patrick.net

I wish there were prices like that in the immediate Bay Area.

edvard2 says

I wish there were prices like that in the immediate Bay Area.

Immediate Bay Area? So a 15 minute drive to SF isn't "immediate" enough for you? You can find even cheaper if you go even closer to SF from here.

Good luck Tude. BTW, I appreciated your post a couple of days ago regarding a sane approach to acquiring rental stock -- when property cash flows, move out, rent it out and buy another.
Nice lot! Hopefully the bank will give your offer proper consideration as there is more money on the table for them. I know this worked for us when we beat out a cash offer, but we were waving more (borrowed) money in front of a 'conventional' seller (way back when...) For those who are interested:
Link deleted to thwart chicken rustlers.

EBGuy says

Good luck Tude. BTW, I appreciated your post a couple of days ago regarding a sane approach to acquiring rental stock — when property cash flows, move out, rent it out and buy another.

Nice lot! Hopefully the bank will give your offer proper consideration as there is more money on the table for them. I know this worked for us, when we beat out a cash offer, but we were waving more (borrowed) money in front of a ‘conventional’ seller (way back when…) For those who are interested:

Hey man, lol, if we actually get the damn thing everyone will know where we live! Anyway, yeah, that's the house. We have weird requirements, another one being buying in an unincorporated neighborhood, we can have chickens and goats!

btw, the house in person is stunning, I almost did not go see it from the pictures, but there are some special things about the house and yard that aren't in the pics. Like a full-size walk-in meat locker! ;)

another one being buying in an unincorporated neighborhood, we can have chickens and goats
You might want to rethink that one, or a least double check as this CC FAQ has me a bit concerned. Plus I just read this last night:
"Kensington is unincorporated therefore subject to laws of Contra Costa County. Other towns in the county can vote to override the law of beekeeping being illegal; Kensington can't."

EBGuy says

I appreciated your post a couple of days ago regarding a sane approach to acquiring rental stock — when property cash flows, move out, rent it out and buy another.

Good luck to you, Tude.

One question I had re: EBGuy's comment, as I thought you said your current house was close to break-even on rent vs. mortgage. That's cash flow negative when you include tax, maintenance, vacancies, etc. Do you feel comfortable getting negative return? If so, why?

Wouldn't you be better off selling the place and investing the money in something that has better return?

corntrollio says

EBGuy says

I appreciated your post a couple of days ago regarding a sane approach to acquiring rental stock — when property cash flows, move out, rent it out and buy another.

Good luck to you, Tude.
One question I had re: EBGuy’s comment, as I thought you said your current house was close to break-even on rent vs. mortgage. That’s cash flow negative when you include tax, maintenance, vacancies, etc. Do you feel comfortable getting negative return? If so, why?
Wouldn’t you be better off selling the place and investing the money in something that has better return?

I would have to bring cash to close on my current house or do a slight short sale. However my monthly PITI is around $1700/month and we could rent the place for $1600+. We are 5 years in on a 30 year fixed. Personally thinking long term I think we will be glad we kept and paid off both houses. We can also really use the tax writ-off to our advantage at this point.

Wow, where is this property? You mentioned west coco, I'm guessing Richmond, el cerrito? No idea when you go to the city, but either of those two places would be at least 30-45min in even non rush hour traffic, that maze blows.

Good luck! I was just curious.

Tude says

Personally thinking long term I think we will be glad we kept and paid off both houses. We can also really use the tax writ-off to our advantage at this point.

Well, if you're comfortable with the risk profile, the you're comfortable with the risk profile. However, be careful not to overestimate the tax benefits. The passive activity rules curb certain tax write-offs, although you might not be hitting the limits with just one rental property of the characteristics you described.

ih8alameda says

Wow, where is this property? You mentioned west coco

From EBGuy's response, it sounds like Kensington, so it'd similar in commute to El Cerrito and Albany -- basically the area between Sunset View Cemetery and Tilden. If you make your way to El Cerrito BART, maybe 30 mins. Probably close to 30 mins by car even at 3AM.

