patrick.net

StuckInBA Says:
What’s wrong with Kiyosaki?

Plenty...

Is he trying to reinvent his image?

Yes, i guess so. When the advice in his earlier books is shown up to be complete cr@p appealing only to the Thompsons gazelles of investing, he then has to go on and engage his brain and do some reading on the markets etc to try to appear like a real expert. Same as Larry Nusbaum -- invent the persona first, then when you get called out on all your cr@p advice, go off and do some hard thinking to reinvent yourself as someone knowledgeable by cherry-picking everyone else's ideas and tone down the act a bit...

I got something in the mail today from an 'investment guru'/spruiker -- he is standing in front of a Bentley on a country road, except he, the Bentley and the country road are all photoshopped together from 3 different photos. These characters love to stage themselves in front of yachts, on marinas, in front of Ferraris, etc, and it's amazing and frightening how well that sort of simple image manufacturing works on most people to convince them the guy is a rich business genius. (Well, if they *are* rich it's usually from seminars, not taking their own advice in investing.)

OO,

My place came Williamson Acted, I was actually surprised when I found out (on the disclosures) because it isn't a super large property and the people I bought it from hadn't done anything agricultural with it. The people before that, however, had subdivided their 2000 acre cattle ranch into 22 'ranchettes', so perhaps it was Williamson Acted at that time. I don't know when the Williamson Act came about.

I don't understand how anybody could be bearish about this market. My wife and I just started looking for a house. We have :

Household income of 180k
Savings for downpayment of 250k

Unfortunately, we cannot find a decent sized house with good schools. We either have to accept living in a shitty school district, commute for an hour, or live in a tiny crapbox we can't afford to remodel now! We'd better buy before we get priced out of the market and count on massive appreciation to allow us to finally buy something livable!

How can you think the market is going to collapse? BUY BUY BUY!

(Also, anybody know of any sweet rentals coming up in June?)

SFBubbleBuyer :

Where were you 2 years ago ? I wish you had given that advice before I started hanging out with the JBRs here. I would have made so much money. How high the median in Cupertino be 2 years from now ? I may think of buying if there will always be so many people with 250K saved for down payment. I don't want to miss the boat.

Thanks for injecting some sense in this blog.

The guy who made up a story about a “rich dad” and made a lot of money selling books (but not much selling real estate) Says:

> For example, say you buy a house for $100,000 and put
> 20 percent down and borrow $80,000. If the market
> deflates and the value of your home drops to $70,000
> (because everyone else is selling their homes to get out
> of debt), the lender may ask you to pay the $80,000 you
> owe immediately.

I’ve never heard of a lender that could call a loan if the LTV fell below some point (but I’ve only actually read every word of a few residential home loan docs).

Then palo alto renter Says:

> I just clicked on one of those Kiyosaki stories and he
> mentions banks calling loans on depreciating houses,
> even if you are 100% current on the loan. I don’t read
> his stuff normally but I presume he knows what he’s
> talking about.

Kiyosaki knows how to sell books (and games, and classes and DVDs…) but not much about real estate investing.

The SFWoman Says:

> palo alto, Why would a bank ever call in a loan as
> long as the person is paying?

There are many reasons that a lender will call a loan that is current. Some examples include not maintaining home or allowing the home to be used for illegal activity like a crack house or pot growing house.

Then DinOR Says:

> Virtually every mortgage I’ve ever had contained an
> “acceleration clause”. Every time I brought it up it was
> quickly dismissed as “obsolete” and seldom if ever used.
> More applicable to the Great Depression era than today.
> O.K then, why is it still in here then?

I would be interested in reading this “acceleration language” and hearing if anyone here has heard of a bank calling the home loan of a solvent borrower who is making regular payments on his well maintained home. How would a bank “prove” that the value of had dropped below a specific point?

Then PaloAltoRenter (or just PAR) Says:

> DinOR, SP, SFWoman, Thx for your comments. Maybe
> Kiyosaki is specifically talking about investment properties?
> That would make more sense… Like I said, I don’t read his
> stuff but somebody here inserted a link.

I have actually read lots of commercial loan docs and while they have many more events of default (like change of control so a lender can call a hotel loan after Mr. Patel the veteran hotel guy dies leaving the property to his 19 year old girlfriend) than residential loan docs I have never read (or heard) of any LTV test…

Right now the rents vs. mortgage are still way out of whack.

I saw in the exact same neighborhood, about 2 blocks from eachother :

2 bedroom, 1 bath, 800 sq ft house on 4750sq ft lot, 660,000 bucks. Listed as 'ready for tear down, build your dream home.' Cheapest thing in Cupertino, basically.

