All Forum Posts by: Wes Brand

@Mike Hanneman You don't understand the rent control laws in the Oakland/SF area. Month to month means the tenant can leave whenever they want. You, as the landlord, don't have a choice -- you're stuck with the tenant unless they meet one of the just cause for eviction criteria. You're also limited in how much and how often you can increase rents (last year SF was 1.6% for rent controlled units, the year before, 2.1%)

I'd cash for keys 'em, you're getting them out now while market is relatively close to the rent they're paying. 

Rent control means the longer you wait the more expensive it is to get them out...if they're paying 1k/mo and market is 1.5k/mo you might be able to convince them to leave. If they're paying 1.5k from the 2% rent increases while market has risen to 3.5k there's no way you're getting them out. (note: this depends on the exact structure of your rent control -- if your rent control allows sizable increases disregard)

It's not my opinion that you're overpriced, the amount of interest is telling you that you are. If you were overpriced you'd get 0 activity, not 50 people in 2 days. I don't care what the rest of the market is doing at this point (it's useful to set an initial price / to see if something makes sense, but not once you get too much interest at a given price).

I'd send the email that was suggested before -- "Due to the overwhelming interest..." and then put the ad back up and email everyone in a day or two saying (effectively) "we've adjusted the rents to XXXX" 

Alternatively, you can ask for offers at the open house saying you expect offers over list. It won't deal with your "way too many people to properly screen" problem, but it will deal with your underpricing issue.

@Robert P. Again, you're saying "I'm getting too many people" but "my rents are at the top of the market"...they're not. You need to get over how well you think you know the market. You don't know the market. The market is telling you your property is too cheap. It's one thing if you're intentionally underpricing it (gets you a warm body quickly), it's quite another to refuse to consider increasing the rent when the market interest is telling you you're under priced...because you "know the market".

Let me ask you this: If you raise the rents and you get, say, 5-10 people calling you in the first day will you be upset or happy? If you get that few, can you do the pre-screen as suggested over the phone? If not, I'll suggest again that you use a PM, you don't stand a chance at having the time to be a landlord (totally fine, not everyone has the time). 

If you *can* properly pre-screen, which approach do you think has the best chance of getting you a good tenant? 

You spend 5-10 minutes on them with the phone going over your requirements, set up an appointment to show the house, spend 10 minutes with them at the showing, and then make a decision

OR 

You take down their info at an open house as one of 50 people through the day and then follow up with them later? 

I know which option I'd think would give me the best chance at getting a quality tenant...and it isn't the mass market approach.

My opinion: do the math. Your property tax rate is low, but if you make more than 500k from selling you pay taxes on the extra. If you take the 500k tax free and use it as a down payment to buy another property, what do you lose every year in extra property taxes?

Since the new property will be an investment, how much worse are the loan terms? 

I suspect the numbers will work in favor of holding, but maybe not...

You can likely do what you want, but everyone who has seen the ad is going to back out if you raise it. You might want to consider mentioning some fees at the open house: yep, rent is 750, but there's another 50/mo for lawncare in the summer and snow plowing in the winter(or trash pickup@cost, big complexes around here love that one). A bit dishonest but it doesn't feel as bad, and you get to defray some of your costs.

@Robert P. if you're getting as much traffic as you say...You might think you know the area, but your rents are too low. You don't go from 30+ people calling about a place in one day to 0 because you upped the rents by 50/mo, but you might cut that number down to something reasonable.

Further, if you don't have time to pre screen everyone who is applying you seriously need to hire a PM. Prescreening can be done over email, requires no real work; you can send the same set of questions to everyone, and you can then weed out the people who have no chance. How are you going to have time to handle the other headaches of being a landlord if you can't even spend the time to send a pre-written email to applicants? 

SF is showing signs of slowing down in the short term. I personally know a few people who aren't under rent control that have had rents decrease instead of increase this year. I don't think that makes it a bad market for building wealth, but the market will not "make the numbers work" unless you're betting on appreciation in rents (which is totally valid, but make sure you avoid the rent controlled properties). The best you can do without waiting for rents to go up is even cashflow, so you're not losing but not gaining (or if you are losing, it's something minimal, couple hundred to a couple thousand a year), and even that is tough. There are also a ton of "trap" properties. Places where you have to pay 1.5mil to get in and then pay an additional 2k/mo for the HOA and it'd only rent for 6-7k/mo.

I'd say the best option in SF is to try to get lucky with a distressed property or a FSBO if you manage to run across one. Actually the real best option is to wait for the next big earthquake that comes through and buy right after it...we're overdue anyway...

Alternatively, you can go to the outer areas of SF. I haven't done the research on their market, so I won't speculate on what happens beyond saying it's not unheard of for the outer city to fall harder, faster, than the inner city. But again, I haven't done the market research on them.

@James DeRoest Interesting take on the matter. I'm not sure why you're so vehemently anti-renting. Some people just don't want to deal with the hassle of owning a house. I currently rent, if my light fixture goes out...I complain to the landlord and it's fixed in a couple days. If my furnace dies, same thing. If someone breaks my window? Yep, landlord fixes it. Lawn? If I had one I'd only be interested in an apartment where that's included in the rent. Leaky roof? Call the landlord. 

Could I afford to buy a property? Easily, probably wouldn't even have to take a loan out in your market. Would I rent? Absolutely. The only way I'm purchasing a property is if it makes enough money where I can pay someone else to maintain it for me. I'm in a similar position to Greg above, only I don't have the wife pushing me into purchasing a house I don't want to maintain. 

@Chris Mason I'd believe it; that's why I suggested within a couple bart stops from SF into Oakland and to the south, Daly City area -- you'll get in for 875k or less and be cashflow positive and the areas are going up in rents and desirability. I haven't done research on those areas, just the general feel I have.

Do you see the same cashflow positive deals IN SF proper, though? I'd be surprised. Could you eventually get positive cashflow in SF? Yeah, but you're carrying the property until then. And you're not buying it in SF proper at 875k (or, what I said before, maybe you can get lucky on one of the outer districts, it's possible, but unlikely, you'll find something in crocker-amazon for 875k or less; I doubt it will cashflow off the bat)