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We do not want to punish the landlord. We want to alter the law.
Laws aren't handed down from Mt. Sinai, they're created by men. Is it not reasonable to assume that some of these legislators have a vested or proxy interest in maintaining a rentier state when it comes to land?
I hear this same argument with the banks -- how we should be focusing only on the policy that allowed and continues to allow them to gig the system, not on the banks themselves, who simply took advantage of some well laid loopholes. With all due respect, (and few figures command it as much as Mr. Churchill), I find this to be something of a red herring. Focus on one side and not the other, and you run the risk of losing the bigger picture.
Is it not reasonable to assume that some of these legislators have a vested or proxy interest in maintaining a rentier state when it comes to land?
Turns out the House of Lords shot down land tax reform in the UK 100 years ago, yes.
The middle class has been co-opted by Prop 13 and other homestead protection laws to favor preserving their real estate investments, however small in the scheme of things. This is political cover for the big boys who own everything else. It is a crock but I don't see anything changing in my lifetime, alas. Any attempt to monkey with Prop 13 to exclude commercial property would meet the mother of all BS strategic communication campaigns.
Term life, is the most expensive Life insurance you can buy. Just compare the amount you pay, to what you would have earned, with that same money, invested at 5% over your lifetime, say to age 85. If you started at age 35, for 1 million death benefit, say for 20 yrs, if you don't die, you lose hundreds of thousands over your lifetime. Your plan has to work whether you die young or live long. Term is only good to use, as a short term coverage, to be converted to whole life, as soon as possible.
Sounds like you are making all of the right moves E-man.
I'm just starting on the same path you're on. One rule of thumb I'm using lately is to not get bogged down in the numbers.
People talk about cap rates of returns and all this nonsense. I dont pay attention to any of that.
I remember my first house I was extremely meticulous. My checklist looked something like the front page of Patrick.net :D
Now I use rough guesstimates. I've gotten plenty good at eyeballing deals in my local area. I just use other properties I own as a reference point.
The good thing about real estate is it's fairly forgiving in the long run. If you get close enough to the mark the situation will correct itself given enough time. This is especially true for the bay area.
I guess you kind of have to know what you're doing to get to that point. The main things I look at now are location, property potential, and whether or not I can keep it rented. The actual numbers I use are rough ballpark figures. Just wondering what your thoughts are on this.
I suddenly become curious about the definition of millionaire in the article.
If it means a person who's total asset including house is $1M and over, many people meet this criteria even if they only have a couple thousand dollars in hand. If the millionaire is a person who's total net asset after all debts/loans paid off is over $1M, then how many they will be in the area?
Not really unnerved by that. The Big Man is not doing anything near as nefarious was President Bush's friends in Wall Street or Enron. And at least he's keeping the money here in the region.
It's the cocked sure snattitude about how to make easy money. If someone is really onto something good, they don't brag how they gamed the system to do it. The quietly stay under the radar.
Besides, I don't think being a landlord of that district of San Jose while living well within the environs somewhere like Milpitas is such a safe idea. I was a decent tenant, when I was renting in that neighborhood, the landlords I associated with got flak from me, my moving out on short notice because of the crime, then two other landlords getting a (reasonable) threat from me when they ignored my request to make sure my family was safe from that neighboring tenants' pit bulls. Of the three landlords, the owner of the first property that had the door busted off the frame for the burglary lived in Utah and couldn't care less, but my roommate was able to get back our deposits from him. The landlord of the tenant with Pit Bulls, he lived somewhere nearby, Berryessa I think, I had met him before. I think he was right to be afraid of those tenants.
That's the kinds of wildcards you have to deal with being a landlord in neighborhoods like that. Not exactly something to boast about. I have a few friends who have slowly built up rental empires; Yuppie type places they own still have headaches of being a landlord but they don't worry about gangsters coming after their families if the tenant-landlord relationship goes awry.
I suddenly become curious about the definition of millionaire in the article.
From the article:
The study defined millionaires as having $1 million worth of "investable assets," which exclude things like their primary residence, collectibles and consumables.
Hmmm... I guess it includes vacation homes and investment properties.
The study defined millionaires as having $1 million worth of “investable assets,†which exclude things like their primary residence, collectibles and consumables.
Hmmm… I guess it includes vacation homes and investment properties.
Thanks EBGuy for the info. I think I need to work little hard for becoming one of them. :)
I think the chance of prices correcting downward another 20% in places like Lafayette and Atherton is about nil.
Set the wayback machine to June of 2009. Foreclosures (NODs, NOTS, bank owned) in Lafayette stood at 61; today foreclosures total 90 homes. IMHO, as long as the pent up supply increases, prices will continue to fall...
