Sign of the times: “Hey you want to buy this property?”

[4plexowner]

jamsvet – I found that the lower the rent on a unit the more problems I had with the tenants – I managed all my units personally but won’t do that again if I buy more rentals in the future – I am also glad that I got out when I did (2002 to 2006)

I will buy more rental units in the future but I don’t think we are anywhere near a bottom in San Diego’s market – I suspect the rental market will get to the same point it was at in 1995/6 – the vacancy rate was high (8%?) by San Diego standards and landlords were not happy campers – move-in discounts, one month’s free rent, lowered rents and high vacancy rates did not make for profitable landlording and the price of rental property reflected that – we currently have increasing unemployment, dropping property prices and an outflow of people leaving San Diego – IMO all of these factors will result in lower rental rates and decreased prices for rental property

the downtown condo situation is another unknown factor for the rental market – way too many condos have been built (and continue to be built) downtown – I suspect that the majority of them will become rentals and it won’t surprise me if downtown condos become the next low-rent district in San Diego

time will tell …

[jamsvet]

4plexowner-I’ve always been intrigued with the downtown market. One of the things stopping me is the insane HOA fees. I’ve seen many of them at 4-5 or 6 hundred dollars a month. Add that to monthly property taxes and insurance and you’re at 1000 a month before you talk about debt service. But what are they going to do with those places but rent them out at a loss?
When I was buying in the late 90’s, GRMs were in the 5-6 range, now people are looking at 10-12 and saying “what a great deal”. You can’t make money at that rate, especially when there is not going to be any appreciation for the next ten or fifteen years.
Something might “pencil out” but it won’t happen in the real world. A pipe breaks, a tenant stiffs you for two months rent, insurance rates go through the roof; things intrude on penciled out figures that had not been predicted. Unless you have a big cushion, it is a money pit.
I too managed all of my properties personally; it’s the only way to control costs and know whats going on. I recently read an article, I think it was in Money Magazine, about someone who bought a property in another state and found out just how horribly managed it was by a “professional” property management company.

[jamsvet]

4plexowner-I’ve always been intrigued with the downtown market. One of the things stopping me is the insane HOA fees. I’ve seen many of them at 4-5 or 6 hundred dollars a month. Add that to monthly property taxes and insurance and you’re at 1000 a month before you talk about debt service. But what are they going to do with those places but rent them out at a loss?
When I was buying in the late 90’s, GRMs were in the 5-6 range, now people are looking at 10-12 and saying “what a great deal”. You can’t make money at that rate, especially when there is not going to be any appreciation for the next ten or fifteen years.
Something might “pencil out” but it won’t happen in the real world. A pipe breaks, a tenant stiffs you for two months rent, insurance rates go through the roof; things intrude on penciled out figures that had not been predicted. Unless you have a big cushion, it is a money pit.
I too managed all of my properties personally; it’s the only way to control costs and know whats going on. I recently read an article, I think it was in Money Magazine, about someone who bought a property in another state and found out just how horribly managed it was by a “professional” property management company.

[jamsvet]

4plexowner-I’ve always been intrigued with the downtown market. One of the things stopping me is the insane HOA fees. I’ve seen many of them at 4-5 or 6 hundred dollars a month. Add that to monthly property taxes and insurance and you’re at 1000 a month before you talk about debt service. But what are they going to do with those places but rent them out at a loss?
When I was buying in the late 90’s, GRMs were in the 5-6 range, now people are looking at 10-12 and saying “what a great deal”. You can’t make money at that rate, especially when there is not going to be any appreciation for the next ten or fifteen years.
Something might “pencil out” but it won’t happen in the real world. A pipe breaks, a tenant stiffs you for two months rent, insurance rates go through the roof; things intrude on penciled out figures that had not been predicted. Unless you have a big cushion, it is a money pit.
I too managed all of my properties personally; it’s the only way to control costs and know whats going on. I recently read an article, I think it was in Money Magazine, about someone who bought a property in another state and found out just how horribly managed it was by a “professional” property management company.

