All Forum Posts by: Brad D.

The SD Housing panel has approved them:

https://www.sandiegouniontribune.com/communities/san-diego/story/2019-10-10/san-diego-housing-panel-oks-movable-tiny-houses-as-new-low-cost-option

Not sure how much of the article I can copy/paste here, but let me know if it is allowed.

The full City Council needs to approve the code change in early 2020, and the Union Tribune says they are expected to do so. 

They will not be allowed to be rented for less than 30 days, need to be connected to city water, power etc, and there is apparently a long list of other requirements. But it sounds like even with the changes to make ADU's easier/cheaper, they weren't being built fast enough.

So what is going on here? Is San Diego trying to act fast before the state jumps in to force more affordable housing as they have done with other cities? I can't imagine anyone will want to live next door to a house with one or two of these in the backyard; but also I can't imagine a lot of people won't jump on this since it seems so much cheaper, quicker, and easier than granny flats.

If this is passed and investor/landlords start to do this, does it scale to the point of affecting rents, and thus property values eventually. It just seems to me the building/municipal/financial issues with ADU's have really limited their construction, but this could be different.

There's a saying in flipping, "You can buy right and do everything wrong, and make money; you can also buy wrong and do everything right, and lose money." I think this is true in Buy and Hold as well if you think of buying right and wrong in terms of where in the cycle you buy.

I would be careful taking direction from your local paper and your local realtor association GLVAR. Upton Sinclair said, "It's difficult to get a man to understand something when his job depends on him not understanding it."  In any case, the local sources, zillow, redfin, movoto, etc all need housing transactions taking place to exist. So you are never going to hear any of them say, "Don't buy now."

The difference between the national platforms and your local sources is that you can use the national platforms to get a better picture of how your local market is performing relative to other markets. However, it should be noted the local sources will always be the best source of deep dive info. It's similar to how the media operates in sports. If you want detailed info on the team at every position, what's going on, the local media is your best source for facts and figures. If you want a realistic assessment of how good they are, check national sources.

All that said, the Eli Segall article does open with "the market has largely downshifted from a year ago' and the headline quotes the GLVAR president calling the market the 'most stable in 20 years.' That's like overhearing your girlfriend tell her friends the best thing about you is how reliable you are; you pretty much know it's over.

@Jack B. if you're still deciding, I would say to wait. @Eric Fernwood I agree it probably won't be 2008 all over again, but it will definitely be significant. And it looks to me like Vegas will be the tip of the spear, from movoto trends:
https://www.movoto.com/las-veg...

Inventory is up YOY 70%, price is down 10%, days on market up a bit. It's worse than Seattle, Dallas or Irvine, other cities people are expecting to tank hard first.  But the good news should be that LV should have the buying opportunities first as well. 

Also, an interesting aspect to this is the the phoenix metro seems to be still doing well; I had thought (could be wrong) that LV and PHX followed very similar downward trajectory last time?

@Darwin Crawford and @Shiloh Lundahl, I will definitely look to have better neighborhoods, tenants and lower cashflow as a Remote Landlord. I've had properties in lower working class (but not warzones by any means) areas in the past, and managed them myself and they are so labor intensive, it would be almost impossible remotely. 

Here are the areas Invitation is heaviest in the Phoenix area for their SFR, which are all pretty good stock. These are nice areas and probably difficult to cash flow, but which do you think it's most possible to get deals that come closest, surprise, queen creek?

https://lease.invitationhomes.com/markets/phoenix-...

Top Cities

• Chandler
• Gilbert
• Litchfield Park
• Mesa
• Peoria
• Queen Creek
• Surprise

@Darwin Crawford Maryvale looks like it might be a little rough:  https://statisticalatlas.com/neighborhood/Arizona/...

Anything you would suggest in the light blue areas here? https://myottetm.github.io/USMapBoxIMO/USLwDispConc.html

Thanks @Wes Blackwell, I'll take a look at Casa Grande. 

@Darwin Crawford, I'm open to SFH or small MFH (8-20), but at this point I only have experience with SFH and Duplexes. So ideally, I'd find a 3BR/2BA 1300 sq ft house in an established, up and coming or gentrifying neighborhood at 180k with a motivated seller, get it at 160k. I'd pay cash, get it rented at 1300/mo, then get it appraised at 200k, and get a 150k loan. The rent should cover PITI, vacancy, repair, and management, and then on to the next one. Easier said than done I know. But with a decent downturn I could be getting all my money out on each house (my understanding is if you pay cash you can get the loan for whatever you paid or 25% of appraised value, whichever is less with no seasoning). So if I'm going to scale it, I would need to find properties in good shape, no rehab.

@Patrick Allen, good points about the downside of a downturn, making purchases tough. On the flipside to mitigate the downside of buying at the top, I was thinking about discount new construction in Buckeye or San Tan and Florence (if they get the water issue handled) if I were to buy sooner rather than later. If i were to buy older stock now at 190k, it could be worth 120k in 3 years. If I buy new housing now at 190k, it will either be 190k, or higher, or not exist in 3 years, since they won't build (unless somehow a builder went crazy as the crash begins).  

But right now it really feels like 2006 all over again, more so in some markets than others. 

Thanks for the replies. @Darwin Crawford that's an interesting take on rural ghettos. I know there are a lot of investors buying to rent. When the music stops, that could be a big issue. 

How does Tucson compare? It looks like in they have better cap rates, but slightly higher vacancy, lower rents. Do they get hit harder in a downturn as well? Is it more difficult to get management.

I'd really just like to buy the dip, but it's looking like Phoenix is lagging a bit behind Seattle/Portland/SF on that front and still going up, albeit at a slower rate than before. 

I'm curious what local investors think of Buckeye as an area to buy SFH's to rent, as opposed to Surprise, Mesa, Peoria, Mesa, Gilbert, Chandler.

On the pro side, it has decent prices, growth, newer housing stock, is somewhat close to Phoenix, decent price to rent ratio, seems to have ok schools, and is next to where Bill Gates supposedly bought a lot of land to build a smart city. 

On the Con side, it is a bit a bit farther from the metro, and not as established as the other areas mentioned, and doesn't seem to get great reviews on housing sites. 

The wild card is Interstate 11. I'm inclined to think it will help it, but some locals seem very against it.