3 bed, 1bath, tiny house... renting for 1600 a month. (http://sfbay.craigslist.org/sby/apa/281561700.html)

So putting 150k down, that's still almost 3200 a month, without taxes vs 1600 a month and 150k in 5% yield bonds or whatever you want to invest in.

It sure doesn't make sense.

FormerAptBroker:

I think it can happen.

When I borrowed for a mortgage in 1989 the mortgage guy at Great Western on Montague in Milpitas S & L laughed out load at my face when I asked him to show me in the contract the language that explicity told the policy on whether the loan could be called. In a derisive way, he, an immigrant from Hong Kong, told me that in California houses never lose value, without ever answering my question.

See, I remembered a news segment I'd seen a couple of years before about people in upstate NY losing their homes when their mortgages got called, because the loan was under water.

Boston Transplant,

Nob Hill goes for about $700/sq ft for a condo or $600/sq ft for a TIC, so somewhere between $1.2M and $1.5M, I would say. Maybe a bit less because it is on the Chinatown side, as SF Woman said.

So, $7k mortgage, $1.2k tax, that is $8.2k * .6 (40% tax bracket) = $5k.

A bit cheaper to rent, but not by much. Throw in $400 mo homeowners association fee, if it makes you feel better to rent,

Somebody gave me Kiyosaki's book as a birthday present a few years ago.

I agree with those who say he's a B.S.'er, but he also has some good ideas that are the same kind of common sense in a book called "The Millionaire Next Door".

SFBubbleBuyer,

Where do you work? You can buy something in Piedmont for ~$1M that would be 3/2 and probably 1500-1700 sq ft. I don't know if you consider that "decent sized" or not, but it is plenty of space for two children. You can probably get something slightly larger for that price in Moraga, but again, I don't know if you work in The City or Silicon Valley.

If it is the latter, how about Fremont? I hear the schools are good and homes are still relatively cheap. The commute must be brutal though.

On and SFBubbleBuyer, if you have only one kid you are much better off renting and sending the one to private school. With two it is kind of a wash and with more than two, you should buy, but your kids or going to have to double up or something if you want a top school district.

Why don't you buy in Campbell Haha?

But yet you can rent one in that area quite easily, Haha.

Shows a bit of a disconnect from fundamentals.

Jimbo, I work in Mountain View, my wife in Palo Alto. I've done a commute of San Leandro to Menlo Park before. That blew. I left for work at 6am just to avoid the traffic. FUN!

I don't mind commutes, but I'd like to minimize the commute with the idea of kids in the very near future. South peninsula and northwestern southbay is pretty much the most 'central' you can get, so future job changes would likely not change the commute TOO much.

I'd like to avoid commuting from Santa Cruz like some of my coworkers. Ugh.

OpinionsPlease,

I would not buy right now. I am holding off for 2004 prices, at least.

CB, now I see how everyone does it in SV, they have three adult incomes! This also explains the shortage of single women :-D

sybrib Says:

> Somebody gave me Kiyosaki’s book as a birthday
> present a few years ago.
> I agree with those who say he’s a B.S.’er, but he also
> has some good ideas that are the same kind of common
> sense in a book called “The Millionaire Next Door”.

Sure he has "some good ideas", but so does Casey Serin...

SFWoman, FAB, Jimbo...thanks for the advice. Fab, your description was pretty much right on the money. It's a group of gals working in the city, interested in the no-car thing.

Regarding the poor parking in that area...is that really considered such a huge downside by the majority of people in SF? I live in Beacon Hill in Boston, where parking is atrocious, but most people here either don't have a car at all, or else they just leave their car parked all week and take it out on the weekends. I consider the car-free thing very attractive, and I was under the impression that it was also common in SF.

Having grown up in Mendocino county, school on the peninsula, and now moved to Boston, I don't have a great perspective on SF proper. But as my wife and I consider moving back to SF, I think we would be attracted to the North Beach area and lower Nob Hill area. My wife's company is on Califonia St. a few blocks from the Embarcadero.

Is my impression that the North Beach area is the part of SF most like Boston correct?

Thanks...

p.s. When I say North Beach is "most like Boston", in addition to the Italian element, I am thinking of the smaller scale of the buildings, the greater preponderance of green space, and the greater walkability. These are things I love about Boston and am looking for in SF.

sybrib,

I can't say as I've ever had a MB be THAT rude (to my face anyway) but I've never rec'd a satisfactory explanation either. Now that we're finally gaining some traction in dismantling the REIC we will some day soon have the audacity to have this language removed from loan doc's! (If it's all the same to them).

OpinionsPlease,

You've come to right place for all informations concerning housing prices, rum and supercharging your "babe magnet"!

