patrick.net

HC said: The fact that things were very deliberately organized in a way that is absurd, has no societal benefit, and can only lead to bad outcomes.
I could both agree, and disagree with you. San Jose has one of the tightest rental markets in the nation; vacancy rates stand at 2.7%. Time may be of the essence, though, as they have a decent pipeline of apartments that will be coming on line in the next year or two.
I can't add much to what controllio said... rent increases limited to 8% per year. The owner has a history of selling to property specific LLCs, so this may be just a way to access the capital for improvements.

EBGuy says

San Jose has one of the tightest rental markets in the nation; vacancy rates stand at 2.7%. Time may be of the essence, though, as they have a decent pipeline of apartments that will be coming on line in the next year or two.

About time!

Now if only there was a good pipeline of well built SFR's that were on lots larger than postage stamps.

EBGuy says

San Jose has one of the tightest rental markets in the nation; vacancy rates stand at 2.7%. Time may be of the essence, though, as they have a decent pipeline of apartments that will be coming on line in the next year or two.

I heard San Francisco currently has round 3% vacancy, so also extremely tight. But it is naturally much more crowded at the low-end range (studio/1 bedroom) where multiple applicants after a single 15 minute showing is not unusual. Quite a few house owners are trying to cash in on that and are cranking out new in-laws like crazy. It looks like the situation is easing a bit now, but the low-end rental market will stay crowded as many people/couples cannot afford to pay more than $1500-$2000. The new "tech boom" has certainly driven prices and demand up.

mell says

Quite a few house owners are trying to cash in on that and are cranking out new in-laws like crazy.

There were already a lot of unpermitted in-law units in SF already. Rents being what they are encourages people to use them again. However, note that they are subject to SF rent control, which is extremely strict, and it doesn't matter if the unit is legal or not for this purpose.

mell says

It looks like the situation is easing a bit now, but the low-end rental market will stay crowded as many people/couples cannot afford to pay more than $1500-$2000. The new "tech boom" has certainly driven prices and demand up.

$1500-2000 would be cheap, although it might be the case in less nice southern neighborhoods or maybe certain parts of the Outerlands.

I'm hearing quotes of $4K for 1BR places South of Market or in Mission Bay, plus/minus a few hundred each way (maybe $3800-4200). Many of these would be easily walkable to many startups, and not too far from BART/Caltrain or 101/280, so you are paying a premium for location.

EBGuy says

The owner has a history of selling to property specific LLCs, so this may be just a way to access the capital for improvements.

Are you talking about the guy who did the 2010 sale at $314K or the current person who bought at $755K? I know the former does this in the San Jose area under his LLC. He was the broker of the 2010 sale.

Everyone's so focused on this potential sale, but that buyer from 2010 to 2012 also made out like a bandit -- buy $314K, sell $755K. Percentage-wise, even bigger.

controllio, I'm just using the County Recorders site so it's a bit difficult to parse the record. Its working a little be better now than when I originally posted.
that buyer from 2010 to 2012 also made out like a bandit
Well, that same buyer -- I'll refer to her by her initials, AK -- also appears to have bought the property (or an interest) in 1995. It then was deeded by AK to an LLC in 2005. And then she shows up on the deed in 2010. Not really sure what's going on... at least from the public recorders site.

corntrollio says

$1500-2000 would be cheap, although it might be the case in less nice southern neighborhoods or maybe certain parts of the Outerlands.

I'm hearing quotes of $4K for 1BR places South of Market or in Mission Bay, plus/minus a few hundred each way (maybe $3800-4200). Many of these would be easily walkable to many startups, and not too far from BART/Caltrain or 101/280, so you are paying a premium for location.