[jamsvet]

4plexowner-I’ve always been intrigued with the downtown market. One of the things stopping me is the insane HOA fees. I’ve seen many of them at 4-5 or 6 hundred dollars a month. Add that to monthly property taxes and insurance and you’re at 1000 a month before you talk about debt service. But what are they going to do with those places but rent them out at a loss?
When I was buying in the late 90’s, GRMs were in the 5-6 range, now people are looking at 10-12 and saying “what a great deal”. You can’t make money at that rate, especially when there is not going to be any appreciation for the next ten or fifteen years.
Something might “pencil out” but it won’t happen in the real world. A pipe breaks, a tenant stiffs you for two months rent, insurance rates go through the roof; things intrude on penciled out figures that had not been predicted. Unless you have a big cushion, it is a money pit.
I too managed all of my properties personally; it’s the only way to control costs and know whats going on. I recently read an article, I think it was in Money Magazine, about someone who bought a property in another state and found out just how horribly managed it was by a “professional” property management company.

[jamsvet]

4plexowner-I’ve always been intrigued with the downtown market. One of the things stopping me is the insane HOA fees. I’ve seen many of them at 4-5 or 6 hundred dollars a month. Add that to monthly property taxes and insurance and you’re at 1000 a month before you talk about debt service. But what are they going to do with those places but rent them out at a loss?
When I was buying in the late 90’s, GRMs were in the 5-6 range, now people are looking at 10-12 and saying “what a great deal”. You can’t make money at that rate, especially when there is not going to be any appreciation for the next ten or fifteen years.
Something might “pencil out” but it won’t happen in the real world. A pipe breaks, a tenant stiffs you for two months rent, insurance rates go through the roof; things intrude on penciled out figures that had not been predicted. Unless you have a big cushion, it is a money pit.
I too managed all of my properties personally; it’s the only way to control costs and know whats going on. I recently read an article, I think it was in Money Magazine, about someone who bought a property in another state and found out just how horribly managed it was by a “professional” property management company.

[4plexowner]

I bought my first multi-unit property in 1998 – in 1999, when I bought my 2nd property, I paid 11.5 GRM and thought I was over-paying – the property was close to the beach and I was excited about having a ‘beach property’ so I went through with the purchase – as I continued buying property in the beach areas and Normal Heights / North Park, I watched GRMs on listings climb into the 14-16 range for average properties with some properties asking for 18-21 GRM

in 1998 and 1999 the numbers made sense for buying the 4plex properties I was looking at – they weren’t cashflow positive but rents were rising at the time so it seemed reasonable to expect at least breakeven cashflow within a few years – by 2002, when I stopped buying property, it was clear to me that San Diego’s market had become a bubble – there was no way (for me anyway) to pretend that buying property at those prices made sense – I started selling at that point

~

the downtown condos are a sticky wicket – what do you do with several thousand excess condos?

there are only a few things that can be done with a residential housing unit, whether you are an individual or a corporation: 1) live in it; 2) rent it to someone else who wants to live in it; 3) let it sit vacant; or, 4) tear it down / redevelop it as something else

near the end of one of San Diego’s past real estate up-cycles, the black high-rise condos across from the convention center were built – by the time they were finished, the market for condos in the expected price range was gone – a single tenant ended up renting one of the penthouse suites and the rest of the high rise towers were left vacant for 10 years

we have already seen one of the projected luxury high-rise condo buildings in downtown get converted to a taxpayer-subsidized housing facility – I believe the property is near the police station

we are likely to see a combination of these outcomes but I suspect enough of these condos will become rental units that we will see an affect on San Diego’s rental market

~

the cost of operating and maintaining a high-rise building is significant – that is reflected in the high HOA fees – if you read James Kunstler, he projects a very dim future for most high-rise structures – hopefully our future is not as grim as the one he writes about

[4plexowner]