DON'T BUY! :)

Seriously, what I know about Squaw could fit on the edge of a razor blade (and look like a BB rolling down a four lane highway). This much I do know, as the outer fringes of the rolling bubble die, resort areas are showing the first strain. In ways it was SO predictable! Most of the run up in resort/vacation areas was built on MEW (mortgage equity extraction) from core metro markets. Since many were part of multiple purchases from the same buyer it's easy for me to visualize mass defaults. Push come to shove these specuvestors will save their own hide (primary residence) and let these units go back to the bank!

The unprecedented explosion in "2nd homes" absolutely connects with the fact that there are more VACANT homes for sale today than any other time in our history. We know, waiting is a PITA, but buying now after only a 4% correction from peak (mid '05) doesn't represent much of a bargain. Sift through the price history data for that area and watch the burn as we plunge through 2005's prices altogether! :)

SVRenter - which school district? Could you be a little more specific - I was thinking of moving to Los Altos School District, but rentals are thin on the ground in our price range at the minute. My daughter is in MV-Whisman District and is doing okay - we can't afford private schools though.

I definitely do not want to be in Cupertino School District!

BostonTransplant,

I lived in Back Bay (Comm Ave between Berkeley and Clarendon) after college. I went to college in Cambridge. The foot of Russian Hill where it meets North Beach is probably the most Bostonian, Telegraph Hill is also fairly Bostonian. Parts of North Beach are now Chinese, and are no longer Italian, so you'd want to look around a bit to get the feel you want. The area south of Market near the Embarcadero isn't Boston-like, but is filled with young people going out at night to restaurants and bars and would be a fun place for a person who works downtown as well.

My one gripe about SF is the car culture. People drive here. I walk everywhere, and people think I'm nuts. The way that the car culture comes in to play is that other people all drive, so if you move to a neighborhood with no parking half of the people invited to your house can't figure out to take a cab over, or they do and then can't get a cab to come drive them home.

The car culture and the dirty streets are my two main gripes about SF. We do seem to have fewer homeless on the streets the past year or so. (Maybe Care not Cash is working?)

Opinions,

If I were you I'd lease a condo for a season and see if you want to own one. The idea of not having to schlep your equipment and clothes up every time you ski is appealing, but I'd see if you want to spend every weekend skiing at Squaw. It's probably cheaper to lease or rent a condo the weekends you need one, then you don't feel guilty if you want to go to Utah or Idaho or Aspen sometimes.

Boston Transplant,

I lived in San Fran proper in the Noe Valley area. I liked Noe because it was pretty quiet and very sunny compared to some areas of San Fran. I walked a LOT in San Fran, but you'll find it's much less a walking city than Boston or Manhattan. If you get a place pretty central, though, you can definately hoof it to pretty much anywhere in the city in a reasonable amount of time. Bart and Muni can cut that time down easily if you like walking. Usually you can walk 6-8 blocks total and be able to get from anywhere in the city to anywhere else if you take public transport. Check the routes where you're looking at living. And I'd definately rent for at least a year regardless of the market so you can get a feel for the town. Figure out where you're going to want to spend most of your time and get a place convenient to it.

SFBubbleBuyer,

(You sound like you're either sarcastic or trolling under a new alias, but just in case you're serious)

Why worry about buying when the buns aren't even in the oven? By the time your kids are school age, you might have a new job across the country and the "good" school district might turn bad. The high selling price of BA real estate makes selling at the wrong time extremely precarious. Why risk it when you don't need to?

SFWoman,

Great advice. I'd say that's the rule for buying any vacation home. Rent for a year to figure out usage and utility, run some numbers and see how it goes.

I don't get the appeal of vacation homes (as opposed to weekend homes or country homes) myself. Why get tied down to one place when the same amount of money (at current prices) will get the FVacationHomeB equal or superior accommodations just about anywhere.

Randy H.

Thanks for the spreadsheet link, but I'm too stupid to figure a couple things out. Is there a instruction link or forum? I didn't want to hijack this thread with questions.

Austingal said: "We are going to buy a mobile home in the good school district on a pier and beam foundation (unable to be financed) for cash."

You are spending $143k on a MH that doesn't qualify for financing in a crummy school district?!?

What's going to happen when you try and resale? Am I missing something?

SFWoman, SFBubbleBuyer,

Thanks for the advice. We are big walkers too. My wife would want to walk to work (in the financial district) and I would probably ride my bike if I can get an engineering job in the city proper. A lot of SF seems imposing in scale compared to Boston, and we prefer a neighborhood that is homey (for the same reason Manhattan is not as appealing). We're willing to give up some space and give up parking in order to find this.

