[sdsurfer]

I think he said North Phoenix…is that the epicenter of the dump of unpleasantness? Maybe everyone that moved there expected more and ended up with a nice quarter acre lot on the sun so they are unhappy about it?

[sdsurfer]

[quote=desmond]Looks like I was right, each person presents their view, which they think is the correct one. Back and forth with congratulations to some and not to others, “I did this and I did that”. Technical commentary follows, etc. Everybody has a opinion and if you don’t follow theirs, your wrong. Keep it simple, don’t involve others, stand firm and do what you think is right. Looks like surfer went surfing anyway……………….[/quote]
Just wanted to say thanks to everyone for their insight. I thought everyone agreed that it was a weird topic when the first couple comments came through, but looking through this now there really are some good thoughts being shared. Thanks!

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Thanks blogstar!

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Yeah….I’m getting better at “picking my battles” these days….I already lost that one.

Thanks though.

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Thanks for sharing. I’ll look into the St. Augustine/ Buffalo varieties.

It sounds like I’ll get sick of whatever grass I plant eventually from the comments above:)

Thanks!

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I’m not that privy to the going rate for the caliber of representation he has anything, but do you think he spent more than the 109k on his attorney’s fees so save the 109k along the way? Not that funny, but kinda.

[sdsurfer]

Well…I feel like this statement:

we are comforted by the peace of mind of selling and keeping additional liquid assets in the bank despite the non-existing interest rates

alludes to you kind of wanting to sell already. If I typed the statement above I would give selling a shot…you never know with the inventory the way it is you might actually get a profit or break even and get you peace of mind. You do not have to sell unless you get the price you want, but I would be open with that Realtor or whoever you go with regarding that “testing the waters” aspect.

Personally…I would keep it because I have a lot of faith in real estate to accomplish long term goals and I would worry about what I’m going to do with my 20% if I were to get it back and if I am making the smartest decision with my money. I do not like letting money sit in banks myself. I’m not a big time economist, but I think just about anyone you ask agrees that we are headed for some big time inflation in the not too distant future. If your 20% is in a home I could see the rent of that home going up too(good school district, condition, etc.). If the 20% is in the bank you have peace of mind for now, but less and less of it as your money is worth less and less.

The other consideration is taxes. It sounds like you do okay so you could probably use the write-offs. I’m not an accountant, but I know when I do my taxes I am very glad to have an investment property because if I did not have the deductions I would be giving the money to the IRS anyways…either way I do not get it. Ask your tax person about that one as they know your situation tax-wise.

My 2 cents….best of luck to you whatever you decide and a cheers to your helping out with the in laws…I love mine too and feel lucky for that since most people tend to feel otherwise.

[sdsurfer]

[quote=profhoff]I’m a registered Democrat, but I’m disgusted. These increases aren’t going to solve the problem. Maybe it’s time to start cutting wasteful spending and chop some of the social services benefits, welfare, prison spending, union payoffs, etc. Oh, wait, I’m preaching to the choir.

I know the polls suggest majority support for this tax initiative, but I really wonder if people will actually vote for it when the time comes.

Blog sentiment is telling. Most posts say “Enough already. Just cut!”[/quote]

I just read through this topic and I’m disgusted too. I not a big political guy, but it seems that the whole idea of saving in order to have money to spend when you need it is gone. People just want to spend spend spend…then figure out where to get more money to spend.

I learned everything about money from my grandfather that said to spend at least one dollar less than you make in a given month. Try to save more whenever possible, but make sure you never spend more than you earned that month.

It’s just about living within your means, but it seems most people/govnts do not understand that.

I feel like the polls are never right because they word those things in a way that they answer the questions for you. Then they come out and say “Yes, 99% of voters agree that children deserve the opportunity to learn”, but then they leave out the part that those same people do not want to increase their taxes to foot the bill for whatever the someone that put the poll together deems “necessary” in order for a child to learn.

Is’nt there any sort of business minded person that can somehow create some revenue in this great state without taxing the people to the point they want to leave?

I mean seriously…raise taxes? is that the best you can do to solve the spending problem? How long did it take to come up with that one. Is that why we hired you for this job Jerry? To find the most obvious way in the world to raise money. Sorry bud…you fail. Go back to business school and learn something new before you present any more grand ideas.

