All Forum Posts by: Jerome Kaidor

"Uninhabitibility" - they ALWAYS check that off on the form.  

@Collin Schwartz - congrats on your success!  I can echo the "hard work" part, especially at the beginning.  I did it in the early 2000's.  I had a good-paying job at a Silicon Valley equipment manufacturer.  One day, I noted that the company stock had fallen from $96 down to $0.48.  Yes, that's right, forty-eight CENTS.   I couldn't help but predict that it would have some effect on my job.

   So I started buying apartments.  In 2003, I bought a 52 unit complex in Fresno.  My schedule at that time:  wake up at 5:00AM,  do landlording stuff till 9:00.  Drive to Silicon Valley ( two hours driving a day ) , work till 7:00 or so, go home and crash.  Do it again the next day.  On weekends we would drive to Fresno.

   On the job, they zapped me around the 3rd or 4th round of layoffs.  I felt like asking "What took you so long?".   The boss did comment that "I chose you because you're the rich guy".    The package added up to 6 months of pay for doing nothing.  The complex became profitable just about when the package ran out.

   Haven't worked a W2 job in 15 years.

@Anton Ivanov:  Great Story.   You shall be both RICH and YOUNG at the same time.  Wow. Поздравляю!

@Jay Hinrichs:  WRT  paying off the loans - I have done the opposite.  I refinanced a property in order to get some cash out AND be paying more interest and less principal.  It's nice to have a property gradually become totally yours, but the tax structure does not support it.  Paid principal is not tax deductable.  So you have this money going out every month and you have to pay tax on it.  So I got this pile of cash out, and am throwing every penny back into the buildings.  Structural repairs, paint, roofs... you name it.

I think Hayward is a good bet.  It's a very do-able commute to Silicon Valley.   I live and own apartments there.  One small snag to investments - Hayward does have rent control.  But it applies ONLY if you have at least 5 units in Hayward.

Don't know if it matters, but Hayward has a large Indian community.

I own an 8-plex in Hayward.  The rental inspection program became annoying in IIRC 2011.  The economy was in the dumps, nobody was building anything and I imagine that they had a bunch of inspectors sitting around twiddling their thumbs and wondering when the big layoff would happen.

   So they came out looking for blood.  "Let's look at your water heaters"...."Got a permit for that one?".  

   A couple of Hayward idiosyncrasies: Until last year, they required metallic pipes and traps under all sinks.  Whereas the real world has moved on to ABS.  The other one is retrofit vinyl windows.  Most jurisdictions allow these to be installed without permit, as long as there's no structural changes.  Not Hayward!  

   So they found some 11 retrofit vinyl windows.  Nope, no permits on file.  So I had to dig through my paperwork and find the original contracts - over a period of several years - for those windows.  Luckily, most of them had been installed by Home Depot.  I went back to HD, and escalated it all the way back to Atlanta.  HD made good on it - they pulled the permits, their dime.   Two retrofits didn't meet modern egress code, and they replaced them.  

   I couldn't find contracts for two windows; I'm guessing they had been installed by the person who sold me the building.  So I went down and pulled permits for them myself.  Snag:  Hayward does not issue "Owner-builder" permits for commercial properties.  All permits for these properties MUST be pulled by licensed contractors.   I went down and begged, and they made an exception.

Aside from that one year, the inspection program hasn't been a big deal.

In 2009 a legal challenge was mounted to the inspection program.  I think my lawyer was involved.    Basically, the inspection program requires landlords to force the tenants to allow city inspectors to enter their apartments.  But California law limits the reasons for landlord entry.  "Inspection by a local government" is not one of those reasons.

---------------------- snip -------------------------

In its final ruling the Court of Appeals found that:

• The City needs the tenant’s consent to inspect the rental unit. Without the tenant’s consent the City must obtain an inspection warrant.
• California Civil Code §1954 does not apply to the Hayward ordinance because the ordinance affects only the conduct of the City and not that of the landlords.
• A landlord is required to make only a “good faith” effort to obtain a tenant’s consent to facilitate a City inspection.
• A landlord cannot be held liable for a tenant’s failure to consent to an inspection of the unit.

---------------------- endsnip --------------------

Really, the inspection program hasn't been THAT big a deal.  Rent control and Just Cause Eviction are a much bigger deal.