South Beach/Mission Bay is extremely expensive, I used to live in a luxury studio while rents were 60% of today and it was lots of fun. However today the area is crowded and there is constant traffic problems, IMO it lost a lot of its appeal. Then there is SOMA which is nothing short of a shit-hole, people paying "premiums" for that location should seriously reconsider. Gentrification has advanced only slowly and I think will reverse with the next bust. Outer richmond (esp. sutro heights) or outer sunset (trails, beach, presidio) beats any of these neighborhoods and you can be at work within 20 minutes anywhere in the city. Also crime is far worse in the inner city, you pretty much need a garage space. In any case the Fed-fueled housing market run-up has run its course, they pretty much need to keep buying MBS at that level and hope for continued low interest rates and job stability to just keep the level it is at now.

EBGuy says

controllio, I'm just using the County Recorders site so it's a bit difficult to parse the record.

I see what you're saying. Based on that, it appears the only real sale might have been 1995, which isn't even listed on the RedFin record. All the others appear to be, ahem, straw man sales most likely based on the complete record. I'm pretty sure it's enough to say that the alleged $755K sale is bogus, and this isn't just a casual 1-year flip. Myth busted.

mell says

Outer richmond (esp. sutro heights) or outer sunset (trails, beach, presidio) beats any of these neighborhoods and you can be at work within 20 minutes anywhere in the city.

Not on Muni. :)

Faster to get to work if you live in Daly City and take BART.

corntrollio says

mell says

Outer richmond (esp. sutro heights) or outer sunset (trails, beach, presidio) beats any of these neighborhoods and you can be at work within 20 minutes anywhere in the city.

Not on Muni. :)

Faster to get to work if you live in Daly City and take BART.

True, I don't even consider public transportation because SF is not that big, so that was for bicycle, motorbike, or cars. My preferred means of transportation is a nice 30 minute bicycle ride through GG park. I don't even remember the last time I took Muni.

REpro says

House sold in October 2013 for $755,000, now for sale for $1,520,000.

Interior Features

Laundry Information
Coin-Operated Washer/Dryer (Leased)

Flooring Information
Laminate

Heating & Cooling
Wall Furnace

If there is any fool who would even pay $50k for that piece of shit, let him buy it and get him off the market. There can't be that many fools with that kind of money left.

Dan8267 says

If there is any fool who would even pay $50k for that piece of shit, let him buy it and get him off the market. There can't be that many fools with that kind of money left.

Yeah, but I'm worried that a couple of years down the road delinquencies will skyrocket again and the taxpayer will have to pick up the tab once again and/or the Fed will continue to print money and debase the currency in an effort to keep interest rates from rising. Rinse and repeat - it's never been a better time to buy I heard when I looked at a couple of open houses last weekend ;)

controllio said: I'm pretty sure it's enough to say that the alleged $755K sale is bogus, and this isn't just a casual 1-year flip.
You said it, not me :-) I'll see you two LLCs and a WaMu mortgage.

That Zillow estimate (Zestimate) is $922,00 for 430 N 2ND St San Jose, CA 95112. I can't imagine they put that much renovation and repair into this home to warrant a sales price of $1.5 million.

This home is useless to a family.

It's basically a frat house being so close to SJSU and the obvious customers will be students from SJSU. Good luck managing eight separate 18-22 year olds under one door chasing rent money from the students mom and dad and constantly have to manage enter/exit. That's not withstanding whatever issues that comes up over 18-22 year old who will drink, smoke or worse.

That 200K upgrade (exaggerated, err deferred maintenence catch-up) may last about 24 months before another 50K maintenence is required. This house was remodeld with the expectation it will be trashed in two years because you cannot replace things any cheaper than this. I see several $400 fridge and $499 gas range and $299 hooded microwaves. 25K in electrical upgrade to get a $19 lighting fixture, and white on white. lol

No amount of yield is worth that level of migraine. These properties drain cash on the maintenance side anyway and yields way less than it appears anyway. There is no chance on this green earth it gets 1.5M. Put it this way, I rather rent to one person for 5K a month than 8 students

What a crappy remodeling job. Fake upgrade terribly-fitting kitchen straight from Home Depot. Scary-looking bathroom re-do. Too cheap to box-in that huge waste pipe. Chopped-up rooms with the weird row of three doors. If you weren't an insomniac before moving there, you would become one. Like out of "Trainspotting".

beetles says

What a crappy remodeling job. Fake upgrade terribly-fitting kitchen straight from Home Depot. Scary-looking bathroom re-do. Too cheap to box-in that huge waste pipe. Chopped-up rooms with the weird row of three doors. If you weren't an insomniac before moving there, you would become one. Like out of "Trainspotting".

