Money & Investing | Asian American Poll

MONEY & INVESTING
(Updated Tuesday, Apr 1, 2008, 05:11:58 PM to reflect the 100 most recent valid responses.)

Who handles the household checkbook in your family?
The Wife | 74%
The Husband | 26%

Which of the following ethnic groups attaches the most importance to making money?
Chinese Americans | 51%
Vietnamese Americans | 14%
Japanese Americans | 1%
Corean Americans | 30%
Filipino Americans | 4%

Which of the following do you consider to be your most important investment method currently?
Buy/Upgrade Own Home | 39%
Other real estate | 4%
Stocks/Options/Futures | 31%
Mutual Funds | 10%
Bank Deposits | 16%

This poll is closed to new input.
Comments posted during the past year remain available for browsing.

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WHAT YOU SAY

[This page is closed to new input. --Ed.]

Repost;

You have some good knowledge of the real estate rental market.

I was wondering how can you find the MLS listings if you aren't a broker or is it required by law that you can only view this prized info through a real estate brokerage firm? And why is that? Is it because they want you to get a salesman to view the info for you and so their firm can make a sale?

Also when you are looking to buy rentals should you buy the whole thing or just put the minimum down(is it a third for rentals?) and make sure that the mortgage is paid off every month by your tenants?

I have a good sum of money and I just want to pay off the whole thing so I don't have to worry about a mortgage when I start to do this real estate business. My dad has rental properties but now he is retired from his investments and is doing the Asian dad thing of me doing it myself without any help from my dad. It pissed me off but I figured I can do this business just as well as he did it but I want to limit my losses by buying a piece of property and learn as I go along without fear of keeping up with the mortgage payments every months, especially now since everywhere there are vacancy rate up and every good place is willing to offer free rent to attract tenants so I know many places are either breaking even or paying the mortgage out of their own pockets.
Real Estate Novice Monday, July 08, 2002 at 00:34:11 (PDT)

To: MLK

Yeah, the Jag is kind of a girlie car. I think the male-equivalent has to be the Aston Martin. When I was younger, I was fascinated by fancy cars. Probably because I couldn’t afford them when I was younger. But now I think my priorities have changed. I’m happy with my SUV.

Thanks for the kind words. You seem to be very educated yourself – and you definitely have a sharp tongue. ;) I only have a BS. If I can get my finances in a row and make sure that my mother is taken care of, I’d like to go back for an MBA. After that long talk with the law student on my way back from New Jersey, the idea of a JD sounds interesting. I can’t see myself in the tech field forever. But heck, if I don’t have children before I turn 40, I’ll probably have Alzheimer’s when they go to college.

I think I missed a couple of questions of yours earlier.

Yes, I’m in the Bay Area. I don’t intimately know the real estate market in the South Bay, but worked down there for about 6 months over a year ago, right off of Great America Parkway. Yes, I trekked that God-damned 880 south-bound every morning. I did have colleagues who rented down there, so I caught wind of what they pay.

I’m not sure if the real estate market will bomb as people say. As we look back, the real estate market, in general, follows a decade-cycle. It sucks in the first half, then kicks ass in the second. Just look back. The last down cycle was extremely bad (early 90’s). But if you look closely, the preceding up cycle (late 80’s) had a lot of acquisitions that were highly leveraged, i.e. 5% down, 10% down – you know, the whole junk-bond mentality of the late 80’s. When the market tanked, the equity was quickly wiped out and people walked away. It got so bad that the Federal government created the Resolution Trust Corporation a.k.a. RTC. I’m sure you’ve seen all the Tom Vu, Robert Allen, etc. commercials on how to benefit from that. Fact is, very few did because the RTC had to sell the properties from the failed S&L’s at close to market price, in a market where no one wanted or had money to buy. Money was tight – with all the foreclosures, monetary policies of the early 90’s became overly strict as a backlash to the loose monetary policy of the late 80’s. The ones who benefited from the foreclosures were the ones who could afford to buy the properties wholesale – Real Estate Investment Trusts a.k.a. REITs. Not little gals and guys like you and me. REITs are usually financed by insurance companies, but you can also buy shares of them in the exchanges. Their buying power allowed them to deal with the RTC by the bulk.