What do you guys think?
There are two futures. One where the worst is behind us now, and one where the worst is ahead.
Will interest rates be 2% in 2015 or 12%?
Worst comes to worst, the Fed starts monetizing everything. Our per-capita external debt would need to double to get to Denmark's, or triple to get to the UK's. That's around $12T of funny money available, or 6 -10 years' worth of Helicopter Ben monetizing deficits like the Japanese do.
Funny thing, when I hit the Sunnyvale Costco I can be damn near the only white guy in the joint, depending on the time of day, with 20% hispanic, 40% Chinese, and 40% Indian being the norm. I see this trend continuing, as the employment base increasingly goes lowerwage immigrant. Will the salary flow continue into the region or will it begin to migrate back to India and China?
Wage inflation? In n Out pays $10/hr now. Will this be $11 in 2011, $12 in 2012 etc? Maybe.
If the tea partiers and Paultards get their way, the balloon would pop and we'd return to 1983-level GDP. Will the world as we know it end in November, 2012?
Federal spending will be $3.5T in 2010. Peak Government or not? Will Mr Bond acquiesce or will there be pushback? The State of course is one step away from blowing its bond rating again. The state basically has to cut spending and/or increase taxes, neither of which is conducive to the general economic health of the region.
Gasoline? Last decade it ranged at $2 - $3 mostly. This decade will it stay under $4 or will it even stay in single digits?
Has the IT revolution been run? Can't we just live off of used hardware and GPLd code from here on out? Will the economy just center around ORCL, GOOG, AAPL, INTC, and CSCO? Not bad engines for any economy to have, but is their Bay Area footprint at maximum now or not?
Is the $100K worker bee wage the base going forward, or will it be driven down towards $50K, like it was in the early dotcom 90s?
The baby boomers are entering their 60s now. Will our economy devolve into centering on their needs?
My crystal ball for this decade is rather murky. This past decade was a disaster in terms of capital formation and good governance, job and wage growth, though we did get iPods out of it so it wasn't all bad.
Chances are things get worse, not better. But I thought the same in 1992 and missed the mother of all candy give-aways for twenty-something CS types.
Chances are things get worse, not better. But I thought the same in 1992 and missed the mother of all candy give-aways for twenty-something CS types.
Mass insanity is a hard thing to predict, but is something that is guaranteed. You know there will be another bubble, but when and in what?
From the article:
For the Merrill report to be correct, the region's rich would have had to demonstrate a prophetic ability to shift their investments into safer asset classes at the right time or have enjoyed a miraculous bump in earned income that doesn't appear to be in evidence, the economists said.
I tend to side with the critics; although, I suppose, the rise could be attributed to an E-man times 12,500 phenomena...
Eman, toothfairy and other RE investors:
How much cash do you keep available for those just-in-case times? For example, property 1 needs a new roof; Property 2 not rented for a month, etc. I remember reading that you are supposed to keep a certain amount, but I'm curious about real world experiences. It seems like there's a balance between using your cash to leverage and buy more properties and keeping enough in reserve so that one little hiccup doesn't cause the whole thing to fall apart. Thanks.
I just came up with an idea to acquire 2 condo’s in the range of $150k/each in the 95123 zip code. It will cost me a total of $10k out of pocket for both deals. So I will be borrowing $145k/each condo.
This is interesting. BTW, Where do you get these kind of loans? Do you borrow hard money or through banks? If its a 30 yr conventional loan, I think this is a sweet deal.
This past decade was a disaster in terms of capital formation and good governance, job and wage growth, though we did get iPods out of it so it wasn’t all bad.
Ah yes, shiny slivers of vastly inferior sounding compressed music (even to cassette) with the added feature of built-in obsolescence. It is an appropriate gadget for our times -- slick looking packaging with an overemphasis on convenience, but with not much inside and totally disposable. A quantum step backward in terms of advancing fidelity.
b
Nobody discusses one thing: landlording/slumlording will kill your soul. A small thing perhaps, all things considered, but it WILL disease you.
http://www.newsweek.com/id/201838
I also don't see how the rents are sustainable, even for San Jose, considering the median incomes for the area. Somebody posted an address up above of a really dismal looking hovel. No offense to you, but my honest take away was, 1700 bucks a month??? For that?
I have been to San Jose numerous times, (about twice a year over the last six or seven years) and other than the fact that you are about an hour and a half away from Carmel, I simply do not get what all the fuss is about.
Austin, these guys here seem to be doing it themselves, but if it got too bad, you could always just hire a property manager. You lose a little $ but save mentally.
