All Forum Posts by: David S.

@Wes Blackwell. Yes, I always take forecasts with a grain of salt but am interested in reading about the drivers behind the specific forecast.

You have a multifamily newsletter?  How can i get on the distribution list?

@Diane G.  Per your words, "The house I bought for $750K in 2004 is now $$2M.... Yes, it could go up to 2.1 or 2.2 by end of 2018... But I am very convenienced that it will drop back down to $1.5M in 1-3 years.....In stead of paying for $2M and pray for the 2.1, I will just wait for the $1.5M to fall on my lap by WAITING...."

You have done great in that investment!....Are you convinced enough of your 25% decline in 1-3 years to sell your property now at $2M, realize a $1.2M pre-tax gain and then buy it back when the market drops?....Or if you don't want to pay the related capital gains taxes, have you refinanced all the built up equity and maximized your war chest so that you can take advantage of the bargains, if and when similar properties drop back down to $1.5M?

Personally, I agree the continued rise in the Bay area real estate and stock markets for that matter seems unsustainable but who knows when the party will stop. That said, the longer it goes, maybe the larger the correction will be.

@Wes Blackwell. Thanks for your further thoughts. I think I might stick to hunting in Sacramento for now.

BTW, this article...

  https://www.zillow.com/research/hottest-housing-ma.. suggests that housing price growth in San Jose, CA will be greater than Stockton and Sacramento in 2018, driven by the continued hot job (tech) markets.  However, the hot job and tight housing situation in Silicon Valley is sure to further the migration trends to Sacramento and Stockton.

My guess is that a lot of investors invest in REITs as an easy way to get exposure to real estate and for the yield. These securities may act more like bonds when rising interest rates are anticipated.

On the other hand, one could argue that a rise in interest rates reflects a strong economy so the underlying assets should continue to do well.

The performance of the various REIT sectors probably reflects the underlying fundamentals of the RE sector they are in. For example, I think a lot of the apartment REITs reflect concerns over increasing supply and plateauing/declining rents in higher end properties which a lot of the large apartment REITs are focused on. The "Amazon effect" is causing investors to flee shopping center REITS in favor of industrial warehouse REITs, etc.

@Wes Blackwell. Have read your great posts on Sacramento and Stockton....your other post,  "Stockton: The Last Bastion of Housing Affordability in California" seems to have a focus on single family homes....For Bay area investors looking for multi-res in California (say 4-15 units), and assuming millennials are moving to Stockton because they want to own and not rent, would you recommend Sacramento over Stockton?

Also, can you share any  opinion you may have on the investability of multi-res in Chico?

I agree. We are already seeing softening in rents and purchase offers in San Francisco….But I am not expecting more than a 5-10% correction in prices in the SF Bay area over the next couple of years. Under this scenario, one should not be in a rush to buy. On the other hand, in hindsight, if one had the financial wherewithal to buy 2 or 3 years ago, they should have taken it rather than waiting.

By the way, @Diane G.,  would you mind sharing what your investment criteria are from a cash flow return on investment point of view for Bay area real estate?

@Manolo D. Thanks again.

I especially like these words..."we have all the specifications and air tight contract that can make them pay whatever the next contractor charges if they screw up."

Are you willing to share one of your standard "air tight" contracts?

@Manolo D.

Thanks for your input!....Is ACORD paper some form of insurance documentation?

Are you suggesting that we should always ask to be added as an additional insured? 
Would this be somewhat of a hassle for contractors? and is there some sort of $$ threshold where we, the investor, would not have to ask to be added as an additional insured, say $5,000?

Practically speaking, shouldn't making a decision to hire a contractor based on what is on the CSLB website, references and social media review sites be enough?

By the way, in your number 5 above, since they cannot issue lien waivers, does this also mean that they cannot register liens?

@Alex Corral. What would you do with that extra $100 per month in cash flow?

In your scenario, I think I would take the longer term/amortization if I was able to or planned to use the extra cash flow to invest in other properties/investments in the near term that will provide a return that is greater than the interest being charged on the mortgage. Otherwise, there is nothing wrong in using the cash or making the higher payments to pay down the mortgage faster and building up equity in the property.

@George Nyquist

Thanks! I think i found Leo's on Yelp.