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[quote=bearishgurl]For the life of me, I don’t understand why FHA’s lending limit is higher than the FF conforming limit of $417K!

The FHA was put in place in 1934 specifically to aid FT homebuyers, including low and moderate-income households to offer 96.5% financing on 1-4 units (where the buyer is in residence) to give them a “leg up” into homeownership.

Nka “FHA 203b,” this MIP program was NEVER intended for move-up/luxury purchases or investment properties but that is what it is typically used for in SD County, what with a current $729,750 loan limit! Even though few applicants can likely qualify to borrow this amount, this is way too much money to loan someone who puts only 3.5% to 5% down, IMO.

The FHA loan limit in SD County should currently be set at $300K. This would allow for an approximate $312K purchase at 96.5% financing. THIS is the type of property the FHA was put in place to finance!! And prospective owner occupants who are shopping at this price point or below are the exact audience the program was put in place to serve.

Slightly OT: Ditto for VA loans. The VA loan limit should be lowered to $417K. The current $477K limit is asking for big trouble, due to the program having zero down (subject to qualifying) for up to $477K. The vast majority of military spouses stationed in SD (male or female) are very young, have little to no college under their belts, and are employed only part-time or unemployed. In addition, the typical active duty military family is subject to COS orders as little as every 24 months.

I think the VA limit should also be $417K for retired military, assuming they still have the benefit (if they used it at one time, it has been reinstated). More than half of military retirees live on their pensions plus “side jobs” or PT work. These are the ones who are native to the area and/or still have family here or purchased a family home long ago in SD, rented it out intermittently throughout their career and never took cash out or sold it. The majority of longtime spouses of retired personnel (if they still have one) never worked or only worked part-time. Most of the newly retired personnel who can’t find good jobs immediately after retirement in SD choose to have the military move their personal effects free back to the area where they first enlisted or any other place in the US where housing costs much less than here. The typical military family in SD lives in military housing complex(es) (which includes all utils but cable/cell phone paid) the entire time of their occupancy but has little to nothing saved upon retirement from the military. They have 30 days from the date of their retirement to vacate their military housing quarters or are cut off from their (now extremely generous) housing allowances within 30 days.

These families have no business borrowing $477K … or $417K for that matter.

This is coming from a person who has lived around a LOT of retired military for decades.

The reason why there have always been a lot of HUD/VA repos (yes, even when the limits were under $100K) is because of all of the above.[/quote]

Great post elaborating on that. Agree 100% that the limits should be as low as reasonably possible. People can live in a condo or attached home if they do not have the down payment for a detached or choose to live in a more expensive area.

[sdsurfer]

Personally, I would never lend to anyone that only had 3.5% to put down. I think it goes without saying that with less skin in the game people are more likely to walk.

However, I think the whole point is to have a loan product that is available to those with a minimal down payment so that we can work towards getting the person that is not paying out of the home and someone that will or might pay their mortgage in. Of course there is a higher risk than someone with 10 or 20% down. It would be ideal if everyone could go conventional (they would also get a better rate!), but the pool of people that can and will in this market is not equal to the number of homes available. I would not blame FHA for providing “an” option even though we all know it’s not the best option.

The alternative would be to tell everyone they need to put more money down, since they dont have it they would not be buying. The prices would go down which would be good for those who have not bought, but would be detrimental to the responsible people in that neighborhood that put more money down and have been paying their mortgage.

There will always be responsible people that follow through with what they say they will and those who do not.

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[quote=moneymaker]Off the top of my head I would agree with you TG. But. And here’s the big difference in my mind, in the long haul >30 years the SFR is the better buy, to live in or as investment. I can look out my dual pane windows and admire my wife’s beautiful roses, then go outside and cut some off and put them in a vase in the house. With a condo you can admire, but I don’t think the neighbors would appreciate you cutting off “their” roses and taking them into your home. Not saying it isn’t done, but that is how squabbles start with the neighbors. In a condo it is “look,don’t touch” in a SFR you “can touch all you want”.[/quote] Does your wife appreciate this as much as you do? My wife would kick my ass if I cut her flowers she grew in the yard to move them into the house.

