patrick.net

sf_peasant says

I have no business buying here.

Stop this mental exercise right here.

sf_peasant says

Sub Oink-is that 25% of pre tax or take home?

Pre tax

SubOink says

sf_peasant says

Sub Oink-is that 25% of pre tax or take home?

Pre tax

The Bank will lend you up to 30-33% depending on what loan you get, I think FHA was even 35%. (pre Tax)

In my opinion. My best guestimate. Prices are still heading into negative equity. Just kills me to see people getting upset about that. I expect it from the interest lovers pan pizza news people. Not people that have actual common sense and their wits about them however.

Its nothing but a win for the common folk. You can do just about anything the big cons can do just leave out the cash and deal in whats real.

I agree with ArtimusMaxtor. Prices are heading into negative equity already there for many around the US. I have a serious issue with any suggestion to dump 200K into a rental. I wouldn't do it. As real estate continues to fall through the floor as it is so are rentals swiftly becoming a major risk in my view. As people are tight on money and jobs are disappearing 2K or even 1.5K is a thing of the past in many areas for single family average houses let alone anything else. I don't know what 200K buys in some areas but I know damn well I wouldn't pay 2K a month for a 200K place. In this economy, which clearly is not on even ground. The new unemployment numbers are brutal at over 9% weren't we at 10% during the Great Depression? Credit is key and cash is king. I'd pay off debt and I would BANK the rest ...and rent.

The places I am looking at are Tenancy in Common and the HOA dues are typically 125-150$ a month... Typically 3-6 units per building.
sf_peasant,
There is another dynamic at play with TICs. Even with a fractional loan, the choice is not yours alone. The whole building will have to be insured through the HOA. Remember, your co-tenants can also 'walk', even if you don't want to; this becomes an even greater liability if there is a common mortgage as the mortgagee can go after any party.
A third possibility that you should consider is a small multi-unit building (2-4 units). With the down payment you have amassed, you should be able to get a better owner's unit and will come out ahead financially with renter's carrying most of the mortgage. The FHA loan limit in SF for a four-plex is $1,403,400.

See your right anything even in income property for the most part is a loss right now. Your going to have to squeeze your tenants to make it. Not to mention razzle dazzling them.

Its a buyers market right now is a misnomer. It's not. It's not a sellers market either. The key thing is not to get anxious.

It's not a buyers market due to declining values. It's not a seller market due to the fact there are no buyers. Thats more like whats going on.

I would like to take a hard look at apartment rentals with fixed pricing. It's just ludicrious to me that you can dicker on the price of a house. However on the rental on an apartment unit. They call the cops if you try to negotiate rental agreements. Just dosen't make sense.

Their stubborness is costing them watch as rents decline. Thing is why sign a lease? In a market where you can wait and get something even better next month. I just can't see that. Being anxious gets you screwed more often than not. Sometimes you have to wait for the right deal to drop in. Casually looking for what you want.

After a while it becomes habit and you really dig for the deal. You do that. You hit the right deal. Something that makes you say to yourself hey I'm not a jackass after all. I actually did get something that was more than worth while. Then you might start living your life like that. I like to meet people like that. They usually don't want anything from you. Because they can do it all on their own.

One more thing you mentioned the word depression. People made it during the depression. Believe it or not. Some made it big to. Looking at the financial news for your future just ain't never gonna get it. They have their own interests and its their game. They could care less about you. Truth.

They act like they like you. They even have feelings for you. They will even tell you they care. However. They never show up to pay your rent or mortgage or even buy you dinner. That should tell you something. They probably have never even bought you coffee. HAHAHA

The financial news. The news has never really done anything much for your life. If you take a good look at your life.

All these things have never bothered me. Because I have a free mind that can come up with all kinds of very workable ways of living.

I was in the car business at 27 years old with my own car lot. Buying and selling cars right along with the big dealers. I'm older now of course. Thing is. I just said hey this is easy enough I'll get a partner and do it. Cash for the bonds. The wholesale licence. See there was even more to it and it got fairly large. I got bored with it. My partner was an asshole. Doing stupid stuff so I got out of it. Sure enough stupid went under.

Partners can be fun however. I have had some I really love even to this day.

So in a market like this one. Your never going to be one of the big guys so called. To tell you the truth I don't even want to know them. It's to much of a strain trying to beat the whole world I am sure. See way to much competition.

The infrastructure and civl unrest would result in a mass exitous. away from the area, to result in a much smaller population.

Just the two bridges being knocked down would take years to rebuild and in the mean time 10,000 of thousands business would go out, to think so locally as ones house is to miss the BIG picture, I mean if you know that the bay area is going to have a MASSIVE quake, it is going to be a larger worry then about whose paying for your home, HOW YOU ARE GOUING TO EAT and survive both the event, and then the after math. That would be your priority. I am sure, you will agree.

sf_peasant says

Is there a ratio of mortgage to income?

