[blue_sky]

Please keep in mind that my comments are based on multifamily commercial property, not SF used as rental, but here goes.

I wouldn’t touch it as a long term hold, maybe as a fix and flip. Negative cashflow is poison. Here’s what makes me go through a deal:

Begin with gross rents.
Subtract all of your expenses EXCEPT interest. This includes but is not limited to:

Property Taxes / HOA if you have it
Insurance
Any utilities you pay (water? trash? gas? electric?)
Vacancy & tenant bullshit (bounced checks, etc) allowance (highly variable based on area and property quality vs rental rate. My vacancy rate is very close to 0%)
Property management fees
Maintance allowance (typically allocate 1% of purchase price here annually for a building in decent shape)

the result is your net. Divide your net by your cash in the property (with commercial buildings I’m typically in for 25% down, plus closing costs, plus some float), this gives you your cap rate. If you don’t get at least a 10% cap rate, walk away.

This nets you 20-30% annual ROE, most of which is the difference between your cap rate and your mortage interest rate.

[blue_sky]

660 million is nothing.

With a population of over 10 million that works out to about 66 dollars per person. That doesn’t even buy a pair of jeans, much less a house. And that’s assuming it’s all being paid to people who still live in the city (which it’s not)

http://quickfacts.census.gov/qfd/states/06/06037.html

[blue_sky]

660 million is nothing.

With a population of over 10 million that works out to about 66 dollars per person. That doesn’t even buy a pair of jeans, much less a house. And that’s assuming it’s all being paid to people who still live in the city (which it’s not)

http://quickfacts.census.gov/qfd/states/06/06037.html

[blue_sky]

As a landlord I have a natural advantage in these negotiations btw, I know how much of a pain it’s going to be for them to turn over the appt 🙂

* Move out checkup labor
* Cleaning, patch jobs, new paint, carpet cleaning, etc. Normal wear and tear still needs to be fixed even though they don’t get to keep your damage deposit for it.
* Cost of obtaining new tenant (for large complexes this is typically 1 free month rent with year lease).
* New tenant risk

Overall cost of turning over an appt from a seasoned tenant to a green one can be > $2,000.

[blue_sky]

As a landlord I have a natural advantage in these negotiations btw, I know how much of a pain it’s going to be for them to turn over the appt 🙂

* Move out checkup labor
* Cleaning, patch jobs, new paint, carpet cleaning, etc. Normal wear and tear still needs to be fixed even though they don’t get to keep your damage deposit for it.
* Cost of obtaining new tenant (for large complexes this is typically 1 free month rent with year lease).
* New tenant risk

Overall cost of turning over an appt from a seasoned tenant to a green one can be > $2,000.

[blue_sky]

I negotiate with my rental company (Equity Residential) successfully every time. Vacancy rates in San Diego are VERY HIGH, don’t let them lie to you about it. I always show up with the rental contract of the place I’m going to be moving to when I cancel with them and they cave.

http://www.signonsandiego.com/uniontrib/20070607/news_1b7rents.html

5.1% is huge vacancy.

[blue_sky]

I negotiate with my rental company (Equity Residential) successfully every time. Vacancy rates in San Diego are VERY HIGH, don’t let them lie to you about it. I always show up with the rental contract of the place I’m going to be moving to when I cancel with them and they cave.

http://www.signonsandiego.com/uniontrib/20070607/news_1b7rents.html

5.1% is huge vacancy.

[blue_sky]

Yeah, and don’t forget special assessments whenever something goes really wrong.

http://realtytimes.com/rtcpages/20031029_reserves.htm

[blue_sky]

Yeah, and don’t forget special assessments whenever something goes really wrong.

http://realtytimes.com/rtcpages/20031029_reserves.htm

[blue_sky]

Hi, I’m blue_sky… You might remember me from such hit films as “How I learned to stop worrying and love the debt bomb”, and “My Days as a GoldBug.”

There was a time when I thought money creation was a bad thing, but it’s really not. You just have to stop thinking of money as wealth and start thinking of it as lubricant. It’s purpose is to allow blocks of wealth to move around, it’s not intended to be a block of wealth itself.

[blue_sky]

Hi, I’m blue_sky… You might remember me from such hit films as “How I learned to stop worrying and love the debt bomb”, and “My Days as a GoldBug.”

There was a time when I thought money creation was a bad thing, but it’s really not. You just have to stop thinking of money as wealth and start thinking of it as lubricant. It’s purpose is to allow blocks of wealth to move around, it’s not intended to be a block of wealth itself.

[blue_sky]

Everytime my landlord tries to raise my rent I argue, loudly. Net result, rent up 60 bucks in 4 years.

[blue_sky]

Everytime my landlord tries to raise my rent I argue, loudly. Net result, rent up 60 bucks in 4 years.

[blue_sky]

Wow, my bad! I read right over that section and reversed donor and donee in my head. This would be the appropriate link:

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

“The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.”

[blue_sky]

Wow, my bad! I read right over that section and reversed donor and donee in my head. This would be the appropriate link:

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

“The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.”

[Author]

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