housing bubble?

[spdrun]

3/4 bdrm (1600-2000 sf) rent-controlled apts (flats) in SF typically rent for $2000 – $2500 mo. That is the cheapest I’ve heard of and SF’s rents are probably on par with Manhattan (NY, NY’s) rents.

There are two levels of rent control in NYC (not just Manhattan). “Rent stabilized” units fetch the kind of rents that you mention, up to a max rent of $2500.

“Rent controlled” units are much, much cheaper, but they’re also rare, since they stopped “making” new ones in the 70s, and only units that have remained continuously in a family are allowed to continue being controlled.

[bearishgurl]

[quote=The-Shoveler]In the case of L.A. some of those old hoods have degraded quite a bit in the last 20 years.

That whole urban revitalization thing is not quite happening in most of L.A.[/quote]

I understand your “perception,” Shoveler.

But the reality is that one is paying for location to own in the “Downeys and Montebellos of the world.” That location is worth X amt of money to a LOT of people (prospective residents and biz owners alike).

You can’t fix this. You can’t attribute that level of convenience to the (relatively cheap) Moreno Valley and you won’t find a typical “Moreno Valley tract home” in the middle of Montebello :=]

Take your pick.

At some point, these inner-city areas will HAVE to “gentrify” because their locations are irreplaceable, rendering them immune from obsolescence.

I can’t say the same for Moreno Valley.

[bearishgurl]

[quote=spdrun] . . . “Rent controlled” units are much, much cheaper, but they’re also rare, since they stopped “making” new ones in the 70s, and only units that have remained continuously in a family are allowed to continue being controlled.[/quote]

LOL, that sounds a little like a “grandfather clause” similar to the benefits afforded CA property owners under Props 13, 58 and 193!

[spdrun]

Interestingly, residential property taxes in the city are actually cheaper than CA. Seem to be about 1% of value per year for condos and co-ops, MUCH less for 1-3 fam houses. Higher for commercial property.

It’s actually based on market rent, not on sale value, but that’s what it comes out to.

[FlyerInHi]

Don’t knock Moreno Valley. I have a friend who bought about a dozen houses at the bottom. Renting them out for great cash flow. Every place has its own purposes.

[bearishgurl]

[quote=FlyerInHi]Don’t knock Moreno Valley. I have a friend who bought about a dozen houses at the bottom. Renting them out for great cash flow. Every place has its own purposes.[/quote]

How is his turnover??

That’s an awfully long way for most workers to drive one-way to/from work for an extended length of time.

[The-Shoveler]

There is a lot of industry in RC, also city of industry and diamond bar etc… are very close, maybe 20-30 minute’s drive from a lot of MV,

Most LA workers (no matter how close they start out from work) end up an hour away after ten or so years unless they work for the city or something, very unusual for people in private industry to stay with same employer more than 5-10 years.

Most L.A. workers drive 30-40 minutes.

[FlyerInHi]

BG, turnover is comme ci, comme ca. Some evictions, some section 8, some good tenants. There are hassles, but considering his cost basis, he will recoup his investment in less than 10 years and then the cash flow is safer than any pension promise.

I hate the area but there is a lake and plenty of jobs and industry. Lots of Hispanics who, I was told, are better tenants than low-class whites and blacks (who know the system better and milk it).

Sometimes you’re full of it, BG. There are benefits to the suburbs in comparison to the old run down-sections of LA. You have to be objective and look at real estate detached from your own lifestyle.

[SD Realtor]

I know of a few other investors who have done well up there as well Flyer. Some are pulling in double digit cash flow and doing the pm themselves. Some are pulling in 8% and having a pm do all the work.

[bearishgurl]

[quote=FlyerInHi]BG, turnover is comme ci, comme ca. Some evictions, some section 8, some good tenants. There are hassles, but considering his cost basis, he will recoup his investment in less than 10 years and then the cash flow is safer than any pension promise.

I hate the area but there is a lake and plenty of jobs and industry. Lots of Hispanics who, I was told, are better tenants than low-class whites and blacks (who know the system better and milk it).

Sometimes you’re full of it, BG. There are benefits to the suburbs in comparison to the old run down-sections of LA. You have to be objective and look at real estate detached from your own lifestyle.[/quote]

I actually live in a (close-in) suburb, FIH. But Moreno Valley is one of the furthest-away exurbs from LA County’s work centers. It’s prices are what they are for a reason. It became severely overbuilt in the early 2000’s, with its subdivisions losing 60-85% of their value by 2007-8.

There was a very good reason for that.

Downey and Montebello likely didn’t lose any value at all during the downtown … or if they did, it was only a short blip on the radar screen.

There is a very good reason for this, as well.

All three of these areas have similar “demographics,” except the homeowning cohort in the LA County cities is more well-established and thus “stable.”

The best any homeowner can ever hope for is “stability” within their own neighborhood.

Without it, wildly plummeting property values within them are one of the direct causes of real and strategic default when homeowners wake up one by one and realize they really never “owned” anything.

I for one wouldn’t want my home’s value to be completely dependent upon the whims of a highly-transient surrounding-resident population, but that’s just me.

