Monday, October 7, 2013
Blog Post 1: Madera's Emerging Real Estate Investors
Deann and Jimmy Liu: Madera’s Emerging Real Estate Investors
Deann and Jimmy Liu have accumulated 10 homes in Madera since 2009. Prompted by a near 50% reduction of their stock investments, these restaurateurs decided to invest in a tangible asset that gave them more control of their financial future. With a proven strategy based on location, square-footage price, and other factors they will continue to pave the way for the future of their family.
When did you begin investing in real estate, and what about the opportunities intrigued you?
I started investing in real estate in 2009 with my wife so that we could plan for the future and retirement. We own a restaurant in Madera, and being business owners we feel that investing in real estate gives us the best opportunity to plan for our retirement. Working as entrepreneurs, we do not receive financial opportunities such as pensions and matching 401k contributions. We invest our money in real estate and stocks independently.
How do you weigh the risks and benefits of investing in real estate as opposed to the stock market or other investment vehicles?
The stock market is a gamble and is not tangible and other investments do not pay out as well. We feel that with proper planning we can consistently receive a large return on our real estate investments.
At one point we had over a million dollars in stock investments, and when the economic crisis during the early 2000's occurred we saw half of our stock portfolio value disappear. This helped in our decision to begin investing in properties and renting them out. Madera has a relatively stable housing market, with home values increasing and deceasing with modest change. We feel that investing in our area is safe and in the long-term will provide us a healthy retirement.
Do you feel that the Central Valley is a good place for an aspiring real estate investor to begin, and if so why?
Yes, in the years of 2009 and 2010 because the prices were ideal for an investor. However the market has rebounded so we have slowed down our investments due the increase in prices. We currently have 10 investment homes, and we will be more selective and seek opportunities that fit our strategic criteria. We purchase homes that are below comparable value for the surrounding area, and prefer homes near middle class school districts.
What have been some of the difficulties in the real estate business that you have faced? (Tenants, banks, etc.)
The only problems encountered are tenants making rental payments late (rarely) and the down payments were 25%-30% down payment, and recently the percentages have increased to 30%-35% due to the incline in the housing market.
How do you evaluate a property as a worthwhile investment?
We choose homes built no earlier than 2000, which results in lower maintenance and upkeep. Also I try to find homes with square footage prices between 50-90 dollars a square foot. We get the most bang-for-our-buck in foreclosure and short-sale homes in middle class neighborhoods.
What are you visions and goals for your real estate investment portfolio?
To invest in more investment homes when the housing market declines. Being that the homes we have accumulated are middle-class homes that we purchased far below their market value, we will continue to follow this strategy. We often purchase foreclosure homes and do our own managing of properties.
Also we have purchased and are in the development stages on a four-story condominium in China. That will be our first real estate investment outside of the United States.