I bought my first multi-unit property in 1998 – in 1999, when I bought my 2nd property, I paid 11.5 GRM and thought I was over-paying – the property was close to the beach and I was excited about having a ‘beach property’ so I went through with the purchase – as I continued buying property in the beach areas and Normal Heights / North Park, I watched GRMs on listings climb into the 14-16 range for average properties with some properties asking for 18-21 GRM

in 1998 and 1999 the numbers made sense for buying the 4plex properties I was looking at – they weren’t cashflow positive but rents were rising at the time so it seemed reasonable to expect at least breakeven cashflow within a few years – by 2002, when I stopped buying property, it was clear to me that San Diego’s market had become a bubble – there was no way (for me anyway) to pretend that buying property at those prices made sense – I started selling at that point

~

the downtown condos are a sticky wicket – what do you do with several thousand excess condos?

there are only a few things that can be done with a residential housing unit, whether you are an individual or a corporation: 1) live in it; 2) rent it to someone else who wants to live in it; 3) let it sit vacant; or, 4) tear it down / redevelop it as something else

near the end of one of San Diego’s past real estate up-cycles, the black high-rise condos across from the convention center were built – by the time they were finished, the market for condos in the expected price range was gone – a single tenant ended up renting one of the penthouse suites and the rest of the high rise towers were left vacant for 10 years

we have already seen one of the projected luxury high-rise condo buildings in downtown get converted to a taxpayer-subsidized housing facility – I believe the property is near the police station

we are likely to see a combination of these outcomes but I suspect enough of these condos will become rental units that we will see an affect on San Diego’s rental market

~

the cost of operating and maintaining a high-rise building is significant – that is reflected in the high HOA fees – if you read James Kunstler, he projects a very dim future for most high-rise structures – hopefully our future is not as grim as the one he writes about

[4plexowner]

I bought my first multi-unit property in 1998 – in 1999, when I bought my 2nd property, I paid 11.5 GRM and thought I was over-paying – the property was close to the beach and I was excited about having a ‘beach property’ so I went through with the purchase – as I continued buying property in the beach areas and Normal Heights / North Park, I watched GRMs on listings climb into the 14-16 range for average properties with some properties asking for 18-21 GRM

in 1998 and 1999 the numbers made sense for buying the 4plex properties I was looking at – they weren’t cashflow positive but rents were rising at the time so it seemed reasonable to expect at least breakeven cashflow within a few years – by 2002, when I stopped buying property, it was clear to me that San Diego’s market had become a bubble – there was no way (for me anyway) to pretend that buying property at those prices made sense – I started selling at that point

~

the downtown condos are a sticky wicket – what do you do with several thousand excess condos?

there are only a few things that can be done with a residential housing unit, whether you are an individual or a corporation: 1) live in it; 2) rent it to someone else who wants to live in it; 3) let it sit vacant; or, 4) tear it down / redevelop it as something else

near the end of one of San Diego’s past real estate up-cycles, the black high-rise condos across from the convention center were built – by the time they were finished, the market for condos in the expected price range was gone – a single tenant ended up renting one of the penthouse suites and the rest of the high rise towers were left vacant for 10 years

we have already seen one of the projected luxury high-rise condo buildings in downtown get converted to a taxpayer-subsidized housing facility – I believe the property is near the police station

we are likely to see a combination of these outcomes but I suspect enough of these condos will become rental units that we will see an affect on San Diego’s rental market

~

the cost of operating and maintaining a high-rise building is significant – that is reflected in the high HOA fees – if you read James Kunstler, he projects a very dim future for most high-rise structures – hopefully our future is not as grim as the one he writes about

[4plexowner]

I bought my first multi-unit property in 1998 – in 1999, when I bought my 2nd property, I paid 11.5 GRM and thought I was over-paying – the property was close to the beach and I was excited about having a ‘beach property’ so I went through with the purchase – as I continued buying property in the beach areas and Normal Heights / North Park, I watched GRMs on listings climb into the 14-16 range for average properties with some properties asking for 18-21 GRM

in 1998 and 1999 the numbers made sense for buying the 4plex properties I was looking at – they weren’t cashflow positive but rents were rising at the time so it seemed reasonable to expect at least breakeven cashflow within a few years – by 2002, when I stopped buying property, it was clear to me that San Diego’s market had become a bubble – there was no way (for me anyway) to pretend that buying property at those prices made sense – I started selling at that point