This down-cycle, I think, is very different. In the last up-cycle (late 90’s), people bought with a lot of cash – mostly from the stock boom. These are not highly-leveraged acquisitions – there’s a lot of equity in them. So if you look at the loan-to-value a.k.a. LTV ratio, the vast majority of properties are still under 90%. So people are not walking away from the properties this time. With less supply, the prices remain high. Also, the long-term interest rates are low compared to the last down-cycle, and money is not as tight. Recall it was Greenspan’s overly aggressive increase in the interest rates in y2k that started this economic debacle (ok, we had underlying problems as well). Now the Feds are responding with extremely cheap money. For these reasons, I really think that this down-cycle is fundamentally different from the previous down-cycle, and therefore I don’t think we’ll see the properties tank like they did in the early 90’s.

If you take a closer look at the rental market versus the property market, you’ll see that while rents are going down and vacancies are rising, the prices are not falling nearly as much. South Bay and some of San Mateo are probably hit more, as is SOMA (South of Market Street, San Francisco). But those are Internet hubs. If you look at other places, the drop is not nearly as significant as the rental drops. In Oakland, Berkeley, and San Leandro, prices have remained steady, even with rents dropping. What does that tell you? There’s still a lot of confidence in the real estate market.

And there’s the whole gloom-and-doom about the IT jobs. In the job I work at, I visit many customer sites and work with their IT staff. Corporations have taken the last two years to lean out, and from what I’ve seen, they’ve leaned out so much that they’re risking not having the expertise in supporting their IT infrastructure. Yet, they are holding back on the hiring, for a number of reasons. Obviously, they’d like to show a profit. Second, most of the unemployed are so desperate that they’d take anything. Employers know that these people will jump ship when they have another offer and don’t want to bother with short-timers. What I’ve seen more is that employers are hiring contractors directly or through outsourcing companies. In time, they’ll hire them directly, and the economy will get better, outsourcing will be passé, companies will grow leaps and bounds, then the economy will tank, everyone will be laid off, and the cycle begins. That’s exactly what happened 10 years ago.

I know you mentioned a triplex a few days ago. If you’d like to keep it private, you can always email me. But of course, this offer doesn’t mean I’m drooling over you. ;) But either way, do this for yourself:

1. Get together the down payment. Make sure it’s liquid – equity line, cash, stocks you can drop, etc. You don’t need cash, just be prepared to have it.
2. Get pre-qualified for a loan. You can get pre-qualified without a property in mind – just make sure you get the right profile – 4 units, $800k, $1.2k rent each, etc.

You’ll be that much more a serious player when you have this, and brokers will know you’re serious and deal with you accordingly. I’ll be happy to tell you what I know, but since I’ve been out of the market for awhile, and I’ve never been a broker in South Bay, I’ll only be doing you disservice acting in any way other than advisory or pointing you to the people I know.

Repost printerisoutofpaper@hotmail.com Sunday, July 07, 2002 at 20:13:50 (PDT)

To: B.Lee

I’m not sure if I feel comfortable with buy real estate on the Internet. I can see buying stocks – it’s a liquid and relatively efficient market. In real estate, the market is much less efficient, so if you know your way around, you can get below-market deals. You basically want to get deals few, if any, other people know about. Usually, the seasoned brokers are the ones who know.

(In California) You can try going to the Recorder’s office and be placed on a list for “Notices of Defaults” – these are the notices that are sent if a borrower is 3 months in arrears. However, you’re not the only one fishing for this, and when the property does come on the market, you’ll have to bid with cash. And when they do get bidded on, you’ll likely find that the borrower has reinstated the loan. One other place I can think of is tax lien sales – you go to the Tax Assessors office and they can give you a list. However, these are as-is, and much of what they offer are garbage.