All of the other benefits aside, jobs are what is so nice about SJ. I know unemployment may be high right now, but you still have 3 major cities and plenty of small cities within about 50 miles of each other. I don't think that exists anywhere else in the US. And if it does (NY, Philly and Northern NJ is the closest thing that comes to mind), their prices aren't exactly cheap.
The guy featured in the article I pasted above had a property manager, but his property was still a monkey on his back -- and despite the rents being higher than his mortgage, the repairs and missed rent were sending him into the red. My takeaway was that easy money is rarely not a misnomer.
As for SJ, I think the Bay Area is a great place to visit, (particularly the coastal areas), and I think if the Bay Area was anything like it was 40 years ago, it would be a no-brainer to want to live there. But it just isn't. I've been all over this country, (including the impoverished, cruddy bits), and there are numerous beautiful cities with their own unique landscapes and homespun character. As for places with loads of jobs, there's always Texas, Montana, Washington, Idaho (parts of), Utah, etc. Also, when you live in a good city that isn't particularly easy to live in (meaning, for instance, inclement weather -- NOT high prices/usurious tax rates/overcrowding), you typically get people who really WANT to be there, which likely contributes to a sense communal solidarity, rather than the highly atomized society you have there in the BA. That seems like a good thing.
Not comparing the two at all. Very distinct creatures. Sort of. SJ is mostly boring-looking neighborhoods with outrageously priced, hyper-average looking homes (outside of Palm Haven) and the same congestion/strip malls as any average American city has. Austin has mostly ugly neighborhoods and growing congestion, (better radio and food), thanks in part to equity vultures and the nerd bird diaspora over the years. What a drag.
Can't we just put all of the major tech employers in the middle of some centralized shitpit state where nobody would want to live (rural Missouri anyone?) and let everyone remote VPN or use Virtual Presence from wherever they choose to live?
I hope so. It's high time the 21st century started looking something like the 21st century.
...by the way, I think the only thing going for Apple in Austin is I-Phone tech support.
Can’t we just put all of the major tech employers in the middle of some centralized shitpit state where nobody would want to live
I was thinking Apple should take their $30B and buy Lanai or something. Now THAT would be a corporate campus!
Campus in Hawaii would be a pretty nice perk but Austin?
That's a tough sell to get top talent to move to Austin when they're making enough to afford the BA.
Loads of Californians move to Austin. Loads. I do not go a day without seeing at least two CA plates. Usually more.
I don't really get it. If your connection to the BA is of an elemental nature (flora fauna) then I don't think Austin is going to fit the bill for you. BA (coastal areas in particular) has Austin beat. The people in Austin are miles better, though. Less atomized and tribal.
I don’t really get it.
You will have to excuse them Austin. Most of the “Californians†are from the east coast anyway.
They never saw the ocean before.
You do understand that on the east coast there is another ocean right?
E-man,
The SevenTrees neighbor with the pit bulls who the landlord felt intimated by was not on the lease, nor were his dogs. See, the tenant on the lease was a hardworking steadyworking middle aged lady who was grateful to live there. The problem was the adult son who showed up, with his pit bulls and tatoos, after his incarceration ended. After he showed up, his "friends" also spend A LOT of time there. The landlord vetted his tenant well, but later on was not comfortable to confront them when I gave him warning that I would hold him accountable for anything that may happen with those dogs.
Can't say that I blame him. He lived a few miles away in Berryessa; it was no secret to his "new tenant" where he and his family lived.
You have tenants in some really rough areas. I think we both know that is gangland turf. Maybe some of them even read this website. Last thing I would do is boast that I have 100K cash sitting around. Please, for your own sake, a little bit of humility.
Wong, are you insulting me because you made a stupid comment that I pointed out or is this some form of humor that's not funny?
Anyway, Austin, another possible reason why the BA has ridiculous prices is that people are much more willing to double-up here (multi-generational living). In most parts of the country, sure some kids live with their parents maybe a few years after college to get on their feet. Here, there are lots of families that go into buying a house knowing that it's either two separate families or two generations of workers under the same roof. Then, you no longer have 2 workers for income, rather you have 4 workers who can support the mortgage. It's unfortunate for those of us who don't want to live that way. I don't know what percentage this is of the market, but it's not helping things.
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“...the number of millionaire households across the nine-county Bay Area climbed to 136,120 last year, up 10.2 percent from 123,621 in 2007″
http://articles.sfgate.com/2009-07-16/business/17217298_1_world-wealth-report-millionaires-bay-area
Hmm, meanwhile thousands more people are being and have been laid off in the Bay Area. Welcome to the aristocracy of the Bay Area. The number of millionaires in the Bay Area partly explains why many areas are still way overpriced.