The finish is great considering the low $925-$1095 rent on studios and $1250-$1600 for the one-bedroom units in Silicon Valley.

drew_eckhardt says

beetles says

What a crappy remodeling job. Fake upgrade terribly-fitting kitchen straight from Home Depot. Scary-looking bathroom re-do. Too cheap to box-in that huge waste pipe. Chopped-up rooms with the weird row of three doors. If you weren't an insomniac before moving there, you would become one. Like out of "Trainspotting".

The finish is great considering the low $925-$1095 rent on studios and $1250-$1600 for the one-bedroom units in Silicon Valley.

Perhaps but imagine what it will look like after a year or two of fraternity living.

If this thing sells at the asking price to the penny, I'll quit this forum. LOL.

Here we have competition. This time more $/sqft, pure and ready for your improvements.

http://www.redfin.com/CA/San-Jose/402-N-3rd-St-95112/home/1084920

I will miss you bubblesitter.

REpro says

I will miss you bubblesitter.

This thing won't sell at the asking price, so I'll be still around!

mell says

True, I don't even consider public transportation because SF is not that big, so that was for bicycle, motorbike, or cars.

Yeah, but if you don't take Muni, you have to bend over for parking too. A bike works sometimes, but gets stolen often -- I know people who've had them taken from their garage in broad daylight, and SFPD isn't too helpful about getting them back.

EBGuy says

I'll see you two LLCs and a WaMu mortgage.

Was there a mortgage filed too? I didn't even look for that. I did see the LLCs, but that could just be for development purposes -- pretty common. The only other easy explanation is if the original owner from 1995 sold it but took a mortgage back, and then it essentially got foreclosed and went back to the original owner. That seems less likely, but not impossible.

I think my suggestion is more likely.

REpro says

Here we have competition. This time more $/sqft, pure and ready for your improvements.

http://www.redfin.com/CA/San-Jose/402-N-3rd-St-95112/home/1084920

They've been trying to unload that albatross since 2008!

I like the recent price history:

Mar 06, 2014
Price Changed
$1,550,000

Aug 30, 2013
Price Changed
$1,650,000

Aug 27, 2013
Listed (Active)
$1,250,000

I wonder if the $1.25 million was a typo or they quickly decided to raise the price -- usually a typo gets fixed faster than 3 days, especially during the week.

That price makes no sense re: cashflow for the 5 units. They are saying $5300/mo + the owner pays a lot of the utilities. It has an interesting ownership history too, probably has a ton of deferred maintenance, and the owner has had some trouble paying the taxes on occasion. The price would only make sense if the units were in perfect condition and rented at a much higher price.

430 is suggesting cash flow twice that, plus tenants pick up more utilities.

bubblesitter says

REpro says

I will miss you bubblesitter.

This thing won't sell at the asking price, so I'll be still around!

It's not going for the asking price, unless a real estate agent buys it. People are getting wise. I lot more people I talk to here in the Bay Area either got out of the game or have no intention of jumping in this artificially inflated and manipulated market until they see less volatile signs. It's sad, the real estate agents keep saying these are normal prices, buy now or be priced out forever, and anything else you can imagine a used car salesman saying, yet this time the majority isn't being sucked in. Only fools hear the same lies, under the same negative conditions and believe them. Maybe the majority of people learned their lesson? These homes are not worth 1,000,000 or more. You can put whatever price you want on anything, and sometimes a fool comes along, but maybe most sellers should give up on the fool stumbling their way.

My Santa Cruz agent told me I should be able to get a LOT more for my money soon. He said all the houses we looked at were priced at least 100K (or more) too high. While we were waiting in between viewings, I overheard him on the phone lamenting that he had purchased his home in 2007.