For a traditional 30-year fixed loan, usually the bankster requires that your mortgage-related payments (PITI, I believe) be no more than 28% of gross income and that your overall debt be no more than 36% of gross income. I believe certain other programs allow 31% of gross income -- not sure what FHA allows.

SubOink says

We ended up getting earthquake insurance for our house anyways. It’s $1200/year - $60k deductible. I still think its “worth” it. It’s really for the worst case scenario in case the house gets trashed. In my case, after my 60k deductible, my structure is insured and the house would be rebuild to code.

Sometimes the calculation works, sometimes it doesn't. I have heard of people paying more than SubOink's quote and having twice the deductible at $120K. I believe a lot of people's repairs were projected to be within the $120K deductible, so the insurance would often net them nothing. It's worth getting a structural engineer to look at your place and see what they think the damage could be. Not all "retrofitting" is effective or the same, so it's worth making the call.

sf_peasant says

row houses with windows at front and back only- are already “braced” to some degree- so that helps.

I believe this is a myth, and proper retrofitting requires that your property have independent bracing. Check with your structural engineer.

I will address the TIC issue separately.

EBGuy says

sf_peasant,
There is another dynamic at play with TICs. Even with a fractional loan, the choice is not yours alone. The whole building will have to be insured through the HOA. Remember, your co-tenants can also ‘walk’, even if you don’t want to; this becomes an even greater liability if there is a common mortgage as the mortgagee can go after any party.

Yes, a lot of people did not address the TIC issues, probably because most people outside of San Francisco are not that familiar with TICs. When you buy a TIC, you are buying into a community and a group of owners more so than in a condo development. If your co-tenants decide to say "screw it, we're not rebuilding," you may be on your own.

You need to have a good idea of what your rights are with a TIC and you may want to consult a lawyer, because this is a specialized area of the law. Your realtor will try to convince you it's not a big deal, but it can be, especially with respect to the risks you are concerned about. It is absolutely not the same as a condo, and you are much more on the hook for your fellow tenants-in-common than you would be for a condo.

Also, if you are not part of a 2-unit TIC, it gets harder to do a condo conversion. If you have 5 units, it might be virtually impossible to do it. TICs may seem cheap, but there are high risks.

A third possibility that you should consider is a small multi-unit building (2-4 units). With the down payment you have amassed, you should be able to get a better owner’s unit and will come out ahead financially with renter’s carrying most of the mortgage. The FHA loan limit in SF for a four-plex is $1,403,400.

Yes, although in SF, you still have rent-control issues to think about, and general anti-landlord regulation environment. There are better cities in which to invest this way than SF.

Dan8267 says

I don’t live in San Francisco, but $400k for a 1-bedroom sounds ridiculous unless the property is on the Playboy mansion’s grounds.

Yes, you don't live in San Francisco. :) There were 1BR condos for sale for up to $900K or so during the boom in the so-called "luxury condo" buildings. Lots of those started being sold for $700K in the initial price drops, and some of the developers started renting some of the units too.

sf_peasant says

I have my eyes on a 1 bedroom apartment for 400K (with parking), and wonder if it makes sense to put more downpayment (50% down) and get a shorter mortgage like 15 years or should one put less down(20% down) and get a longer 30 year mortgage. I prefer the former, as one would pay less interest over the span of the loan and build equity faster…

No offense, but the upside on a 1BR TIC is not that great. It's basically forced savings, because you will not get a huge amount of return. You may be better off using a smaller downpayment and investing your money wisely somewhere that's more liquid, rather than locking it up in the highly illiquid property market and facing high transaction costs to retrieve it. You need to do the math here and consider your life situation and make sure it makes sense to lockup a substantial part of your portfolio in a poor investment.

SubOink,

did you look into the fine print of your policy on insurance payout?

I guess you took the 15% deductible at $60k, which means your structure is valued at $400K. The $400K is the max payout if, god forbids it, your house is leveled. I have no idea what your house' sq ft is, but in today's environment, to be completely code compliant, you are still looking at $200-250/sq ft, and in case of a massive hit which will lead to massive rebuild in the area, be prepared to pay $350/ sqft for today's dollar. Which means, if in the worst case scenario your house is leveled, you can only rebuild something slightly more than 1000 sqft. That is the worst case scenario.

Now, more practical scenario. Since I just finished remodel, so I have a very good idea of how much things cost. For most cases, if you are already code compliant, unless you are situated on the faultline, the chance of your repair going over $60K is slim. But even if your repair bill goes over $60K, it doesn't mean your policy will reimburse you based on how much you actually spent. It reimburses you based on how much a comparable project in California costs. So if you repair a foundation for $30K, but the average CA foundation repair of the same scope costs $20K, you will only get $20K.

