All Forum Posts by: Amit M.

But granite is very practical, it's for a rental not your home. And certainly more durable than laminate.

granite is pretty cheap nowadays and very durable. Installing it costs a bit more, but if your kit counter layout is simple, it's not too bad. Just google discount granite in Oakland- plenty of places sell it. It's also avail in black btw.

Sure avoiding negative cashflows and bad long term loans (variable, balloon, hard money) are important, but an equally important factor in surviving RE crashes is where you buy. The 07-08 crash in the Bay Area played out as predicted, like a ripple effect emanating from the prime center. The very best locations- most of SF and prime towns/neighborhoods in Silicon Valley and San Mateo counties fell 10-20%. Other good areas of Silicon Valley and East Bay fell about 30%. Going outside of the Bay Area we're talking -40% and onwards.

And not surprisingly, the best areas are the first to jump back in values. In my case I invested in a gentrifying SF neighborhood (Mission district) and even I was surprised at the appraisals when I refinanced two condos last month. They actually came back higher then I expected. So now my properties are at least 10% over their 07 peak.

My experience in the Bay Area has shown me that prime areas are the last to fall, fall the least, and rebound the first. And that has a huge cumulative effect on appreciation.

Like many investors, the 07-08 crash was challenging. I got stuck with a gutted triplex and no loan options for renovations in 08. I was able to sell a unit to family for a discounted price, and used the cash from the sale to renovate the entire property. I sold them that unit for $350k, and later this year I will be finalzing condo conversion on that property and their condo unit will be worth $650k, so it turned out a sweet deal, and now my dad plans to give it to my sisters, so they have some security in their lives.

Another saving grace was that rents skyrocketed in SF from 2010-2012. Several of my rentals went up 30%, so having that wind to my back helped during that timeframe when the banks were barely lending (even to qualified people like me.)

With strong positive cash flow I basically treaded water since stabilizing that triplex in 2010, until earlier this year when I was able to refi and separate a former duplex to condos, as well as lock in 3.75% 30 year fixed rates, which is godsend. Now I am in the midst of refing the triplex, I plan to access some of my equity and pull $500k as I would like to buy 2-4 units in SF. With these low fixed rates it's a no brainer if I can even get close to break even. I normally buy properties that need some work and have upside, so I will be busy bringing it to higher and best use. Should be good times ahead!

I like to think in contrarian terms, and to go where others usually ignore. Areas that are 'known' as investor Meccas have some negatives- they tend to boom and bust. One day everyone is there bidding things up, the next they all bail, prices drop and all of a sudden half the homes on the block are either for sale or for rent. I prefer areas that are more prime and more in general demand. Impacted and with no place to build new homes. Of course these areas tend to be expensive and hard to cash flow, but they are a lot more stable. Food for thought.

Pam- SF is super competitive, and I've heard from others that the valley is too. Personally, if I were you (and you plan to stay in the area for a few years) I'd get into my first home before buying anything as investment. An SFH with a granny unit is a great idea, and you can also consider 2-4 units where you live in one. IMO we are on the start of another appreciation cycle in the bay area that will last a few years, so now it's still early to get in. I made all my subsequent purchases from equity appreciation and renovations/property improvements. I'm about to do it again, after a 3 year hiatus when the banks were super tight with lending. It's improved recently.

I suggest you ditch your mortgage broker and work with banks directly. I have had good luck with Wells Fargo recently, as they are actively seeking good candidates to make loans to.

What are the basic numbers on the homes with granny units (cost, rent for unit, etc?). If you can get into one for $200 more than you rent, and the place is as good or better than your rental...then that's a no brainer IMO!

perry- that's exactly right, and how I succeeded in SF with my investments. It's so different than the rest of the country. Do you own investments in the city?

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To the OP- cash flow wise your deal looks good. Check with local owners who are knowledgeable about expenses specific to your location. Another plus is that the property is only 9 years old.

BUT, the big question is: what kind of area and neighborhood is it in? Is it improving in quality, or at least stable? Is there potential for appreciation? Making $9k per year is nice, until a roof needs replacing, appliances go out, or you get one nasty tenant that doesn't pay rent plus damages the property. Good areas that appreciate provide a long term buffer to that.

hola all you Bay Area peeps!

I invest only in San Francisco, but was wondering if any of you looked at 2-4 units in the Bay Area. I know the cashflow is much tougher here, but the appreciation on any decent quality property/location is priceless! Prices are even higher here in the city, but i have gotten several properties to work out with renovations, positioning for higher and best use, tenant tweeking, etc. So let me know if you looked at things locally and what you thought, as out of state investing is not for me. Cheers.

two words: think quality.

You are fortunate to have cash, which gives you options. Buy in good hoods- the kind you would live in. Even if the cashflow is not as good/will needs 20-30% down for a return, etc. Why? Cause good neighborhoods tend to appreciate.

Many here get all excited about $35k homes that cashflow +$200, but guess what? Those deals tend to be precarious. Stable homes in GOOD neighborhoods will usually cost north of $200k (I'm assuming for most of USA; on the coasts, and here in San Francisco it's triple that.)

We live in a society now that is highly fragmented into winners and losers, unfortunately. Be careful not to buy RE that has no future appreciation potential, and will only kill you in maintenance costs and potentially problematic tenants. I know many investors play that game and can do very well. I'm commenting on the fact that with real cash you can avoid that, if you choose to. Cheers.

do you have the property listed on the mls? If the market is hot there now you should get some normal offers- where people get their own loans. Rates are still good so I'd expect someone to want to lock in a low 30 year fixed on this.

You have to ask yourself, why can't this guy get his own loan? Can't qualify? Then he will not be able to perform if the bank calls the loan, leading to a big headache for you.

Precarious situation. I say pass.

Jim- I'd think twice about getting out of your Venice prop. That area is gentrifying quickly- your chances of gaining equity appreciation in the next 1-2 years is extremely high. As a Matt mentioned, those google engineers do wonders for property values! (I know, we have the same phenomena in San Francisco.)

I'm confused about your numbers though. You purchased for $900k in 2010? And its worth about $1.2 now? (Your $300k appreciation gain.) So don't you have equity (unless you already pulled it out)?