All Forum Posts by: John Nachtigall

I am new to commercial real eastate investing also, but you may find this podcast by realcrowd useful.  It is specifically on the negative reputation of retail right now.   BTW, the whole podcast series is excellent as well.

https://www.realcrowd.com/blog/2017/06/podcast-epi...

You may want to consider investing in syndications instead of directly in 1 property for divesitvication.  Sites like CrowdStreet and RealCrowd offer institutional quality deals with low minimums.   they both have excellent educational materials but I like the realcrowd 101, 201, and 202 power points, they are ~15 pages and explain the basics

https://www.realcrowd.com/learning-tools

I started investing in deals last Jan, I have no interest in any site except as a customer.  I have invested in 4 deal, 2 on each site.  Good luck.

@Dan H.

Actually yes, London is "San Francisco" level expensive, actually worse. The tenets were almost exclusively low income retired or immigrants . They call it "social housing" in the U.K.

https://qz.com/1007903/the-catastrophic-consequenc...

Affordability is relative.  I was just in a webinar where they were offering investment in a new modular apartment they are building in SF.   250 sqft for $2500 a month.  They had to get an exemption to building codes because the square footage is so small.  They sell it as the solution to affordable housing.   Of course I noticed they are selling at $10 a sqft as opposed to the neighborhood average of $7.60.  But apparently the tenets are going to be bad at math and look only at the monthly cost.   They may be right because city hall is all for it and they didn't notice it would actually be less affordable per sqft.

Shrug

@Cody L.

Wait...an internet discussion that ends in agreement?   Do we have to register with the Guinness Book of World Records?   I feel like this may be one of the signs of a coming apocalypse.

:-)   I am glad we found common ground.

@DL Martin

I would grant that right now there are more homeless deaths than death due to failures of housing by code in the US for sure.   Although small point, I am not sure the death of every homeless person is a result of them being homeless.   For instance if they OD, they could have done that in a house also.   But to be sure, it is the direct or contributing cause to a lot of deaths.

My assertion is that if the STOPPED enforcing codes, and we put people in some kind of housing, for example, the Favelas in Brazil, that the corresponding deaths would be actually higher.   Why do I think this, because every city in the US was originally founded without building codes.   And in every instance, they instituted those codes because they found it was needed.   This is not just true in the US, if you look across the world most all places have some form of building and safety codes.    So I would assert that the experiment has been run, and the benefits of codes outweigh the cons.

Of course I presented 1 side....I am arguing my point not his.   I don't think you understand how debate works.   My argument is simple, less people die from homelessness than would die in tragedies that would be prevented by code.   It is unprovable, because you can't run a controlled experiment, but I wanted to answer your post.  

I would point to the recent experience in Utah.  They specifically provided the opportunity for housing to everyone and recently claimed to hit 100%.  Which is great.  But if you look at the numbers, you see a bunch of people did not take the housing.   Because homelessness is more about mental disease and drug use than money.   So you are going to get homeless deaths regardless, I see no need to lower codes to make it worse

 In Grenfell there is proof going back more than a decade people had been trying to get that cladding outlawed in high buildings. It was allowed specifically to provide  an "affordable" solution even though in the US that application was outlawed by code for more than a decade.  So it is directly on point to the tradeoff of allowing the building code to be subservient to affordability.   And the worst part, it was never a good tradeoff.  They saved 300k on a 9.2 million renovation. A whole 3.3%....amazing.   If you are going to sell your soul get a good price.they could have met both codes (fire and environmental) easily.  

In Oakland the only problem is that they continue to tolerate any "unconventional" spaces.   How many people do you want to die?   What will it take to learn the lesson?   So either enforce the code, or when the next fire hits the headline better be "Acceptable tradeoff of 20 lives in exchange for inexpensive housing happens last night".  Is that what you want, because that is exactly the choice.   How many deaths a year is an acceptable tradeoff to allowing artists to live in warehouses that are not even close to code?   I say 0, but you give me your answer

@Cody L.

I will take your your challenge and say this from a high horse.

