- This topic has 65 replies, 14 voices, and was last updated 4 years, 4 months ago by scaredyclassic.
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May 11, 2020 at 8:16 PM #22879May 12, 2020 at 4:45 AM #817178HobieParticipant
this:
“Governor Gavin Newsom today issued an executive order that authorizes local governments to halt evictions for renters and homeowners, slows foreclosures, and protects against utility shutoffs for Californians affected by COVID-19.”Agree, I would be wary of a new tenant who then plays the Covid card and you are stuck with no rental income and no means to evict.
Read up on Force Majeure in your contract.
May 12, 2020 at 4:57 AM #817179CoronitaParticipantif you don’t mind me asking, where is the property? Is it here in SD or even in CA?
May 12, 2020 at 10:34 AM #817180zkParticipantMan, that’s a tough one.
$5,000 is a lot of money. But how many months rent is that? 2? 3? 1 1/2?
I don’t know what the odds are that you’d have trouble finding tenants who can pay or that you’d get one who would seem ok but then lose their job or otherwise not be able to pay. But if one of those things does happen, it wouldn’t take long for that to cost you 5K. And a whole lot more.
I guess I would try to find a way to figure out how likely one of those things is. Not sure how you’d go about that. Maybe ask other landlords in the same neighborhood or general area if you can find them.
May 12, 2020 at 11:00 AM #817181scaredyclassicParticipantIt’s hard to eat a loss.
I’d consider the 5k as lost either way and just think independent of the 5k do I want to move forward.
Look at it this way. If you bail, and its relisted will the price be 5k less?
May 12, 2020 at 11:38 AM #817182CoronitaParticipantI’d venture over to craiglist and zillow lookup the zip code where your investment property is and figure out how much and how many properties are currently listed for rentals…
In fact, I’d try to make a fake craiglist or zillow post offering this house as a rental at the price you think you were originally going to rent it for to see how many people will respond. That will give you a reality check as to how much demand is softened near your particular sub market.
When I did this for one property near SDSU, the response rate was roughly 4 per week, and many had not so great credit score
When I did this for one property in mira mesa, the response rate was roughly 15 per day, where 3 out 4 had 700 or above credit scores. Hence, why I sold that condo near SDSU and did a 1031 exchange.
This probably matters even more during these times.
92126 still is a shitty market if you are looking for a 1/1 (and lesser extent 2/2) to live in. Very little inventory.
https://sandiego.craigslist.org/search/apa?query=92126&availabilityMode=0&sale_date=all+dates
92130, on the other hand, plenty of rentals available.
Carmel Valley, contrary to popular belief is not that great as a rental market versus say Mira Mesa.
May 12, 2020 at 11:44 AM #817183bpnbpnParticipantTeam,
Great questions and thanks for quick replies. I used piggington while I was shopping for house in 2012 and you all provided excellent help that helped me to make great decision during the down market.
Ok, here are more details, sorry I didn’t provide it upfront.
1) This is a 2000 sqft independent house in Chandler Arizona
2) It’s priced around 350K and we paid earnest money of 5,000$
3) I estimate the rent will be around 2100$ or so
4) Chandler has been a hot market, especially due to their outstanding schools. They are surely at the peak (this house would have costed 220K back in 2012/2013).
5) The builders are claiming that they are still seeing strong sales though I clearly witnessed that they moved from lottery system with multiple offers to tons of unsold units. so I wouldn’t believe them fully.I hope this helps. I know 5,000$ is a lot of money but I am very concerned about not able to receive the rent and/or the house price plummets right after we buy.
Please share your thoughts.
May 12, 2020 at 11:48 AM #817184bpnbpnParticipantI’d venture over to craiglist and zillow lookup the zip code where your investment property is and figure out how much and how many properties are currently listed for rentals…
In fact, I’d try to make a fake craiglist or zillow post offering this house as a rental at the price you think you were originally going to rent it for to see how many people will respond. That will give you a reality check as to how much demand is softened near your particular sub market.
When I did this for one property near SDSU, the response rate was roughly 4 per week, and many had not so great credit score
When I did this for one property in mira mesa, the response rate was roughly 15 per day, where 3 out 4 had 700 or above credit scores. Hence, why I sold that condo near SDSU and did a 1031 exchange.
This probably matters even more during these times.
92126 still is a shitty market if you are looking for a 1/1 (and lesser extent 2/2) to live in. Very little inventory.
https://sandiego.craigslist.org/search/a…
92130, on the other hand, plenty of rentals available.
Carmel Valley, contrary to popular belief is not that great as a rental market versus say Mira Mesa.