~

the downtown condos are a sticky wicket – what do you do with several thousand excess condos?

there are only a few things that can be done with a residential housing unit, whether you are an individual or a corporation: 1) live in it; 2) rent it to someone else who wants to live in it; 3) let it sit vacant; or, 4) tear it down / redevelop it as something else

near the end of one of San Diego’s past real estate up-cycles, the black high-rise condos across from the convention center were built – by the time they were finished, the market for condos in the expected price range was gone – a single tenant ended up renting one of the penthouse suites and the rest of the high rise towers were left vacant for 10 years

we have already seen one of the projected luxury high-rise condo buildings in downtown get converted to a taxpayer-subsidized housing facility – I believe the property is near the police station

we are likely to see a combination of these outcomes but I suspect enough of these condos will become rental units that we will see an affect on San Diego’s rental market

~

the cost of operating and maintaining a high-rise building is significant – that is reflected in the high HOA fees – if you read James Kunstler, he projects a very dim future for most high-rise structures – hopefully our future is not as grim as the one he writes about

[4plexowner]

I bought my first multi-unit property in 1998 – in 1999, when I bought my 2nd property, I paid 11.5 GRM and thought I was over-paying – the property was close to the beach and I was excited about having a ‘beach property’ so I went through with the purchase – as I continued buying property in the beach areas and Normal Heights / North Park, I watched GRMs on listings climb into the 14-16 range for average properties with some properties asking for 18-21 GRM

in 1998 and 1999 the numbers made sense for buying the 4plex properties I was looking at – they weren’t cashflow positive but rents were rising at the time so it seemed reasonable to expect at least breakeven cashflow within a few years – by 2002, when I stopped buying property, it was clear to me that San Diego’s market had become a bubble – there was no way (for me anyway) to pretend that buying property at those prices made sense – I started selling at that point

~

the downtown condos are a sticky wicket – what do you do with several thousand excess condos?

there are only a few things that can be done with a residential housing unit, whether you are an individual or a corporation: 1) live in it; 2) rent it to someone else who wants to live in it; 3) let it sit vacant; or, 4) tear it down / redevelop it as something else

near the end of one of San Diego’s past real estate up-cycles, the black high-rise condos across from the convention center were built – by the time they were finished, the market for condos in the expected price range was gone – a single tenant ended up renting one of the penthouse suites and the rest of the high rise towers were left vacant for 10 years

we have already seen one of the projected luxury high-rise condo buildings in downtown get converted to a taxpayer-subsidized housing facility – I believe the property is near the police station

we are likely to see a combination of these outcomes but I suspect enough of these condos will become rental units that we will see an affect on San Diego’s rental market

~

the cost of operating and maintaining a high-rise building is significant – that is reflected in the high HOA fees – if you read James Kunstler, he projects a very dim future for most high-rise structures – hopefully our future is not as grim as the one he writes about

[AK]

Owner-occupied makes a big difference for financing.

I think most lenders want 30% down these days for non-owner occupied.

Owner occupied, you can get away with 3.5% down FHA if it’s 1-4 units.

Huge difference in leverage!

[AK]

Owner-occupied makes a big difference for financing.

I think most lenders want 30% down these days for non-owner occupied.

Owner occupied, you can get away with 3.5% down FHA if it’s 1-4 units.

Huge difference in leverage!

[AK]

Owner-occupied makes a big difference for financing.

I think most lenders want 30% down these days for non-owner occupied.

Owner occupied, you can get away with 3.5% down FHA if it’s 1-4 units.

Huge difference in leverage!

[AK]

Owner-occupied makes a big difference for financing.

I think most lenders want 30% down these days for non-owner occupied.

Owner occupied, you can get away with 3.5% down FHA if it’s 1-4 units.

Huge difference in leverage!

[Author]

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