[(former)FormerSanDiegan]

Speaking of nailing predictions, I don;t think anyone nailed the timing of the bottom as precisely as I did here:

https://piggington.com/welcome_to_the_bottom

[(former)FormerSanDiegan]

I’m still waiting for that next wave of foreclosures that he said was going to happen in 2009 …

[(former)FormerSanDiegan]

Trumpelstiltskin

[(former)FormerSanDiegan]

Do you have the resources (time, money, desire) to bring the house up to snuff ?

If so, ask for a credit or a reduction in price based on estimates of the repairs.

Some of our experiences …
We’ve bought 4 houses and sold two (primary and rentals) and have a couple instances of significant items in the inspection.

In one case we asked for about $10K credit on a $1.1M house. Seller wouldn’t budge, so we walked…. luckily.
In hindsight the repairs would probably have been 2 -3 x our request.

IN another case we found a slab issue and requested a credit for an estimate of the repair. That one we did get. And still own to this day. Spent some money on it, but it was a fixer that we got at a fixer price.

Other two cases there was the usual list of issues:
1- some termite damage
2- Missing GFI / grounding
3 – water pressure valves/limiters (or something like that… been a while) based on newer codes.

In those cases we typically had some of the work done, seller paid prior to close.

So, if you are getting a good price and have the resources and willingness to polish up and fix this, then consider moving forward. All houses have problems.
If an extra $20K in fixes in the first few of years will cause you to lose sleep, I would consider walking away.

[(former)FormerSanDiegan]

[quote=Oni Koroshi]Shouldn’t you have done an inspection before starting escrow?
[/quote]

Sounds like you have not been involved in a purchase of a house, at least not in CA.

The standard process for at least the last 20 years is once you make an offer, there is an inspection contingency (unless it is waived, which is a bad idea) that usually must be removed within some time frame (e.g. 17 days).

It is not normal in CA for a seller let a buyer perform an inspection (which involves testing the homes systems such as AC, dishwasher, plumbing, etc) without an offer and a deposit.

Likewise, it does not make sense for a buyer to pay for an inspection (hundreds of dollars) if they don;t know the seller would agree upon their initial terms.

In many cases a seller may consider reducing the price or offering a credit towards closing costs or some combination if there are significant findings in the inspection.

[(former)FormerSanDiegan]

Slightly off topic, but prompted by moneymaker’s comment…

Our plan is to move to a less-expensive part of CA when we retire.
That may not be that surprising, but for us that place is San Diego (which may surprise some).

[(former)FormerSanDiegan]

[quote=gzz]What is that? Unpermitted garage conversations?

Looks like the biggest new construction development is Otay Ranch, which is a great location for commuting to Tecate, Mexico.[/quote]

Sorry should have been more explicit… I should have written as follows:

.sarcasm ON. These articles don’t take into account the shadow construction going on. .sarcasm-OFF.

[(former)FormerSanDiegan]

These articles don’t take into account the shadow construction going on.

[(former)FormerSanDiegan]

Thank you for citing my 18-month old comment and for your response. Quite useful.

[(former)FormerSanDiegan]

[quote=kev374]just because lending standards are tight does not mean speculators do not exist. The speculators this time around have been private equity and foreign investors, this is a widely known fact. It’s a repeat of the past but just the actors are different.

It’s not a matter of IF but when the next recession occurs and rents start softening. Oh yes, all the experts here proclaim that rents never fall – that is utter BS. I know during the last crash my rent fell by 30% in south OC, rents were crashing as well. What happens to all the rental investments, the rental backed securities held by private equity? Will they start bailing?

I am not saying that I know what is going to happen, but completely dismissing the possibility that prices are over inflated is completely short sighted.[/quote]

You may be right, but Prices in San Diego were overinflated relative to rent and income in 2001. That didn’t make it a bad time to buy or a good time to sell. Waiting 3-4 more years to sell or never selling resulted in much better outcomes than selling in 2001.

I agree that prices feel pretty frothy. At this stage I’m not betting on price declines from this point in the near future, but I’m also not advocating jumping in and buying anything either…

[(former)FormerSanDiegan]

I like her style.

Rich, you have some competition. Her hand-held charts just feel more homey, kinda like a 2nd grade teacher reading a book and then showing us the pictures. So much easier to consume than reading Piggington’s complicated explanations and crisp, clear charts with legible axes and legends and citing of sources. Those are just way to exact and precise to be digested.

[(former)FormerSanDiegan]

I think it depends on the type of units you are renting out and your normal rate of turnover.
Large complexes for example, typically raise rent every year. In times like today, I would guess 2-3% (rents have likely increased faster than this, but you should give a discount to avoid excessive turnover (and cost).

If you have a small number of units and correspondingly less turnover (or no turnover), the math might be different. I rent out a SFH and rarely increase the rent during tenancy, especially if the tenant is low-maintenance. This is because I miss 100% of my rent if someone moves. If you have 10 units and 2 people move that’s only a 20% hit for the turnover period (plus maintenance, paingint carpet, etc).

If you think you are below market, I would go ahead and do an across the board 3% increase. Most won;t move, but if you are lucky maybe one will. Get your tenants conditioned to annual increases, just like the large complexes do. I wouldn’t try to raise to market instantaneously. But if you are lucky one or two will move upon the rate increase and you can capture some upside for that unit.

[(former)FormerSanDiegan]

[quote=Escoguy]
I’d suggest anyone who is only focused on SD to look north at LA. That’s where the prices are insane. Anything decent is 1.7M plus in certain areas which would be 600-650K here. So no I don’t see much of a drop coming any time soon.
[/quote]

You aren’t kidding about LA. We track both markets (own a rental in SD and own a home in LA). Once the nest is empty, we plan to move back to San Diego where things are less expensive. Especially property.

[(former)FormerSanDiegan]

.. gonna put that question above to a poll …

[(former)FormerSanDiegan]

Folks…

Today is pi day. In celebration of pi day, I am endeavoring to brush up on some math.

So, here’s a word problem:

If inflation adjusted incomes go up from 63K to 64k over a 5-year period where cumulative inflation was 8.7%, what is the increase in nominal incomes over that same period:

A) 1.6%
B) -7.1%
C) > 10%
D) Prices are inversely proportional to rates because of stealth inventory.

[Author]

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