I also just wanted to chime in to say how thankful I am for everyone’s thoughts through this discussion. I feel like I’ve learned a lot from everyone’s comments.

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[quote=temeculaguy]Earlier today I wrote a long post about how I disagreed with the assertion that condos were bad and fodder for rookies, then I deleted it before posting because it seemed fruitless, like arguing religion with someone. Now I read sdr posted essentially the same thing from a different area and I decided to weigh in. My experience is anectdotal at best, a family trust with about 25 years worth of rentals that I do not control exclusively but stay abreast of it’s performance. I pay attention because I’m a self admitted geek and because the responsibility is inevitiably heading my way in short order. 7 or 8 properties, mostly sfr’s, spanning multiple cities and counties in so cal. Some have been added and some sold off over the years but the best ones have actually been condos and the top of the heap have always had HOA’s, contrary to what some have said. I realize that a great deal of research went into the HOA prior to purchase but by and large in this small sample, HOA properties held up better and made more profit over time.

Before anyone quotes me and bolds my words, I acknowledge that there are exceptions and horror stories on both sides of the aisle, but sfr’s can be horrific and non hoa sfr’s seem to attract a certain demographic that make for bad tennants and those same tennants are repelled by rule laden hoa condos. Maybe it’s a factor, maybe not, but like sdr, my real world experience runs against the grain. When I analyze and investment property, there is little emotion and lots of math. In a primary residence, that is not the case. The roi often beats the sfr. In my own primary I have some regrets because I could have bought two townhouses for the same price, or three for the same “net cost” and right now I would be up more than 100k in equity over my current situation and be cash nuetral with my two rentals paying for the one I lived in and themselves. But emotion played a role, I wanted to be happy, I wanted a big house on the hill and I could afford it and I am happy. I just cringe when I see sweeping generalizations against condos and even more so against home owners associations.

I’ve never been involved in an hoa, never even been to a meeting, yet my experiences from a financial aspect have always been positive and my non hoa experiences been negative, including sfr’s. I liken it to people’s bias about race and sexual orientation in others, using a broad brush never paints an accurate picture. Actually, the very fact that some people listen to “pearls of wisdom” creates an opportunity for you to find the hidden gems. Every hidden gem I’ve ever found in both real estate and in life has been because I ignored conventional wisdom.[/quote] Bummer you had to type it twice, but thanks for doing so to throw in your 2 cents.

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[quote=sdrealtor]SDS
Just some local perspective. In 1999 I sold my condo/townhouse in Encinitas. I wanted to and should have held onto it but I didnt. At the peak it had increased 125%. Comps on it today still support a 70% increase.

I bought an SFR in what has become perhaps the nicest/most desireable community in the area with the strongest sales and appreciation among SFR’s. Including my costs to complete landscaping it incresed 100% at the peak. Comps today support a 55% increase.

Over the last 13 years it consistently appreciated better than an SFR. If I had held onto it I would have close to $1,000/month positive cash flow on it. These are real not imagined numbers.[/quote]

Thanks Sd! I really appreciate that you provide the local data to back it up.

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[quote=bearishgurl][quote=sdsurfer]…Worst investement? Even if it cash flows and is in a great area where the rents tend to stay high and most people do not ever want to leave?

Monthly fee will never go down…I know that, but would’nt rent go up…increasing my cash flow or increasing my own reserves toward future mainteinance of the property?

Special Assessment…would’nt that be a write off?

Ticking time bombs…Are they all inexperienced? I’ll agree that some boards are sub-par, but I believe 4 out of 5 board members in the community I’m thinking of live in the community and have for over 10 years. I would think that qualifies them.

Only a small group to pay the fees…would’nt spreading the cost of a new roof over a number or owners be better than having to pay the entire expense yourself?

I really just like the idea of critically thinking for yourself to make your own decisions…[/quote]

sdsurfer, unless the roof leaks and is beyond repair, it likely doesn’t need replacement. I don’t currently own any rentals but have in the past and would prefer to “critically think for myself” whether my propertie(s) actually need new roofs (or not). The same can be said for any other repair/replacements that condo associations specially-assess their owners for.