This site suggest that the average 2-bedroom apt rents for $2616 in North Beach and $3505 in Nob Hill: http://www.rent-sf.com/avg_rent.php

Is that because the quality in Nob Hill is much higher, or just that the location is more desirable?

Astrid,

I'm not trolling. :) And if I were single, I wouldn't be looking for a house at all. My wife, however, believes things happen this way : Get Married, move to SF where her family lives, Buy House, Have Kids.

We're both early thirties. We both want kids starting in about two years. The wife wants a house before we start trying. I am arguing to wait for awhile on the house purchase. If I don't win the argument, I don't want to be stuck with a house we can't afford to sell and can't stand because of location/schools/etc.

And I was being sarcastic when I said "Why would anybody be bearish on this market?"

"FVacationHomeB" LOL!

Took me a minute, but definitely funny! Perhaps had it been prefaced by "Mr. Thinks he's Donald Freaking Trump" it would have stood out a little more? :)

The only way a vacation home makes sense (to me anyway) is if it's located where you would want to retire/live permanently. Outside of that it's really just vanity. "Oh, we were up at our FVacationHomeB (TM) over the weekend and Bruce and Demi....."

DinOR,

That high profile hotel dude divorce wouldn't be Mr. Shiloh Inn, would he?

Boston Transplant :

CalTrain will let you bring bikes on specific trains. http://www.caltrain.com/caltrain_bike_FAQs.html gives you the skinny. If you're flexible on your commute schedule, you should have no problem workign in the southbay and biking. CalTrain isn't exactly FAST, but it's a damn site better than sitting in traffic.

Nob Hill has high rents. I never saw the allure, but certain types of people are impressed if you're in 'Snob Hill'. The views are definately nice, however.

For a 'homey' feel, I recommend Noe Valley. It's not really 'walking' distance to the financial district, but it's definately walking distance to Bart which will dump you right there in a few stops. Rents in Noe Valley are hit and miss. You can get some good deals, but there are others that our sky high. I lived there for four years.

If you can find a month to month or even a six month lease, I would go with that and get a feel for the city.

If the bubble really does rupture catastrophically (so far it's just threatening... and promising at least a deflation) everybody sitting on cash reserves will probably be able to afford a house and a vacation home.

PAR,

Rich is.... he's brutal ain't he? Dead "kitten" bounce?

Doug H,

Yeah, watching that guy go into meltdown mode was not pretty! Mark was one of OR's home grown success stories and quite the darling with the finance crowd and then he went wiggy. I'd heard he started this crusade about frivolous lawsuits and just couldn't let it go!

Even conservative talk show hosts couldn't get him to talk about anything else. He just got obsessed with it and it really cost him. He's a big part of the reason my "bubble crusade" has been kept as quiet as possible and why I'm grateful to everyone here for putting up w/me. :)

"Not having an income to take deductions, Priceless"

O.K, that may be the best take off on that ad yet! :)

Even by ditch digger's standards this guy is..... is.... I dunno?

Boston Transplant,

I think that a lot of the Nob Hill rent being higher is because of some of the very luxurious high rise or older (Brocklebank type) doorman buildings. They are pricey, and there are a lot of them on Nob Hill. The North Beach area that is nice is the area at the foot of Russian Hill. You don't want to get close to the Chinatown area that borders North Beach or you start hitting nightclubs and strip joints.

Noe Valley is very convenient to the freeway, most of the people I know who live there work in Silicon Valley, and can hope right onto 280. When I first moved here (1993) Noe was very Birkenstock and hairy armpits and badly renovated (in the 1970s) working class Victorians. It gentrified during the dot com boom, and then even more so the past five years or so. It reminds me of a gentrified Dorchester. It and Potrero Hill and the Mission are the sunniest neighborhoods.

Ah, yes. Definitely rent for a year or so before buying if sun is important to you. Some of the neighborhoods are really socked in during the summer, and you don't want to accidentally buy in one if you don't want fog June-August.

ubermonkey,

The graph stops at 1998. The spread has gotten much greater.

newsfreak,

That's the least frightening part of his agenda, if you ask me.

SP,

There are lockers up at Squaw, there is a club with lockers next to the parking lot for the Squaw Kids facility. I've never looked into it, I only go up there 4 or 5 times a year max. I let my husband ski with the kids in Oregon or elsewhere the rest of the time. I like sun and heat in the winter!

SFWoman said:

> The idea of not having to schlep your equipment
> and clothes up every time you ski is appealing,

Then SP Says:

> There are some places in EU (Austria, for e.g.)
> that you can rent a railway station locker for a
> long time.

When I was skiing and snowboarding a lot more a few years back I had lockers at both Squaw and Heavenly…