All Forum Posts by: David Schach

 Yeah, not sure i would call them great places to live. One could live there if they had to. But certainly wouldnt rank anywhere near the top of places one would move across country for. If you grew up there, went to school there, etc, you could make a decent life there. Not bad places to live, not great either. Acceptable. Atlanta has some upside but the weather is awful. I dont know much at Kentucky, other than its Kentucky. Its an after thought for 99.9% of the country i would say.

http://www.huffingtonpost.com/2014/12/29/best-cities-for-millennia_n_6374304.html

 I always love these affordability charts. They without fail prove that the places where people want to live are the most expensive. I can write this article today, yesterday and tomorrow. Very very few people WANT to move from CA to Detroit, some are forced to. Others chase the low costs. But for the most part people want to live in great cities, NYC, SF, LA, Boston, etc etc etc. They will always be the most unaffordable. if you want affordable, just drive 4 hours into the middle of nowhere and buy a house for $30K. 

Yeah, vacant duplex, which in my estimation adds a 10-20% premium on the value in SF. Basically you are prepaying for less headaches when trying to remove tenants either via OMI or Ellis Act. both of which have potentials to reduce the resale value on the exit via TIC sales.

I agree with your thinking. My numbers for me personally put the purchase price right around 1.1MIL, anything north of 1.2MIL scares me, because at 1.3MIL a slight hiccup in both directions, costs rise, prices fall and your easily upside down.

And, lastly. I am tending to think it will go to an owner occupant with enough stomach and cash for a nice remodel and then sell off one unit or rent it out. At 3500 a month in rent thats a nice dent in your PITI payments.

The condo conversion is the second step in SF. First step is forming a legal TIC and selling off TIC units. After 1 year of TIC occupancy its on condo fast track, strictly because its a duplex. Large MFR buildings have many restrictions about TIC to condo conversion. And there is a moratorium on condo conversion until 2024.

 Looking into funding options now, most likely hard money lender in SF.

Rents would be in 3500-4500 range per unit.

I am looking at a duplex in SF, list price is just under a million. This will go over asking and probably by at least 15-20% maybe more.

this property needs 500k worth of work. plus or minus 100K. 8-10 months turn around time

Exit strategy would be to split the duplex into 2 TIC units.

One unit could re-sell for 1.1-1.2 MIL the other 900k-1.0 MIL.

On the low end re-sale could be 2MIL and high side costs 600K assume another 200K in soft costs (closing, carrying, permitting, plans, etc)

On the high side resale 2.2MIL with low estimate on costs 400K and still assume 200K in soft costs.

Would anyone pay over 1.2MIL?

 I did a long term ground up build and recent sold it. I am actively looking in SF for a 1 year fix and live in flip, but its very very challenging. Everything is priced and or sold at max value, even the properties that need rehab. So for example a fully repaired property might sell for $1,250,000, but needs $250K of work, that final closing price will be slightly over $1MIL. there is nothing left on the low end. The only places I am seeing the numbers work are on the high end. Getting into a 2MIL property that needs 1MIL of work that can sell for 4-5MIL. On the mid-high end there is a lot of money to be made. but the entry hurdles are very high, you need to have cash and LOTS of it to play in that world. it can be done, but its tough.

That is in the back of my mind right now. For one main reason, if prices flatten or start to decline at least I have a place to live that i am happy with. I might have to ride out the bottom cycle.

 I dont have a dog in this fight, just interesting reading at dinner. BUT, if it were me, I would LET IT GO! just forget you saw anything and go back to your normal daily life. IF this is coke, most likely its not the first time hes done it and you never noticed anything worrying before. They have a saying about sleeping dogs!!!  I think its starts with "dont mess with texas."

Here is an interesting article on the cities own research into the impact of AirBnb

http://www.socketsite.com/archives/2015/05/analysts-airbnb-findings-and-recommendations-for-san-francisco.html