You guys are nuts. It's El Sob, and without traffic I have been seated at dinner in downtown SF within 30 minutes (it's 18 miles) on multiple occasions. I have also commuted to Concord, WC, Oakland and SF and all the commutes have been around 30 minutes either driving (going east) or BART via Orinda (going to Oakland or SF).

But it really is a horrible place to live. Seriously. Don't come here. Please spend 500k++ to live in the "real" Bay Area (TM).

Tude says

It’s El Sob, and without traffic I have been seated at dinner in downtown SF within 30 minutes (it’s 18 miles) on multiple occasions.

I'm not sure I believe that as a door to butt-in-seat time and not just because you might be circling for parking :) . Google maps says 19 miles/28 mins from off of San Pablo Dam Rd to 4th and King, for example, if you work South of Market, and 19 miles/30 mins to the TransAmerica Pyramid, if you're in the Financial District. At many times you'd be going to dinner, there will probably be *some* traffic on the Bay Bridge and its approaches. I'm not saying it's a bad location to live, but rather that people often grossly underestimate their commute. "Oh, I didn't include the part to get out of the neighborhood; the time to get to the freeway; and didn't include the walk from the parking garage to the office," etc.

Tude says

But it really is a horrible place to live. Seriously. Don’t come here. Please spend 500k++ to live in the “real” Bay Area (TM).

I wasn't saying it was a horrible place to live. I was just saying that your judgment of time was inaccurate. Most people's judgment is inaccurate because they don't include certain things when they say "about 20 mins."

Tude, good luck to you. I wish you can get what you want.

Talking about 18 miles and/or 30 min drive... Heck, that's a lot. I commute to DC and that's 12 miles. Can be done in 20 min before 6 am in the morning, 1 hour when I got caught in rush hour traffic, 2 hours if there's an accident or two in the way. That's why I hit the road early in the morning before sunrise. Do I go DC for dining and stuff? Hell, no. Hope the traffic in your area is not this bad.

Well it was "delisted" today, looks like it went to another CASH offer. The vultures are out in force still. Every house that comes up for sale in my current neighborhood has gone on to become a rental unit as well, and I know people have made offers on them for primary homes. Kinda sad.

Tude says

Every house that comes up for sale in my current neighborhood has gone on to become a rental unit as well, and I know people have made offers on them for primary homes. Kinda sad.

Aren't you planning the same thing? :)

Since Tude no longer has to worry about chicken rustlers, here's the property in question.
http://www.zillow.com/homedetails/775-Kelvin-Rd-El-Sobrante-CA-94803/18517069_zpid/#{scid=hdp-site-map-bubble-address}

corntrollio says

Tude says

Every house that comes up for sale in my current neighborhood has gone on to become a rental unit as well, and I know people have made offers on them for primary homes. Kinda sad.

Aren’t you planning the same thing?

No, I will be an unfortunate landlord if I buy another house, and will sell it once I am no longer losing money. I would never go into working class neighborhoods with loads of cash and outbid local residents who want a lifetime home so I could turn around and rent it.

Tude says

No, I will be an unfortunate landlord if I buy another house, and will sell it once I am no longer losing money.

Fair enough, although I think part of the problem is that many people who used to be homeowners during the boom weren't necessarily good candidates for being homeowners.

I didn't realize that El Sobrante was unincorporated west county -- had always assumed it was a municipality. Big lot compared to many others in the neighborhood too -- more than half an acre.

Tude, Have you thought about sticking some of your cash into your existing home and refinancing to a lower rate? If not that, then perhaps it is time to exercise your put option.

EBGuy says

If not that, then perhaps it is time to exercise your put option.

But EBGuy, wouldn't it make sense to buy a new house first before short-selling your old house? That way, you can buy the new house on your good credit rating before the short-sale (or foreclosure) lowers it. I'm not convinced that putting good money after bad is the way to go here.

EBGuy says

Tude, Have you thought about sticking some of your cash into your existing home and refinancing to a lower rate? If not that, then perhaps it is time to exercise your put option.

