All Forum Posts by: John Collins

 Give it time. The wheels are in motion , and those places insulated from COVID like SF, the wealthy stock market, will all have to deal with the new normal eventually. 

And even for the Bay Area that deal is a ridiculous outlier, it is in no way the norm even for off market properties. 

Meh, tech's impact is a way off, but it is definitely coming. twitter, FB etc. are all allowing employees to work at home indefinitely. Google and AAPL have their own policies.

My brother works for google in Palo alto. His fiancee works in finance - venture capital. Pay $4500 rent in SF. They're already looking to place offers on homes in LaFayette. Their like minded friends in the 25-40 range , those who can afford to do so, no longer want to pay rent and want an out from the city. Of course, those making 7 figures a year and not a measly 6 will still stay, but that demand is limited. 

So yes, SF will be affected, not as immediately as NYC due to their impact with corona, but down the line. Welcome to the new normal. 

 Life, empires, everything has cycles. Sex and the City culture has been replaced by app culture where youngsters don't need to be right next to each other to meet like minded people. No one is saying NY will be a ghost town, but it is very clear to me the absurd premium on rental properties there is at an end. You will have to drop prices and things will be less competitive going forward. 

 Not sure you understand what cost of living is. Houston, Minneapolis, Ohio... the midwest in general, is a destination because of how affordable it is. Rental rates there are far lower than premium rentals in NY and SF... in fact the highest tier in Houston would be mid range in NY/SF. 

This isn't about the demise of NY, but the plethora of options available to wealthy city dwellers and the new normal which is a shift away from these congested city centers to upscale suburban living. If you look at the sales of places like restoration hardware, which specialize in $10,000 couches, COVID has boosted these places and a desire for comfort and safety instead of being in the  "thick of all the action". 

For similar sq ft roof:

Consider roofing jobs...10 guys 1 day = $3,000 labor
Materials = $2,100-$3,200

Quotes = $13,500-$18,000

There will be a 200% markup for jobs well done (professional, accurate, fast), but all of that goes to the contractor, not the actual workers. 

Think of it like the princess diaries makeover - the more work you need to do, the bigger the payoff. Already have a list of things I would do the exterior to really give it a good look - of course the most important things are the fundamentals, so would do as budget allows. 

Have you looked at the process of acquiring BRRR's in the LA area? Anything with a pulse or sliver of potential is gone real fast, and the competition for off market properties is even higher. So I'd get feelers out with agents in the area who have access to these properties and ask them about the process of acquiring one - even though you do have cash, you are always competing with seasoned investors or very aggressive agents who represent investors.

An STR in a spiritual place liek Joshua Tree is likely to fare better than an event destination like Indio. Again, talk with agents who know the area about occupancy rates and their projections for demand.

Overall, I don't think you need to be frightened about any market if enough due diligence is done. That being said, the rates you get on rentals in LA are very , very poor compared to most cities in America. Even with a large down payment, cash flow is not easy to achieve. If you find a duplex or triplex that needs renovating, you're in with a chance, but a traditional home is very tough. So another part is to talking to banks and lenders, big and small, to see what your monthly payment would be on different sized down payments for these homes. 

Once you get a clearer idea of those issues, you'll have a better understanding of what strategy to use. 

https://www.cnbc.com/2020/06/11/manhattans-empty-apartments-new-leases-plunge-62percent-in-may.html

“The supply of available rental units continues to accumulate,” UrbanDigs said in its report, which looked at all five New York City boroughs, “hinting that renters will have the upper hand in negotiability when the market finally reopens.”

Larger and more expensive apartments are getting hit the hardest. New leases for three-bedroom apartments in Manhattan dropped 71% in May. The average rental price for the top 10% of rentals fell by 20%.

To people who talk about infinite appreciation... especially in NYC, SF, Miami etc. nothing lasts forever. There will be a move away from these clustered city centers with expensive housing to suburban areas with work from home available.

@Mike McCarthy
@Patricia Steiner
@Anthony Wick
@John Mocker
@Anna Sagatelova
@Adam Martin

Thank you for the advice on a supposedly small issue that leads to big problems if I don't address them initially .. or atleast think them through. 

This is located in a city area where you aren't going to see golden retrievers , labs or real dogs. Any pet I've seen in the apartment has been one of those toy dogs, 10-12 pound maltipoo's. 

It looks like I'm going with a $200 pet fee non refundable and $50/month in rent. If he has issue with that I have other tenants who have put in an app so not really into negotiating on this one. 

@Patricia Steiner - In one of my homes, I had a tenant who came in with a "perfectly behaved" large dog and letters from a vet showing great behavior. Unfortunately, he used the entire carpet as his personal bathroom, had the tenant complaining to me about mold smells giving her allergies (nope - $600 worth of testing proved that), and drenched the entire subfloor in a terrible smell. I have no idea how they lived there, in a nice property nonetheless. After removing the carpet and engineered wood we saw stains all over the subfloor that had to be treated with enzymes, then vinegar, then bleach. Vets can say whatever they want to, it doesn't mean much if the owners don't understand pets!