Bay Area

[tjh]

Uncle Jed was wrong.  Oakland is the place you want to be!

http://finance.yahoo.com/news/cities-with-the-highest-rent-spikes-in-2012-201103748.html?page=all

[sheriff]

I can still see Jethro driving the truck with granny in her rocking chair on top. 

Being a landlord is the way to go if you can afford the initial investment.  Just make sure you screen well so you don't get the tenant from hell.

Then again, I have a brother that did the "Green Acres" thing.

[buyinghouse]

Oakland, reminds me of EPA..............

[Jil]

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tjh wrote:

Uncle Jed was wrong.  Oakland is the place you want to be!

http://finance.yahoo.com/news/cities-with-the-highest-rent-spikes-in-2012-201103748.html?page=all

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Many times, in auction, I have seen cash investors compete at Oakland homes. They normally take bunch of homes, like 5 or 10 at a time. Due to low cost and high returns, experienced investors - mainly cash rich - get those homes. I witnessed them since 2008 onwards.

Next place is Sacramento. Now, Sacramento has become expensive as competition spiked.

[tjh]

1.7% vacancy rate.  That's killer.

Will OWS push for rent controls next? 

[Michelle1x]

Next place is Sacramento. Now, Sacramento has become expensive as competition spiked.

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Why go to Sacramento though?  Wouldn't you be better off in Fairfield or a location that is barely driveable to silicon valley?  Some f these SV exurb locations like parts of Concord have been almost as cheap as Sacramento before (maybe not at this exact moment).

I root for east san jose personally.

[Jil]

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tjh wrote:

1.7% vacancy rate.  That's killer.

Will OWS push for rent controls next? 

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1.7% Vacancy rate is very less for a rental property. Assume Move-out, clean,fix some issues, market and move-in takes 7 days each time. The least possible is 3 days. For example, during an year, when two tenants are changing the home, it takes 10 days to 15 days totally for two tenants.

10 days Vacancy = 10*100/365 = 2.75%,      15 days Vacancy = 15*100/365 = 4.11%

The 1.7% is almost equal to single move-out for 6 days (365*1.7/100), which is very minimum.

This is very common and needs to be accounted/absorbed in profit or loss

[Jil]

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Michelle1x wrote:

Next place is Sacramento. Now, Sacramento has become expensive as competition spiked.

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Why go to Sacramento though?  Wouldn't you be better off in Fairfield or a location that is barely driveable to silicon valley?  Some f these SV exurb locations like parts of Concord have been almost as cheap as Sacramento before (maybe not at this exact moment).

I root for east san jose personally.

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You are 100% right, "Fairfield or a location that is barely driveable to silicon valley" is a better place. As a local investor, you know the truth.

To my knowledge (as I have not involved for the past one year), Oakland and Sacramento investors are full cash buyers especially when the homes are sold less than $250k. The peak of Sacramento came down from 1M to 200k level (I saw a newer home foreclosed three times from 1M to 200k). This is a selling point that peak will come back later. 

Many Sacramento investors are from all over the world, especially asians passive cash buyers, not necessarily local persons. They do not have any idea about "Fairfield or SV", but they all know Sacramento is capital of California as it is known world wide. They assume the capital of a state is very expensive place like they see their capital.

If I further discuss, it becomes regional conflict and redfin likely block the thread.

[returningson]

Can any of you investors tell me how you plan to deal with the big earthquake when it comes and destroys your rental property?  

It the "big one" hits you will not have any rent coming in because the property will be uninhabitable but the bank will still want its mortgage payments.  I guess you can walk away from the property and let the bank foreclose but you will lose all of your equity.  

If I am going to take that kind of risk I will need to earn a significant hedge premium.  

[Dukey]

Oakland is cheap for a reason - crime rate.  Granted its a big city but not a day goes by without shootings and murders.  Not to mention schools sans nicer parts of Oakland.

I'm thinking about buying a rental SFH in Concord with better schools than say apartment strewn parts of Concord.  Also look at older neighborhoods in San Ramon and Dublin.  Will wait till dust settles as 2013 may mark a year of steady price after nice increases in 2012.  Real estate like other investments goes thru cycles and all cash investors may be tapped out.  Add to this mountains of properties technically in foreclosure and supply may catch up with demand.

Downside and risk of course is that it takes effort and luck to end up with good tenants.  I had same tenant for 12 yrs at a rental in So Cal (my 1st house).  Only raised rent once after 10 yrs but the place was in pretty bad shape as I did not fix the walls after 1994 Northridge earthquake and the paint/carpet was 25 yrs old (original).   That said its amazing how much right a tenant has having heard nightmare stories from couple of friends.  I had a short 6 month rental (before I bought a house) after I used up 3 months of free furnished housing provided by relo company and got out of lease 2 months early without penalty easily due to minor code issue and demand letters thru lawyer who costed me nothing via corporate legal plan.