That's because he is part of the cult of the National Real Estate Association.

rufita11 says

My Santa Cruz agent told me I should be able to get a LOT more for my money soon. He said all the houses we looked at were priced at least 100K (or more) too high. While we were waiting in between viewings, I overheard him on the phone lamenting that he had purchased his home in 2007.

And he didn't default?

hrhjuliet says

People are getting wise.

I don't fully agree here. The inventory here is so super low that a few(top notch condition) listings have sold above asking price. The crappy one like the one listed by OP will languish on the market forever.

New Renter says

And he didn't default?

Not yet. But he wasn't wearing a suit like he did the 3 previous times I met him. He also offered to buy me breakfast, but I wouldn't let him--he has young kids and a mortgage :)

rufita11 says

New Renter says

And he didn't default?

Not yet. But he wasn't wearing a suit like he did the 3 previous times I met him. He also offered to buy me breakfast, but I wouldn't let him--he has young kids and a mortgage :)

Do him a favor and introduce him to the fine art of squatting.

mell says

P.S. Long 500 sh SRS @17.76 for lack of better options, you gotta be hedged with something during such an epic melt-up ;)

Ah yes indeed it's fun time!

mell says

P.S. Long 500 sh SRS @17.76 for lack of better options

Do you understand how UltraShort funds work? Do you trade frequently?

bubblesitter says

If this thing sells at the asking price to the penny, I'll quit this forum. LOL.

Unfortunately, it went pending above list price. I'll miss you.

E-man says

Unfortunately, it went pending above list price. I'll miss you.

Nice try. Still shows active. :)

bubblesitter says

Nice try. Still shows active. :)

The status will be changed in a day or two.

E-man says

The status will be changed in a day or two.

OK. We shall see if it sells @ the asking price.

E-man says

bubblesitter says

Nice try. Still shows active. :)

The status will be changed in a day or two.

wow, that is incredible for a frat house near SJSU.

SFace says

E-man says

bubblesitter says

Nice try. Still shows active. :)

The status will be changed in a day or two.

wow, that is incredible for a frat house near SJSU.

Not sure it would be a frat house. Too far from SJSU.

I was yanking bubblesitter's chains. I have been inside that building. The seller did a crappy job of rehabbing the building. Shoddy workmanship. Other than the travertine tile floor and some cheap stainless steel appliances, they used low grade materials almost everywhere inside the building. They did a horrific job of painting the inside as well as the outside of the building.

One unit has been vacant, and I know why. It will be a challenge renting out this unit. It appears that whoever is buying this building will have to drop another $200k to rehab this place and make it right. The foundation/basement appeared to be not seismically reinforced/upgraded. Therefore, there's a high probability that banks will not lend on this building.

With that said, they're looking for a sucker paying all cash for this building. I was sad after seeing the house. This gorgeous, 10-foot high ceiling on each floor, Victorian building was ruined by a tasteless woman flipper. Fortunately, money can fix its cosmetic, but it won't be cheap fixing it. This building will sit on the market for a while at that price.

E-man says

This building will sit on the market for a while at that price.

I knew it. I don't have to quit this forum. :)

E-man says

The foundation/basement appeared to be not seismically reinforced/upgraded. Therefore, there's a high probability that banks will not lend on this building.

That's what I was saying -- they didn't pull the permits or spend the time or money to do this job right.

E-man says

The seller did a crappy job of rehabbing the building. Shoddy workmanship.

For what they were quoting, of course they did a crappy job.

E-man says

This gorgeous, 10-foot high ceiling on each floor, Vitorian building was ruined by a tasteless woman flipper. Fortunately, money can fix its cosmetic, but it won't be cheap fixing it.

If you look at the sales record, it looks like she has owned it since the 90s, so not sure if she's just a flipper. As EBGuy and I discussed, the sales record is odd, but it seems like she's been using LLCs and straw men to hold it for that long, hoping that it'd eventually be a good investment after buying it cheap. She appears to spend at least a good percentage of her time in another state and is above retirement age, from a quick search.