Yes, but then we lose our down payment money for if/when these opportunities do come up. We have also considered putting in a second bathroom in our current home, but because of the layout of the house/lot/sewer line and the fact that it is a slab foundation, just adding a bathroom, laundry-room/closet onto our bedroom would run in the 40k range, and that is with a bros deal. Maybe worth it if we could enlarge the garage and had side access parking, but we can't and don't.

fwiw, we are the perfect homeowners, we just happen to be in a home that doesn't quite work for us. My husband is a mechanic and does a lot of side work for friends in trade and really needs a large garage/shop and a space to park and work on a car. And because we both work full-time having one bathroom that is only big enough for one person to even stand in makes getting up and ready for work a real pain.

I don't really know what you mean by the put option. Bailing on our current house isn't really an option for us as we really like our neighbors and our little house is completely rebuilt from the roof to floors. We could not rent anything near as nice for the $$.

Tude says

I don’t really know what you mean by the put option.

He means that home loans in California are largely non-recourse, so you can short-sell or get foreclosed on with impunity. It's a put option to sell your house to the bank for the price of the loan.

Its baa-aaack. New photos. New agent. (Perhaps the bank thought there was some double dealing?).
http://www.redfin.com/CA/El-Sobrante/775-Kelvin-Rd-94803/home/1120185

EBGuy says

Its baa-aaack. New photos. New agent. (Perhaps the bank thought there was some double dealing?).

http://www.redfin.com/CA/El-Sobrante/775-Kelvin-Rd-94803/home/1120185

yep. The bank fired the original listing agents. They were HELL to deal with. We have to resubmit. Typically it's delisted when they sell to a cash offer and the listing agents were hinting at that, but instead they were fired.

Tude says

Typically it’s delisted when they sell to a cash offer and the listing agents were hinting at that

Well, of course. All houses in the Bay Area sell for "all-cash, above asking." :) It's special here.

Dude! You should have used Mr. Cash Services. I buy houses with my cash for clients - from auction, short sales, etc. - and sell them back to clients who are using bank financing.

Most of the time I do not charge for the service - I get the 'margin' between what your bid would have been and what I can get it for in cash. Not all cash buyers are 'vultures' - some are services like mine.

You need to be much more creative and open minded to get a deal in today's market. And that was a nice property - lots of potential. Good luck in finding another.

Why don't you do some leg work and quickly find the buyer and make them an offer? I bought a house off of auction in Phoenix and the next day the previous owner contacted me (got my name from court house. He visited in person) to buy the house (they were still living in it!). He bought it with financing in his father-in-law's name for about 1/3 what he originally paid in 2006 and I made 15% on my cash and never, ever set foot in the property.

I finally received notice today that the house was sold to an all-cash offer of well over 300k. There were 19 offers and 5 of them were for all-cash.

No doubt it sold to a speculator assuming he could subdivide the property with spec-homes. Just what the area needs. The "investors" and speculators are quickly ruining this community with development and rentals :(

E-man says

My in-laws recently bought 2 homes for their sons with ALL CASH, and both were FTHB’s.

That seems internally contradictory. :) Your brothers-in-law were not actually home buyers, but rather gift recipients (and some might give them a less charitable name).

I don't disagree with the overall point -- just because someone paid more doesn't mean they are a specuvestor. And what's with the knock against renters? In some neighborhoods, there are renters who have lived there longer than many of the owner-occupied people because there has been so much turnover.

Well... Like I and others have said, prices around the Bay Area- even in the far-flung burbs- are still heavily overpriced. Any prices are are event remotely close to being affordable seem to be getting bought up by investors. Thus my observation that in all reality, a home in the Bay Area that is more likely to be 450-500k in the immediate Bay Area and probably more like $350-400k in the far-flung burbs.

Good luck.

Sold as of June 27 for $317K:

http://www.redfin.com/CA/El-Sobrante/775-Kelvin-Rd-94803/home/1120185

This is after a 2003 purchase at $519K and a foreclosure at $250,515, so the price doesn't seem unreasonable. It seems like it was wildly underpriced when listed at $236,950.

Exactly. I have several others that I have experienced the same thing on in Lafayette, Walnut Creek, Pinole and Pleasant Hill as well. Low price, bidding war won by cash offer. Over and over.