For the same reasons, I don’t like the Las Vegas, NV market (even though it is much closer to jobs).

Your “friend” likely bought all of his MV houses for a song in recent years (not taking into acct at least 20 yrs of pesky MR left on most or all of them) but their fundamentals remain the same. They are where they are and thus attract the tenants they attract.

I wish him the best of luck.

[bearishgurl]

[quote=SD Realtor]I know of a few other investors who have done well up there as well Flyer. Some are pulling in double digit cash flow and doing the pm themselves. Some are pulling in 8% and having a pm do all the work.[/quote]

I believe it, but it has to be very labor intensive. In addition, these LL’s need a good UD law firm chained to their ankles at all times.

It’s not for a prospective retiree (like myself) who wants to go play on the ski slopes for multiple days per year and take summer road trips (short and longer) as well.

I’d rather invest in something more passive, make less and have more peace in my life.

[The-Shoveler]

The Metro Rail station in the City of riverside is very close for those on the north west side of MV as well.

The place will grow.

[FlyerInHi]

BG it takes all kinds.

First, the history of CA is about sprawl. Can’t have land without sprawl. Like it or not, that’s what it is.

I for one think that property management is the best retirement job. I share time between different cities. When I’m old I can manage my properties and earn spending money without touching my principal. Going places is actually fun to visit friends and family at the same time. For misc repairs, call a contractor. For the occasional eviction, you use a local attorney (never came to that for me).

For me PM is fun. You get to meet people and give them housing. Some of them might become friends. One one my tenants is a cool guy who does sports/entetainment programming so I’m learning something new. And with experience you get better at screening tenants so you don’t have evictions.

I learned how to solder plumbing and tile and install wood flooring. Not that hard and it’s fun to do. The key is to not overextend yourself that you’re stressing to meet deadlines and make payments.

As for Moreno, I’m jealous off my buddy. Wish I had followed in buying at the bottom.

As long as there is population growth, then real estate is good if you can buy well below replacement cost. You have to identify the window of opportunity and just do it.

[bearishgurl]

[quote=FlyerInHi]BG it takes all kinds.

First, the history of CA is about sprawl. Can’t have land without sprawl. Like it or not, that’s what it is.

I for one think that property management is the best retirement job. I share time between different cities. When I’m old I can manage my properties and earn spending money without touching my principal. Going places is actually fun to visit friends and family at the same time. For misc repairs, call a contractor. For the occasional eviction, you use a local attorney (never came to that for me).

For me PM is fun. You get to meet people and give them housing. Some of them might become friends. One one my tenants is a cool guy who does sports/entetainment programming so I’m learning something new. And with experience you get better at screening tenants so you don’t have evictions.

I learned how to solder plumbing and tile and install wood flooring. Not that hard and it’s fun to do. The key is to not overextend yourself that you’re stressing to meet deadlines and make payments.

As for Moreno, I’m jealous off my buddy. Wish I had followed in buying at the bottom.

As long as there is population growth, then real estate is good if you can buy well below replacement cost. You have to identify the window of opportunity and just do it.[/quote]

I was a LL in the eighties on a duplex and again in the early nineties on a triplex which we sort of “inherited” and kept for about 4 yrs. I HATED both jobs. I don’t have the patience in dealing with a tenant late on their rent when it was obvious that they paid the local cable company $150 more per month than I did and drove newer vehicles than mine. I’ve just heard a lot of sob stories but the reality is that they could afford my rent but couldn’t properly manage their incomes, hence chronic late payment of rent. Meanwhile, my mtg payment was due. I just don’t like the whole tenant-victim culture and for that reason if I DID rent out my house, I would use a VERY local PM company (w/ a UD firm chained to their ankles) and get the largest security deposit I could get away with.

Life is much too short to deal with that noise. I don’t have the personality for it.

[FlyerInHi]

Knock on wood, i’ve never had late rent.

My ads say that something like this: “I’m looking for a clean, reliable tenant who has verifiable income (i will write to your employer and verify). If you’re a slob and have a history of late payments, you know who you are so please don’t apply. In return, I provide a good rental at fair price. Compare to the other rental complexes before calling me.”

For my condos I charge a little less than the big apartment complexes. Tenant get a condo, not an apartment. Then the second year, I raise rent to catch up with the market. If they want hardwood or some improvements, I’m happy to pay for it.

My places show well. I rip out the old kitchens and put in new Ikea kitchens with granite counters. With ikea, you can easily replace the doors and shelves and refresh the look. The glass doors look sharp and are easy to clean. Granite countertops including undermount sink cost about $1,100 installed.

If you provide a superior product, you get superior tenants because they know they can’t get what you offer for the same price.

Oh and before the official move in date, I’m happy to give them key one week or two early without charge so they can move their belonging. I kinda gauge the tenant to see if i should offer that freebie. People remember when your treat them decently and they won’t want to stiff you.

Another thing is that I normally don’t provide a rental application on site. I offer to drop it off at their current home to see what kind of condition they live in. That’s another way I gauge my tenants.

Yes, it’s work. But you can think of it as fun. Like going to the zoo or going shopping.
It’s all a state of mind. Of course, it takes a certain personality.

[Author]

Posts