All Forum Posts by: Kathryn M.

If you decide to go ahead, my newbie advice is to go with an architect/team (surveyor, civil, structural, Title24 etc) very experienced with Oakland City requirements.... could literally make years of difference to permitting process.

Sorry I have no help with the title question, but if you haven't already, get each and every tenant and previous landlord to sign estoppel certificates. You want to start from a very well defined and known base (original lease is useful but IMHO is not sufficient).

Also you will want a history of rents in case there is some banking available and current owner's mortgage info may be useful.

Hi @Victoria S.

Just wanted to add a little bit - the $250k is only the tax free portion. Holding for the last 15 years in the Bay Area has yielded more like ~triple valuation, so depending upon starting number, could be a lot, lot more appreciation to access with mortgage or HELOC. Buy/Lend with Heloc, refi to standalone mortgage, rinse repeat. The next 15 years is your guess but IMHO likely to be less as we are peakish now and 15 years ago was a relative dip... could still be dandy.

I view cash flow <--> capital appreciation; risk <--> reward; investment <-->speculation  as  spectrums not digital values, and any specific property lies somewhere on those spectrums. It is up to the purchaser to accurately estimate the position, make the risk reward decision or be pleasantly surprised or hit with catastrophe :-(

Anecdotally, one can "force" appreciation on single family  on primary in the Bay Area: locate nearly the worst house in the nearly the best school district; renovate, add sq foot; add bedrooms, bathroom; add in-law etc etc. This usually does not raise tax basis (land) at anywhere near the same percentage as potential rent/sale value. Scrape and rebuild has also worked over the last few years too.

IMHO multi-family lies lower on the risk scale as higher rent/appreciation ratio ie higher percentage of your return is in your hand (but taxable). And especially wonderful if you can force the initial chunk of $x00k appreciation , refi, rinse repeat: Love the @J. Martin primary 4-plex route, if you want the cash now rather than wait for tax-free appreciation upon death. Clearly @Arlen Chou and @Amit M. SF reposition multis, and Professor extraordinaire: @Account Closed have the best of both worlds cash now/quick reposition then continued high cashflow + Bay Area appreciation. Not everyone has the skill/intelligence to do this :-(

One thing I conservatively consider when aiming for Bay Area appreciation is to envisage the worst case(s) that I want to mitigate (loss of job, withdrawal of HELOC, earthquake, high % vacancy, high % drop in rent) and answer the question, how can I ensure that I do not have to sell low.

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Just a less than 2c comment: Due to Oakland rent control, personally I would allocate some "extra" value to the duplex with 1/1... 

1/1 likely more turnover, so easier to attain market rent, affluent renters might be easier to manage and the possibility of living there gives you more options.

However, since income is your stated priority - makes decision difficult. Does considering using your rent replacement help the decision?

Thought this thread of a satisified out of state investor may be of interest: https://www.biggerpockets.com/forums/223/topics/16...

• Bryan C. :This whole out of state vs. in state argument is like the kobe vs lebron debate 5 years ago. There are pro's and con's to both stories. At the end of the day though, I think that as long as my money's leveraged through a mortgage and I benefit from loan pay-down by a tenant for the next couple decades, I will always be a winner.

Another analogy, might be: 3 point vs paint strategy... Either can be done very successfully or woefully if the % are low.  I appreciate the desire for a passive investment :-) A few more things for your winner list: "partners" (e.g. prop manager) you trust; high quality tenants, low vacancy, sufficient reserve allocation (vacancies,roofs, regular painting and flooring), appreciating or at least neutral demographic drivers, really understand your purchase/street/block/neighborhood/city. 

Some of the "best cashflow" can be found in areas that have been declining for decades... IMHO you probably want to avoid these, even though they may look great in a spreadsheet with underestimates for vacancy etc.

Just a 2c note: Many pro out of state posts have something to sell, whereas many of the pro CA posts are individual investors who have made significant $$$ and want to share their understanding of CA potential. (clearly much more difficult to do now than 2009-2012 and probably require a different strategy to a competitive MLS purchase).

Probably won't be news to you, but there is a huge range in property values for the same Oakland building specs. Depending upon address, I could easily believe $650k - $1.5m but from your market rent quote, seems you are near the higher end??? Proximity to good schools, crime prevalence, BART (San Francisco and other commute), gentrification being some of the major drivers.

Looking at MLS listings many, many of the Oakland buildings are sold with rents at near 50% of market and I would never buy with a multiplier assuming I could raise building to market rent due to rent control restrictions. Banked rent and increased mortgage may help somewhat but there is also hard 30% limit over 5 years.  However, I might try to sell assuming market rents :-)

@Mel Selvidge will probably have more specific and valuable help.

Will you represent me?

Hi J.

I am very impressed by your leading recession indicators chart (third one) and don't disagree with your conclusions.

The one point I would like to discuss is that in 2 out of 3 (excluding housing crisis) of your charted recessions the Home price index didn't go negative or barely went negative.  ie prices still rising

Do you think a heavier tech MSA would, for example, go show more negative for the 2001 tech crash? If we think the reason for the next Bay Area "correction" will be tech, then this is kinda  important for the many first investment/first home buyers. As you point out, the more experienced will be in a better position to take advantage of any (smaller) correction.

Hi,

Short answer is yes, you can apply "banked" rents where the CPI adjustment has not been applied. There are detailed rules about timing and limits here:

http://www2.oaklandnet.com/Government/o/hcd/o/RentAdjustment/

Hi,

I think all of the major online RE sales sites have local market data/stats.

I particularly like Trulia's maps:

http://www.trulia.com/real_estate/Oakland-Californ...

http://www.trulia.com/real_estate/Oakland-Californ...

Recently sold listings are helpful too and I think available from all the major sites: Zillow, Redfin, Trulia etc

I found ZipRealty polygon map search very good for current "for sale" notifications in a small area e.g 5 blocks wide and a mile or so long, but Redfin and many other sites are probably just as good for an entire neighborhood.