All Forum Posts by: Amit M.

@Justin Thorpe I’ll also chime in agreement: what makes the Bay Area unique is the scarcity of land, which does not exist in TX and other high growth markets. Austin already has crazy sprawl, while the baby area is taking a breather. All markets self correct and nothing goes positive forever. Be aware of the cycle yes, but more importantly, buy quality locations worth holding for the long run. Sure a downturn sucks, but it’s temporary, especially in blue chip locations. 

—————

my2c

Keep DSTs in your back pocket as back up options.

my2c

If your needs are pretty straightforward (which includes real estate btw), you can save a lot of $$ by going with someone like California Document Preparers. They’re based in the Bay Area, have good service imo, and only charge about $750. A lawyer will cost you several thousand, and it’s usually not necessary as most trusts are boilerplate (again, unless you need something very special.)

Good luck

You need a high down payment, deep pockets to weather the rent collection risk over the next 1-2 years, and a long term perspective (7+ years) for this to make sense. Usually well capitalized* established portfolio SF investors buy properties like this, as they can add it to their mix, and wait for the longer term upside. 

*meaning they already have made a lot of money in the SF market; newbies bettering the farm on a non value play expensive property, not so much.

way

too

pessimistic 

—————-

3words/1chart

@Joe Black congrats on getting your first property. Tell us more- did you keep existing tenants, do any renovations, etc? Usually you need to work some type of creative magic to get a successful house hack in Oakland/Bay Area :)

@Jc M. You made a good basic investment IMO so first, don’t panic! I know SF is in a tough position now, but don’t buy into the BS media hype. SF is not going down, tech is not dead by any stretch of the imagination, and the BS social policies will reverse themselves. If you’ve lived here as a native I’m sure you’ve seen this dynamic unfold before...like during the early 2000’s. To put it succinctly, in dynamic RE markets like SF, when it rains it pours, on both the ups and the downs (although prices drop are maybe 10-20%, but the ups reach 100% :) There are a lot of sensational click bait articles on forever dead office buildings and SF’s demise, and they are dead wrong! Young people will start returning to the city later in 2021, and even more in 2022. Both new grads wanting an urban environment and those that left by pandemic-panic...after they realize that cavorting around in a cookie cutter and soulless suburb (often with crappy weather...too hot or  cold) ain’t what they thought it would be. And remember, due to rent control and so many units (effectively hoarded) off the market, the relative available rental market here is small. Doesn’t take a lot of people coming back to reset rents to positive territory. That, plus new developments will be dead in the next 2-3 years, so not much new inventory coming after 2021. 

As to your specific case: yeah the rental market is horrible NOW (like from October; in the summer it was better). But I think it will stabilize and slowly improve starting in the spring. So a summer renewal may not be too bad. An inlaw in the excelsior should be nowhere near a 30% hit in rent. That mostly happened in soma and DT high rise/expensive condos. Try to keep current tenant, maybe offer. a modest reduction if needed. Otherwise re rent it, and look for younger people that will not squat there forever.

One investment you may want to consider (if you haven’t already done this), is legalizing the inlaw unit. Or legalizing the rooms down as part of the main house, but still make that space rentable as a second unit. You’d need a good architect to get this through SF’s arcane planning and bldg depts, but it can be done. Either way you legalize 550 sq ft, which will add several hundred thousand $$ in value. I’d focus on that rather than risking $$ in unknown out of state markets. Good luck!

...guess this isn’t one of those “feel good” posts about RE investing 🤪

@Carlos Ptriawan no issues with insurance. But yes with financing, there is a little song and dance that you and the realtors must do: basically you can have everything in the unit EXCEPT a stove! Yeah it sounds weird, but the appraiser will just look at everything as non legal bonus rooms, including a kitchenette. They just don’t want to see a stove, which for them defines a full kitchen. So as long as there isn’t a “full kitchen” it’s not considered a “unit”. Having extra unpermitted rooms, bathroom and a “kitchenette” are ok, they just add minimal value to the appraisal. In our case a handyman pulled the stove out, put it in the garage and covers it with a tarp ;) after appraiser came he put it back in ;);) It’s a bit silly but it worked.

You can buy the place then legalize the unit as an ADU.

@Carlos Ptriawan in my specific cases all the properties are in San Francisco, which has a San Francisco only program to legalize existing inlaw units. They are not referred to as ADUs. I wouldn’t extrapolate that to other counties in CA, which are mostly relying on the state law allowing ADUs.