According to that Zillow article, Hayward appreciated over 12% this year.  And the average asking price per square foot is within spitting distance of Sa n Francisco.  Which, honestly, surprises me.

  Gentrification on the Peninsula is driving population to Hayward, which is right at the end of the San Mateo bridge.

   I grew up in the City, and moved down the Peninsula because there was no employment in my chosen field ( Electronics ).   Lived in San Mateo for 30 years, then sold my house to a Facebook manager.

  The Peninsula is under assault by SF to the north, and Silicon Valley from the south.  I'm told that even EPA is gentrifying.  Ordinary people with ordinary jobs are being forced across the Bay, and ever further out.  

  I recently scored a 13-unit building in Tracy; I expect it to be a real cash cow, as soon as I catch up with all the former owner's deferred maintenance.  The former owner was renting 1-br apts there at $675.  I now ask $950 with impunity.

See http://www.city-data.com/city/Hayward-California.h... to find out if your prospective purchase is in Hayward.  It either is, or it isn't.  I suspect that it isn't, but I haven't looked that carefully.  If it's in Castro Valley, be advised that CV is not a city of any sort;  it's just a "Census Defined Place", and a part of the Alameda County unincorporated areas.

If it isn't in Hayward, make sure the escrow company doesn't charge you the City of Hayward transfer tax.  If they do, you can get it back from Hayward, but why have that hassle?

Another thing to consider - which school district is the place in?   Castro Valley schools have a good rep around here.  Good schools get you good tenants.  But I suspect - even if it's not inside the City of Hayward - it is under Hayward Unified School District.  I told that those portions of CV that are south of the 580 freeway belong to HUSD.

Hi Arthur.  I'm a multifamily investor (& resident ) in Hayward.   

Hayward has seen some pretty good appreciation over the past 5 years.  It has recovered from the 2008 slump and then some.

That upper Grove St. area is pretty nice.  Grove St is a bit of a secondary route to get from Hayward to Castro Valley.   It's uphill from nasty things that happen down on the flats.  I don't remember seeing any serious multifamily up there.  That's a good thing, because it only takes one bad landlord of a big MF to make a bad neighborhood.

All this being said, 4% is pretty low, and I would not expect you to make any money, cash-flow-wise.  So the question is - how much upside is there in the rents?  Which leads to another question:  Is it inside the City of Hayward?  If so, you might be limited by Hayward Rent Control.   Which limits you to 5% a year.  IF you are subject.  You may not be subject to rent control if you have less than 5 units in Hayward.  Go look up the ordinance; it's on line.  It contains other annoyances, such as Just Cause Eviction, and Interest on Security Deposits.

On Grove Way, you might be outside Hayward.  Go look up the exact city boundaries.  Don't take the escrow company's word for it; they do make mistakes.  If it's outside the City, there is no rent control.  Well, I've heard that there is a rudimentary control in unincorporated Alameda County, but you need to check it out for yourself.  Somebody told me there was a $100/year limitation.

Over the past 5 years, asking rents in Hayward have risen to the point that I am guaranteed a 5% increase for most of my apartments for the next decade.

Fay, your hard work is inspiring.  Be assured that it will pay off.  

I had a period around 2003 when I was working really hard - I was working in Silicon Valley as a software engineer, and had closed on a 52 unit complex.  I would get up every morning at 5:00, do landlording stuff till 9:00 or so, then drive to work.  Work for the boss til 7:00 in the evening, drive home, crash, and do it again the next day.  And on the weekends we would drive to the complex - a 3 hour drive.

Now I haven't had a W2 job in 13 years.  The properties make my living.  I have people and processes in place such that I only work about half time.

@Lena Wang: I haven't had a W2 job since 2003.   Since then, I have bought properties, sold properties, and refinanced properties.   But my wife had a W2 job - which did not pay very well.  Now, she has been laid off, and we're on our own.  I'm told it's true that for commercial & multifamily properties, they look more at the deal than at the person.

@Lena Wang - WRT my building in Tracy; I self manage all my buildings. I have staff at each one to handle the upchucking toilet situations.  But I do all the back office stuff.  I pay the bills, do the payroll, check out prospective tenants, track maintenance & repairs.  The Tracy building just has a guy who keeps it clean and does repairs.  He is a good handyman and also repairs a few of my other properties.    Tenants send the rent to my PO Box.