First, I think it is a good thing that your buy houses and fix them up.   Call it gentrification or good investing, any addition to decent housing is a net positive.

But, your logic regarding substandard housing is better than no housing is flawed.   Lets use a real life example

The cladding used in the low income apartment towers in London was 300,000 pounds less than the fire resistant cladding.   There are at least 111 buildings with that cladding, so a crude estimate of money saved is 3.3 million pounds or 4.2 million US.   Now here is where I get nice.   I am going to grant you that 3.3 million pounds will build 50 low flats.   It wont, London is the 2nd highest construction costs in the world, but I am going to grant.

So cheap cladding saved enough money to build 50 flats  

In exchange, more than 100 people lost their lives (80 confirmed and still searching) and   156 homes and flats were lost and 250+ people are homeless.

Explain how that tradeoff works?  This is a real life example.

Don't like this one.   Do the same math with the warehouse fire in Oakland and letting people live in non-residential spaces.  It will turn out the same.   Substandard housing is not better than no housing.   

@Joe Splitrock

I can't tell what your position is Joe, at first you say landlords should follow codes.   Then at the end you imply they are filling a need and this is a reasonable solution, not meeting codes.

This is not complex.   Every landlord should comply with building, fire, and safety codes.   Even if their tenets are the ones causing the violation, because as the OWNER, this is your ultimate responsibility.   And the law backs that up, they fine the owner of the property, not the tenet   Call it unfair all you want, that is the deal you make when you own property, it is one of the risks that is rewarded with cash flow.  Landlords have no legal responsibility beyond that.   So you if you want to keep 30 year old counter tops or stinky carpeting....go for it.    

Yes, I think landlords should keep there properties meeting the codes.   But my opinion does not matter, the local, state, and in some cases even the federal government also think landlords should meet codes or no tenets.   They matter more.    And being this is a democracy, if there is a code you feel is an undue burden you are free to lobby for it to be changed.

If you think landlords should meet code then we agree Joe.   If you think there is an excuse to run slums that rely on people not reporting violations then you and I most certainly do not agree.

@Luke Miller

This is simply not a free market issue.   The democratic society you live in has decided that there is a minimum level of compliance that under which is not acceptable.   Those code have been developed over the year specifically in response to things that your democratically elected government has decided are unacceptable.  

And you are correct, it is absolutely an intrusion into private property rights.    Because no right, from free speech to private property, is absolute.  Furthermore, the argument that "it happens anyway" is ridiculous.   Most laws continue to be broken, from murder to robbery to rape, but that is no excuse to eliminate the law.   

I love the free market, it does a ****** job of enforcing national defense, police, fire, and building codes.   For that other systems are needed

@Joe Splitrock

Drug Dealers are also serving a "market need".  People who peddle fake health cures are serving a "market need".  Loan Sharks are serving a "market need".  So what, serving a "market need" does not automatically make your business acceptable.   

Lets be very clear

- don't want to judge your tenets profession as long as they pay on time:   Super

- don't want to provide any amenities beyond 4 walls: No problem, it is a free country

- don't keep your rental up to building, fire, and safety codes:   BBBZZZZZZ, I'm sorry the answer was "Follow the law".   Perhaps you can make up ground in the lighting round.

So bringing this back to the original post, the OP was fixing the stairs.   The deaths in the recent Oakland Ghost Ship fire was because the people on the improvised makeshift 2nd floor were unable to evacuate because the "stairs" were actually stacked pallets.   Want another example, the refrigerator that caused the London fire can not be sold in the US because it does not have a metal back.   That safety law exists because it turns out that when they don't have a metal back...they light houses and apartments on fire.

I get that you "hate" government regulation, or at least strongly dislike it.   And God knows I agree it can go way to far.   But when it comes to building, fire, and safety codes, you can almost always point back to a painful lesson that was paid for in blood.   And the code is the learning from that lesson.

So no, it is not ok to meet a "market need" if you are not meeting the basic fire, safety, and building codes.   No matter how much "benefit" you think you are providing to society.