Looks like an expert in this area! A lot to learn from you. This is a fantastic idea. I will keep this in mind.
BTW I do agree that 92130 is a very bad place for investment property. I did the math for cashflow and it looks like I will have -ve cashflow for at least 10 years in the future.
This kinda applies now to most of SD as well given how high our prices have gone. That’s the reason I started looking into AZ.
May 12, 2020 at 11:49 AM #817185bpnbpnParticipant[quote=scaredyclassic]It’s hard to eat a loss.
I’d consider the 5k as lost either way and just think independent of the 5k do I want to move forward.
Look at it this way. If you bail, and its relisted will the price be 5k less?[/quote]
I think it may not be 5K less immediately. I think it may stay in the same price. But again, you are right. I thought to myself. If I hadn’t put the deposit for this house, would I be shopping right now? The answer is NO.
May 12, 2020 at 12:08 PM #817186scaredyclassicParticipantI’ve become better at accepting losses but Im Still bad. Someone told me a neat trick for not getting irritated at smaller screwups.
Set aside 1k for small failures.
When u get a parking tkt, dont get mad, say, ah of course. Here’s one of this years screw ups I set money aside for.
It works.
Better than raving at a ticket.
May 12, 2020 at 12:31 PM #817188HobieParticipantThat’s a good area. I’d say if you have the $ to keep it a while without relying on a monthly rent for the mortgage, I’d stay the course and buy it. If your cash flow is tight, well..
May 12, 2020 at 12:42 PM #817187CoronitaParticipantIf the property is out of state, then I’d look into the tenant right laws. California is probably the worst case scenario for landlords. States like AZ are probably more landlord friendly. So all these concerns about tenants not paying you might be overblown for your respective locale where your property is. Even in CA, it’s not really a free for all. At some point these people still have to pay you back… Besides, in CA, it’s not just the temporary moratorium that one needs to worry about. It’s also about all the other crazy laws they are trying to pass, like the ones sponsored by two SF assemblyman that wants to cut rent 25% across the board in CA. AB-828. https://californiaglobe.com/section-2/bill-to-reduce-california-rents-by-25-using-coronavirus-crisis-as-opportunity-to-erode-property-rights/
Most ridiculous thing ever.
Sadly, I know one of the guys sponsoring the bill. We went to same grade school. Phuck you Phil.
With Craiglist, you can play around with the price. Sometimes dropping the price by $100/month is the difference between getting +- 10 extra interests who contact you.
Zillow is trickier because you have to actually enter more details about the property and address but it’s also more reliable as far as getting real tenants… (Craiglist has been getting more to be the wild wild west).. There’s a way, however you can list a rental without providing an actually street number, only a street name. So that way, you can create a burner account to test the waters…. I do this all the time and price the actual rental appropriately based on the amount of response and quality of the responses.
92130 is what an area where I think a majority of the landlords are “accidental landlords”… They bought a house, outgrew it, and rather than selling it and buying real investment properties, they rent it out. Partly to gamble on the appreciation in 92130 and partly because they have more money than know what to do with it… The issue is that the tenant pool in 92130 tend to also be wealthier, so they typically don’t stay as long in the rentals as elsewhere, from what I can tell. So a lot more homes to choose from. Though many stay vacant because again, i guess the owners can hold on to them that way.
May 12, 2020 at 12:42 PM #817189outtamojoParticipantJust occurred to me this is the perfect time for scammers to move in and stay forever without paying any rent with all the moratoriums and such.
May 12, 2020 at 12:58 PM #817190CoronitaParticipant[quote=outtamojo]Just occurred to me this is the perfect time for scammers to move in and stay forever without paying any rent with all the moratoriums and such.[/quote]
Id ask for first month and last month rent and 1-2 month security deposit. That’s probably a lot to ask for and settle somewhere in between. Some wrote me a $16000 check as a condition of moving in, and had to wait for the check to clear. If they can’t come up with the money, that’s a red flag.
May 12, 2020 at 2:26 PM #817191FlyerInHiGuestWith hindsight, would you have bought in 2007, 2008? In 2007, even 2008, the polyannas were saying to stay the course.
Scaredy asked the right question. How much would the same/similar house sell for in the foreseeable future?
Even if your tenants pay you, and you can afford to stay the course, tenants not paying other landlords will cause your portfolio to lose value. Why would you not look at the value of your real estate portfolio like you do stocks. You may not sell your stocks, but the monthly statement show you how much you have gained/lost. If you do an annual statement of net worth, the loss of real estate value would be reflected.
In a recession, landlords become desperate and lower deposits and give free months’ rent. large apartment complexes are already giving free month at the end of the lease.
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