All Forum Posts by: Scott Trench

@Scott Johnson we typically don't delete forum posts, and I don't see a reason to make an exception here. 

Is there some reason that you or the company simply don't discuss what happened and use this as an opportunity to turn a negative post into a positive one for the company? 

This is a casual, free to attend, meetup at the local library in Highlands Ranch, CO. I, Scott, and Mindy Jensen will be there, and we just plan to chat with BP Money Listeners, Mustachians, Real Estate Investors or anyone interested in hanging out and talking about money, investing, or financial independence. Hope to see you there!

@Jay Hinrichs 

Haha no sand hill road. Visiting our investors, yes! They have offices in LA, Menlo Park, and NYC.

@James Wise NYC, and Manhattan specifically, are magical man made creations. If you are the best in the world at something, you often go to NYC. 

When I visit Manhattan, I'm amazed at how the world really seems to revolve around that city. The best acting, best jobs, best food, famous landmarks, best museums, best park, best comedy, etc are all arguably located there.

It allows the ultimate lifestyle for those who can generate the income, the ultimate opportunities, and the ultimate optionality. 

If you are an elite actor or athlete or executive, NYC allows you the option to do nothing but excel at that. There is no reason to own property, no reason to ever cook for yourself, no reason to own a car, and no reason to ever be bored. Anything and everything is available at a moment's notice.

NYC is not for me like California and Denver might be, but when I visit I am blown away. There is no doubt, that, if maximizing the quality of my life experiences including luxury dining, entertainment, and/or the pursuit of a job in high finance, I would consider New York.

fortunately, I prefer running, mountain biking, taking my kid to the pool, and reading her books by our fire.

These activities do not give NYC an advantage.

But I also would not bet against New York. For some reason, I feel that it is harder to analyze NYC, and it's real estate market, than the rest of the country. I feel like they play by more subtle or more aggressive rules that I don't understand quite as easily as simpler markets like Denver and even places like San Francisco. So I fear the unknown in NYC and don't touch it. That might be silly.

But, I'm sure that a long term thesis, grounded in fundamentals, will do super well in NYC. And, that people will, over the next 30 years grow very rich with New York real estate, the outliers growing 2-5 orders of magnitude more wealthy than their peers in the Midwest.

Also, I am on a work trip to Menlo Park, CA as I write this. It's 60 degrees. Humidity is gloriously perfect. Every coffee shop and restaurant has outstanding service. Transportation options are plentiful. People seem friendly.

At home, in Denver, which I also love, it is 18 degrees. I left with a sniffle, with bleeding fingers, cracked lips, and a perpetual risk of a nosebleed in the heart of Denver winters that get so cold, my toes start to turn blue after 5 minutes outside. These problems have completely evaporated in less than 24 hours. I return to my cocktail of winter moisturizers tonight when I land in Denver.

I understand why it is more expensive here. I'm also not even in the nice part of California, much farther down South. I understand why it is extremely expensive down there too. San Diego, and the strip of California between San Diego and California, is some of the most glorious land on this Earth. And, unlike other beautiful places, like the mountains near Denver, or those in Arizona, it's always a good time to live there (at least if you like the idea of long pants and/or a jacket being truly optional). Last time I visited San Clemente, my uber driver told me that he has not had a heater or an air conditioner functioning in his home for the last 16 years, and doesn't miss it, with very rare summer exceptions.

If you have the money, I imagine it's a pretty good place to be. All the opportunity, weather, food, and culture you can ask for. I literally want to vacation to San Diego. Somehow, Southern California, at least those areas right by the coast, also escape the discomfort of a large amount of insects. Not a lot of screen doors or porches. Those are a nasty surprise whenever I go to Texas or the South (we also don't really get a ton of bugs in Denver, though they are there in the mountains). 

Problems? Of course. But, maybe not so large as the people out of state like to imagine them to be. California's economy, and real estate market, ain't going anywhere. 

 What's super interesting about this argument, James, is that Minneapolis is actually much more violent as a city, than San Francisco. San Francisco has a higher property crime rate. 

San Diego, where @Dan H. invests, blows Minneapolis out of the water - it's WAY safer in every category. 

California has it's pockets of high crime areas, but San Diego is not one of them. 

That's interesting that many of your clients are doing that! I think I'm actually arguing exactly opposite to your point, and think that these investors would be better off staying in SFO. 

 Austin's policies, which allow for large-scale development, are bad for landlords, because they encourage so much new construction, which inhibits rent and price growth. This is good for tenants and first time home buyers, and, good for the city as a whole. But, it is bad for landlords, long-term. I know that @Austin Wolff will push back and cite that construction is, in fact, correlated with long-term prices and rent growth, because it reflects underlying demand dynamics, but I'd bet against those in the case of Austin, TX over the next 5 years. I'd bet on Austin over 30 years, but again, not necessarily relative to SFO. 

I'd be willing to place a nice little bet that, from current prices and rents, SFO experience higher compound annual price growth and higher compounding annual rent growth, than Austin TX, over the next 5 years.

Could be wrong, but it's always a bet when we forecast more than about 12 months out, right? 

When I talk to investors in San Francisco, they often have problems like: 

"I'm worth $7.5M, but all of my wealth is in 4 rental properties I own in San Francisco and my condo." 

California real estate investors enjoy: 

- Sustained demand - if you have all the money in the world, California is a great place to live. 

- Sustained limitations on supply - all those "tenant friendly" laws that landlords on BiggerPockets love to hate on actually work wonders for the landlords, at tenant's expense, over the long-term. 

When you offer huge protections, including fixing rent, or not allowing landlords to evict/not renew, you limit new supply. No one is buying old properties in San Francisco, kicking out the tenants, and building nice shiny new inventory, because San Francisco doesn't really allow or encourage it. This means... less new supply. 

Take a market like Austin, TX. This is a place that allows the market to work. Builders can come in, buy inventory, evict, and build new stuff. So they did!

Too many investors take their politics too shallowly. San Francisco and many parts of California have very bad housing policies. But, these are bad, long-term, because they inflate prices and rents, by prohibiting the market, directly or indirectly, from creating supply to meet demand. 

Austin TX investors have to give incredible concessions to fill quality inventory. San Francisco investors get hundreds of applications from extremely well-qualified applicants every time there is a vacancy. 

This is as landlord friendly as it gets over 30+ years. And, those who invest in certain markets today, will, I believe, be rewarded for taking the 1 in 1,000 risk of having a "professional tenant" truly take advantage of them. 

If I lived in SFO, I'd bet on it all day. 

And, for what it's worth, the ultra ridiculousness that allows the streets to be so unclean is easily fixable in a single election. The general misguidedness of not allowing new construction to take place at scale due to long-term tenant protection laws is not. 

Also, for the new move, if you don't know the city very well, I generally bias towards renting, at least for a few months. Then, when you have a better grip on the neighborhoods and strategies that make sense, you can buy. A furnished mid-term rental or month to month lease can be well worth the small incremental monthly cost for this flexibility if you are serious about finding a great live in flip candidate on your timeline, not that of your employer's. 

Susanna - welcome to BiggerPockets and thanks for the great first post! 

It sounds to me like your Austin home is a "Sell" candidate - while it could appreciate over the long-term, you might be sinking cash into it for many more years in order to realize that appreciation. If you'd like our "Keep or Sell" spreadsheet, email me at [email protected], but I think that you'll have to be very aggressive with your assumptions around rent growth and price appreciation in order to justify keeping this property.