All Forum Posts by: Andrew Yip

Hi there,

Just wondering if anyone has had any experience with rental properties in Palmdale or lancaster area during downturn /recession.

What happened to your current tenants?  how's the rental situation during that time?  and how hard was it hit during the downturn?

I heard that properties went down to even below 100k.

Sorry to ask these questions, but I invested quite heavily in the area and I need to prepare for the worst. Thank you

Thank you @Sam Shueh I'm also in high tech and have similar income to the professionals. Just few weeks ago, I got a bitter taste of life. One of my clients  outsourced development to dominican republic, thus it caused quite a  ding to my income and some panics in me. I also started and fund new tech projects ... with all these.. I really hope my real estate investment can stand by itself without causing extra burden on me. You're right many can go wrong especially during downturn when businesses are not doing well. 

I remember how difficult life was when I had nothing... I have to prepare myself especially that I have a family to feed now.  Most investors are always looking on the upside... but I think wise investor should prepare for the worse. 

My concern with class C investment, during downturn.. it'll be difficult to find qualified tenants and house price would generally take greater hit.  Do you agree with this?

This recession would probably a blib and not as bad as 2008. (expert predict 10-15% correction and 20-25% if it's long recession). Thus  with that number..  my inexperienced mind still think that the house value still make profit even after correction (#2-6). Is this true to your experience?  I assume you've been in several recessions in your career.

Thank you for your time on answering my question. 

@Dylan Vargas  I could sell the property and do 1031 exchange ... within 6 months.. if I can buy similar or better property. Yea I can buy multifamily property.. but currently the market  doesn't make sense. I'm prone to make mistake on buying property at this time of the game. Unless you know anything worth investing within or near los angeles area, and I'm also open with commercial properties.

Right now, my concentration is to make sure my money flows in the right place with minimal risk as possible. I think something is going to happen with the rate especially when they change Janet yellen in february. 

If there's any fix loan out there with less than 5% interest, I'll take that.. hehehe.. 

Thank you you @Robert C. and @Account Closed

Perhaps I'm not giving enough details up there regarding property no 1 and my primary house

my current house has mortgage balance of around 600k and also heloc of 300k.

property #1 used to be my primary property. it has mortgage of 3.3% and heloc that has balance of 286k. But total heloc is 700k.  thus I'm not sure if refinancing my primary or house number #1 would be something that I would like to pursue at this point, since both of them would give me investing leverage when opportunity comes.   

I'm just wondering what are your experiences on class C property investments during downturn.  

2 months ago, I burned more than 30k to fix one of the house. Tenant destroyed the house and took me 3 months to evict them.

for that property, thankfully, I was able to rent it out again and now it's more than 1% rule. But yea.. things can go the other way around if I didn't have the right property management.

my primary residence has around 600k balance and 1.5 M in value..   but I'm not sure about dissolving the old heloc to the current primary residence ,  since rate now is higher than before..      That means I would have higher mortgage  for total balance of 900k.   Thank you

Sorry for the break down... it got truncated. I'm attaching the image. Thank you for your help

Hi @Jim D.  sure... here's the breakdown

properties breakdown:

All of them are single family house,   house no 1 used to be my previous house and it has heloc balance of 286k 

but APR is only 3.3% for the main mortgage. Rent is low because I only rented out the rooms, I could rent the master room.. and get another $1600

FYi, These are the balances from December of last year,

Thank you @Kristina Heimstaedt @Alex Lucille @Dylan Vargas for responding to this! just a bit more details about my situation.  I have 2 other properties that has plenty equities.. about 800k and 500k. I utilized Heloc on one of them, but I 'm not planning to refinance any of them since I got record low interest on them. 

The chips that I could play around is with the 6 properties that I have. If I were to sell them... I will be making gross money between 103 k to 111k  ( sorry I made a mistake when writing the original post) but then again I have to calculate the renovation that I did, agents, bang on the tax...   so I'm guessing net profit would be about 55- 80k for each houses.

In terms of loan, I don't have much room on this, at most I could cash out 80k... probably 100k if I'm super lucky on the appraisal.   so that would leave my heloc to 200k.

Or should I do combination... selling 1 house and refinance?  so I would be left with around 130k in heloc?

I agree with Dylan that during recession and tough times,  people would have real hard time and I need to really minimize the risk. Given the properties in class C neighborhood, it might be hit quite hard on the price.. and probably it's difficult to replace tenant during that time. 

I just got married last year and now have a baby. There are lives dependent on me, thus I have to be wise on making decisions and not just following my guts. This is why I 'm asking for help at this forum.

Thank you for your help

Hi Bigger pocketers,

Through bigger pockets, I've been a big fan of BRRR. I bought and hold properties in southen california area ( total 6 investment properties). My investment properties would be considered class B or C... with close to 1 % rule (0.8-0.9%) rental income.

Properties value has gone up.. and if I were to sell the properties I would have been making around 50-70% gross profit.  ( about 55k-70k)

Now the problem is that I have about 280k in helloc... that kinda burden my finances especially due to FED increased rate. I feel that I need to take care of this problem ASAP before rate goes up to 5 or 6 % ( currently it's the same as prime)

I need your advice, 

Should I start selling my houses in order to pay off the helloc? or should I do cash out refinance... ( max I could get is around 80k for all the properties) and continue the BRRR strategy?

or what other better way to handle this situation?

I'm not sure how far are we to recession, this make me nervous especially on holding C class investment properties.  During recession, house price went down significantly and there were scarcity of qualified tenants.

Thank you very much for your time and advice.

Hi Jeff

Could you please add me into your email list? I would like to meet Bpers and exchange some knowledge. Thank you