The biggest gotcha in buying a property in the auction is whether or not the property has clear title. That’s why when you buy properties in the “conventional” way, you get a title company to give you title insurance. They do a title search, and if in the future a lien pops up, the title insurance protects you. Without title insurance, you’re on you own. So be careful if you’re buying as-is.

So the bottom line, I believe, is that unless you really luck out in the foreclosure-type arena, it’s really hard to get the one-in-a-million deal. And since we’re professionals busy working at the jobs we have, why not leverage good brokers? All the great deals made, from what I’ve seen, were all done before they hit the market. But of course, I’m in the Bay Area, so the atmosphere may be different elsewhere. Where are you located? Do you own rentals?

How to find tenants? In a good market, they’re all referred to me by existing tenants. In a bad market, the best is a local news-paper. I don’t mean big publication like SF Chronicle, SJ Mercury, or Oakland Tribune. I’m talking about the neighborhood papers. The big ones always get the Section-8 tenants (here in California, Section-8 is government subsidized). I guess I just don’t like to run a ghetto building.

Repost Sunday, July 07, 2002 at 20:11:29 (PDT)

To: AC Dropout

Yes, credit check does show some pattern of payment – or lack thereof. However, it’s really low on my list, mostly because it’s difficult to read, it’s usually outdated, it’s full of errors, and the worst part, it delays my getting back to the prospect. In a bad rental market, like in 93-94, I lost a bunch of good prospects just because of waiting around for a credit check – and that’s waiting around in the real estate office I worked at!

This is the process I’ve used and has served me well:
1. Never answer the phone. Screen the calls. When some idiot says: “This is Mr. Jackson. Page me at xxx-xxxx” don’t call him back. Mr. My Ass. You want me to page your ass back? You can tell bad attitude on the phone. If it sounds bad, it probably is.
2. Meet the person, but schedule the meeting to overlap with others. You don’t want to have no-shows here and there screwing up your time. Further, when a prospect sees another prospect, there’s a feeling of competition. But don’t schedule the appointment at the same time. You want some time alone to talk to the person.
3. Get them to fill out the rental application right then and there. It’s unlikely they’ll take it home, come back, and drop it off. That’s because the next place they see will make them commit. And you’ll lose the prospect.
4. If the prospect looks good on paper, tell them they can have the unit pending verification. Have them write the deposit check. You want committal right there. In effect, you’re doing the same thing the next landlord is doing to you in #3.
5. Tell the prospect that you’ll be doing checks. Let them know to fess up all the dirty laundry. You’d be amazed how they sing – and tell you things you’ll never find out on a credit check or employment check.
6. Check employment – if the prospect has been with the company for more than 3 years, that likely shows stability. I think this is where you can get the same stability information as you would in a credit check – so I don’t bother with the credit check. When you call the workplace, call the general number from the Yellow Pages. The number they gave you might be to their cocaine buddies.
7. Personal references – call them up – preferably at work. Same as #6.
8. Previous landlord – not the one they are currently staying with, the one before that. The current one will not want to give up a good tenant, but will gladly give up a bad one. The previous landlord has much less motivation to send you a lemon.

In a good market, such as 96-99, I never really had to do much. Before a tenant gives me a 30-day notice, I’d have other tenants refer their friends to me, and I’d have the deposit and first month’s rent before the leaving tenant vacates.

Repost Sunday, July 07, 2002 at 20:11:00 (PDT)

MLK,

I think Repost is using "ping" in a colloquial term of making contact. I doubt he's going to post his IP address on this board so we can all have a turn in hitting it.

I don't know the just-cause eviction laws. Basically the only way to evict a tenant is to either raise the rent or if the tenant doesn't pay. However, there is a 4 month waiting period before you can file an eviction with the courts. So the loophole a tenant can take advantage of is pay one month's rent after 4 months. Then you have to file another notice with the court.

Rent control was repelled in NYC a few years ago. Only a few building in NYC are rent controlled due to gov't funding
AC dropout Sunday, July 07, 2002 at 13:48:44 (PDT)

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