All Forum Posts by: Derek Daun

I know this is an older thread, but I started seeing some pricing on the new developments coming online, and I do think these developments might have a small impact on the greater housing market in Sacramento. 

Particularly, I think the premium markets might get some temporary price ceilings inserted at the price levels the developments are selling for. If you can suddenly get a 2000sq/ft townhouse, brand new, with all the amenities, and a built in garage, for 600K-ish, the 100 year old 1800sqft bungalows might cap out at that price. 

I'm not sure if this could cause price decreases , but it could cause appreciation rate slow down. This affect could trickle down a little, but probably wouldn't affect transitioning neighborhoods much. 

Granted, there might be a bunch of suburban-esc buyers who only consider new developments, and would like to move closer to downtown if the supply existed. Given enough of those, there might not be much impact after all. And actually, something like this could actually bring more stability to the market, and allow more gradual but consistent gains. Then again, what do I know, I'm just some guy who spends too much time reading the MLS.

Are there any issues in that neighborhood with the weird city and county lines?

@Joe Bertolino, What do you consider Central Oak Park?
At one point people were labeling 5th Ave to 12/14th ave as "Central", I'm not sure if that's the case.

@Gordon Cuffe

The north side of North Oak park (areas close to the non defined area formally referred to as Med Center by people not wanting to own up to living in Oak Park before living in Oak Park was cool), has seen sale prices hit mid 300s recently. Anything North of Broadway is now pushing 300k asking price.

The exception to that would be poorly rehabbed < 1000sqft  2/1s. But these are tweeners that don't make sense for investors. I wouldn't be surprised if we don't see anything < 300k north of the Lubin Elementry school boundary by mid summer.

I was hoping to acquire another Oak Park property this year, but now I'm not sure I'll be able to stay north of 12/14 ave or not.

Oak Park is getting extremely competitive right now, and going into Spring it's just getting worse. You're going to want to check out some other areas to have back up options. 

@Joe Bertolino You might be right, but I think 1500 is a little high even given all the rent increases. 1000 seems about right for a sub 700 sqft place. Maybe 1200. 

My first instinct is to agree with other saying this is a bad investment, but I'm a little biased. In my opinion, MLS listed multi-family in good neighborhoods in Sacramento are not investment grade property. The problems lie with all the 1031 money come from the Bay area. There's a lot of demand for these properties site unseen, even if they make poor returns because it's an okay place to park money and make a little bit off of it. You need to go into more marginal areas in order to make some money on multi-family in my opinion.

Then again, to play devil's advocate, you have a lot of valid points. You'll pay off principle, get to live in a nice neighborhood, not pay to much more than you were renting, and maybe get a little appreciation.

Like other's mentioned, you also to take into account all your expenses - maintenance, sewer, water, garbage, and vacancy. Also, you have to take into account that you won't be able to take deductions of the rental portion of the property towards your ordinary income. Those will just be carry over losses, not actually money back in your pocket.

Overall, it's not the best deal, but possibly better than nothing relative to your goals. I would do an ROI comparison between this deal compared to continuing to rent while investing in an investment grade SFH elsewhere.

@Jeff B., in general I agree with you. We have trimmed the tree in a healthy manor to mitigate the major concerns. That doesn't mean we just cut off all the branches on our side of the property though, which is what would be required to take a conservative approach. In addition to that looking really bad, it could have legal consequences.  Not very likely, but possible.

Say I aggressively trim the tree back. A 100 year old tree, weakened by drought, it could die. Two year later, a windstorm blows the whole tree down smashing two houses. I could be held liable.

My wife was able to swing by and take some pictures while I talked to my insurance company a bit.

It looks like a ~200lb branch fell about 20ft on to the roof. Luckily this house had a substantial remodel, and the roof is very well supported including kneel walls. I doubt the roof on my primary residence could have withstood the force. (Granted that house isn't parked under a giant cedar tree)

It looks like the branch was originally hanging over my neighbors yard, so it is not something I could have legally trimmed even if I wanted to. Based on the pictures, it looks like it was a live branch though, so it wasn't necessarily negligence on my neighbors part. 

The surprising part is that my insurance company wouldn't have cared about negligence. I mentioned above that I've had conversations about the tree in the past with my neighbor. As suspected, that only matters if I have officially notified her in writing that her tree is a hazard. Without that, she can't be held liable.

So, it looks like in addition to have to some substantial clean up, I'll also have to be serving my neighbors some papers soon.

I should add that there is actually a high likely hood the branch came from a spot that was originally over my neighbors yard, in which case I assume there's no question of it being my neighbor's liability if the cause is neglect.

I just got a call from my tenant informing me that very large tree branch from the neighbors tree fell on the top of the house.  I haven't gotten chance to inspect it yet, but there is likely to be some shingle and drywall damage. 

This leads me to a couple questions:

• Is the neighbor's insurance liable even if the tree branch was hanging over my property before it fell? I know in California I have the right to trim the branches (with some limitations) that come over my property, but do I have the obligation?
• This tree is directly next to the property line, such that trimming all the branches over my house would take off half the branches. Could this limit my obligation/right to trim it? The case law regarding limitations on trimming your neighbor's tree seems ambiguous, for example you can't tree the trim if doing so could harm the tree. 
• Should I preemptively contact my insurance company? They did a thorough inspection before insuring the property, but I'm concerned they might second guess that decision if I'm liable of the branches over my house.

Some more background information: This is a hundred+ year old neighborhood, that back in the day, decided planting giant cedar tress in the front of the houses was a good idea. These trees are massive: 60-80 ft tall, trunks 5 feet in diameter, branches the size of trees. One such tree is in my neighbors front yard, about 10 feet from either of our houses. When I moved into the house as an owner occupier 5 years ago, the tree was extremely neglected, with many dead branches. We had some work done on the tree on our side of the house, basically removing all the dead branches. The owner of the house next door was not in any condition to cooperate with us at the time. (Original owner passed away, daughter moved in and promptly picked up a meth habit). Since then the house was flipped. We've had multiple conversations with the current owner regarding the state of the tree, so she is aware it is an issue, but never anything in writing.