The devil is in the details, so I'd highly recommend you to study the fine prints on payout calculation, procedure and play with different assumptions.

OO says

SubOink,

did you look into the fine print of your policy on insurance payout?

No, I never look at fine prints...but that's because my wife is the insurance agent :)

That's the fear Cyoc. Thats only the fear however. See you can play with this. However it's serious biz. I repeat we have all the assets here. WE DID THE LABOR. So. It take someone determined to do all of this. Say some down home N.C. politicians that don't want to play B.S. anymore. I am in a very determined manner. See. I have time for chat and pleasantries always. I am a people person. But when it comes to Biz. I want to get it done and right and not screw around with it.

This is a land more of rules that anything else. Thats ok. See the thing now it to determine what we want. Follow thru. The big mistake here is to think that you have no resources. That just is not true. My God the people you educate should be able to do something with all of that.

It's the labor that we always talk about but never have as far as industry. You simply rethink what your teaching in the Universities. This country has enough people to be self-contained. We don't really need outsiders anymore. Hey we have sports. I like football and playing just as much as the next guy. Baseball I could care less. I like contact sports.

So we need to stop spinning our wheels in the paper. Get something real going. There is no way you can tell me that these Universities can't turn out the talent.

artimus maxtor, i cant understand any of your mystical ramblings.

i think this thread has been dominated by probability of an earthquake, largely due to my questions.
and based on that logic--nobody should own any property in SF. never ever.
even in 89, when we (or i should say, they, as i wasnt here then) had the big one, not all buildings were levelled. a lot were destroyed in the marina on reclaimed ground, by ruptured gas lines and fire, more than the earthquake.

Nothing mystical about it. This is opportunity knocking I feel. The whole housing situation. Jobbless etc. Its a time of opportunity and not of dread. See. We have the opportunity now. We offer it. No second fiddles. NO SECOND STRING. hahaha. I hate second string I am way to good for that. Always have been.

I would defnitely put 50% down if you can afford to. Payout a lot less in interest.

sf_peasant says

even in 89, when we (or i should say, they, as i wasnt here then) had the big one

If you think Loma Prieta was the big one, you probably should not buy in SF at all. :) It was far away from the core of the Bay Area. The next big one predicted is on the Hayward Fault.

sf_peasant says

had the big one, not all buildings were levelled

The '89 quake was in no way 'the big one' they speak of. The big one is going to be 9.0+, and probably shear off most of coastal southern CA and drop it into the Pacific.

And in that case it's not worth worrying about anyway. It's like trying to plan for life after nuclear winter or the impending zombie apocalypse. Purely academic and completely pointless. Property insurance will be the least of your worries if that goes down..

Schizlor says

sf_peasant says

had the big one, not all buildings were levelled

The ‘89 quake was in no way ‘the big one’ they speak of. The big one is going to be 9.0+, and probably shear off most of coastal southern CA and drop it into the Pacific.

Most people take this for granted, oh it is not going to happen in our lifetime but it can happen any day.

bubblesitter says

Schizlor says

sf_peasant says

had the big one, not all buildings were levelled

The ‘89 quake was in no way ‘the big one’ they speak of. The big one is going to be 9.0+, and probably shear off most of coastal southern CA and drop it into the Pacific.

Most people take this for granted, oh it is not going to happen in our lifetime but it can happen any day.

Just wait for the cataclysmic Mega-Earthquake brewing under Yellowstone to hit. If that baby touches off in our lifetime, we'll be living in APOCALYPSEFUCKland!!

sf_peasant says

and based on that logic–nobody should own any property in SF. never ever.

not everybody. Super fantastically rich people need tax right offs. I feel like all solvant SF LL's need to be so wealthy,.. That they don't even have to break even with rents. I feel like the numbers In SF are so out of whack, that only these people can for sure benefit financially. everyone else is just gambling it seem.

sf_peasant says

89, when we (or i should say, they, as i wasnt here then) had the big one

you said all you need to said to say that you should not "buy" here.

1989 was a tremor, nothing more.

The destruction you observed (or didn't) was done only to places with shoddy practices like building on Bay fill, or old construction practices like unreinforced masonry foundations of Victorians, the long-obsolete design of the support structures for the Cypress Freeway, etc. that are not used any more.

Maybe you and your flat will survive a "real big one" unscathedbut you may be so shaken by it that you will want to leave SF or even the region, but owning that flat, if it's still there, will make it more difficult or expensive to leave. I knew a handful of non-locals like that after the 1989 tremor.

Just enjoy your time here as a renter and enjoy the Coolness and Hipness of the place without commitments.

One thing about all the Asian immigrants in these parts: many of them come from places where big quakes are part of life.