome and hope you can join our BP metopes nice a month in Lake Forest

http://www.meetup.com/Orange-County-Real-Estate-Investor-Networking/events/225780431/

I've always been a capital gains investor, so I tend to favor the markets like SF and LA. Low rental returns compared to Chicago, and Midwest for sure. Is one better than the other? no, I think each one is just a different investment strategy for what you want in life. 

Contrary to most investors here, I tend to play the capital appreciation game. First, for me to get the same kind of returns from rental as I do from capital gains, I'll need to hold a fairly large portfolio of rentals...more tenants, more headaches. 

Second, I do have some rentals, but I notice it really doesn't take much to wipe out cash flow. Factor in the occasional bad tenant, vacancy, broken this or that, and it goes south pretty quick

Third, in areas with high cash flow, I find the ratio of land value to asset value to be inverse to market like SF and LA, which means that come time to sell the house, it often takes a tremendous amount of money to rehab the house before it can be put on the market. In extreme cases in some areas like AZ and Texas, the property can even be less than what it was bought for due to the low land value and the condition of the asset. 

Fourth, at the end of the day, I just really really like the joy of watching my investors cashing big checks with lots of zeros at the end. Brings tears to me eyes when I see them celebrate. Hard to do just on rental return. 

This week is going to be a good week for my investors. They are cashing in 2 big checks in investments my company made for them. $700K (net after commission and fees) on a $450K investment (3 year hold) and a $2.7M (net after commission and fees) on a $1.5M investment .

Second one is a 7 year hold, but to be fair this is a commercial property so not pertinent to the discussion in a sense but just to consider how many properties and tenants one has to deal with just to walk away with this amount net. And figures don't include the rental returns they received, but this was low, I think in the region of 3-4% nett per annum. 

But what I mean to also say from the above examples is that a lot of investors see capital appreciation as this voodoo science...it might happen it might not. Personally, I think if you invest away from the coast, yes it is voodoo trying to spot capital gain in the middle of AZ or Ohio. But if you have lived and invested along the coast, or anywhere that has a shortage of land i.e. California, Hawaii, Hong Kong, Singapore, Melbourne, Sydney, London capital appreciation isn't that hard to spot or compute if you know the market.

Personally, I don't see capital appreciation to be more or less complicated to compute than rent appreciation. In fact, in areas with high cash flow (admittedly these are not markets I understand at all), what's to say some big employer doesn't move out and suddenly rents drop? Nowadays it's so easy for some corporation to just pack up at leave or lay off tens of thousands on a whim. For example what's going on in North Dakota right now. The what?

So in summar,y no, I don't think you're at a disadvantage investing in LA or SF or NY, you just make money in a different way, and it's for you to decide if that's ow you want to make your money. 

Nothing positive? Offer your parents 12% returns on funds invested with you and soon their negative will turn positive. :D

Everyone wants someone to blam. If it's not the Californians, it's the chinese. If it's not the chinese, then the indians, then the federal government, and on and on and on. If i'm just buying to flip it personally won't be a big deal. If i had live there....... 

Yes, I would certainly be wary of zillow's valuation. If my property values were really on par with Zillow's estimate, I'd sell and retire tomorrow. Alas, this is not the case. 

Hi Dante, I dont invest in Malaysia but do invest in Singapore. Can't really tell you much about Malaysian real estate, other than be careful of the Iskandar project. But just wanted to say hi. 

@Auriel Orozci, if you're not too picky about having the exact house you want (since this is your first home anyway), have you ever thought about looking for homes for sale with lease to own options? This might given you the time to overcome the hurdles to obtain a conventional 30 year loan. I don't know how many owners do it in Washington, but they do pop up now and again here in OC. Just buy carefully and make sure the deal is a win win for both parties. 

Sigh, one can only hope. I've experienced 2 major real estate crashes in the last 15 years, and each time, I walk away wishing I had bought more. 

But back to your question, from my point of view here in Orange county, is there going to be a crash? No, but it depends on how you define a crash. Could there be a dip in home prices i.e. 5% down from current prices? Possibly, if the interests rates go up and the economy keeps the way it is, which I believe it will. 

On the sale of my last few houses, I've noticed the buyers have really had to stretch themselves to buy the houses, with all sorts of contingencies that wasn't previously a factor. The buying demographic for the given home is older and wealthier than one would normally assume for the given neighborhood.  

That being said, my business is so small that this sampling really has no statistical significance, however, it means on my buys I am offering less (based on my personal observation). I know a few flippers have been feeling the same way around my area. I guess repeated enough times, this could affect the overall local market.  

So in short, my take for my are, crash? No. Dip? Probably. Flatline 1-2% growth? Yes