My posted opinion was based upon the presumption of a property owner’s right to control all aspects of his or her property. This is impossible (and also illegal) with the presence of an HOA in the mix.

As a landlord, I wouldn’t want to be told what to do (within reason) and/or how to manage my property. I wouldn’t want to be fined for the children of my tenant repeatedly chasing a ball through a garden on assn land. I realize a city/county has the right to zone the use of my property and could cite me for high weeds, excessive “storage” of junk visible on my property (both visible from the street) or failure to evict well-known local narcotics dealers. But as a landlord, that’s all the “control” I’m willing to concede to someone else. It’s hard enough managing one’s own rental property without another layer of bureaucracy in the way costing a fortune and untold headaches for a LL.

If my smallish rental SFR needs a roof, I am free to critically think for myself to choose T-lock shingles and have the entire job done for =<$5K in the absence of a HOA. I am free to use cheaper landscaping and fencing than a typical HOA would use. I am free to hire my bro-in-law to roof the place or even do the job myself. I am free to cut a deal with a tenant to maintain the landscaping for a rent credit. The law and local custom does not require or force me (due to what tenants expect in the local SFR rental market) to pay ANY utilities for them, have ANY personal utility accounts open for that property in my name or even have them turned on prior to a tenant's occupancy! Not so with condo rental properties. As an "investment owner," many of these freedoms are taken away from you and relegated to the condo assn board (who often have wildly diverging levels from one another of expertise, knowledge of property mgmt law and motives for choosing to be board members). Unlike a detached SFR, when in escrow for the purchase of a condo property with shared walls, a buyer's inspector is often only able to do a limited inspection of the areas he/she can access and issue a limited report as it applies to the inside of an individual dwelling unit. If you, as a buyer, haven't done extensive due diligence on a complex, you can easily get stuck with one which has litigated over construction defects in the past or even distant past, its assn prevailed in suit and those defect(s) are still present today. Just because each owner at one time received lawsuit proceeds to fix the defects in their individual unit/PUD, this in no way means that they used these funds for that purpose or even made any repair(s) at all! There are many, many complexes around the county which have prevailed in construction defect lawsuits even 25-40 yrs ago where only a fraction of the units were actually fixed.

No matter where its locale, the value of a condo owner’s property is entirely dependent upon the quality of each owner’s current and future tenants, the decisions of their current and future board members, how economically the assn’s management company is able to get the required and necessarily regular and periodic maintenance done and keep ALL the dues collected and how well the original developer’s construction methods hold up over time. Condo-unit occupancy (both owners and tenants) turns over faster than SFR occupancy but I don’t know by how much.

You state you have a rental unit in Encinitas and that “everybody wants to live there.” Even if a tenant is living exactly where they want and need to (for work commute purposes), they often move next door or down the street for a better rent deal or upon notice of a rent hike. They do this because they CAN, far more easily than an owner-resident. IMO, it doesn’t matter where the rental property is, whether Del Mar or Lomita Village, tenants will always periodically price what they are renting against similar rentals in the same area and adjacent areas. When rents get too high for them in one area, they often move to an adjacent area with lesser rents. In small condos, tenants usually don’t have much to move or as many utility accounts so moving isn’t such a big deal. As a LL, you must be intimately familiar with your own rental market, i.e. what tenants expect to live in there for the price they’re willing to pay for it. Proximity to the beach is only so desirable for most tenants until the rent level is no longer sustainable.

Any monthly fee hikes or special assessments a HOA imposes on an investment owner has nothing to do with the desirability of their unit to prospective tenants OR the monthly rental amount they’re willing to pay.

For $300 month (typical HOA dues amt), I could get load up nearly an entire pickup bed at Home Depot or from a craiglist ad with all kinds of things to make my rental SFR more marketable to tenants and do the work myself or have it done cheaply. But I would only have to do this periodically between tenants or when something critical breaks, not every month![/quote]

Thanks BG. I appreciate the insight. I guess we’ll see how it goes and stay optimistic.

[sdsurfer]

Thanks for chiming in! My grandparents have shared similar experiences with regards to a few condo’s they bought in the 70’s in the Bristol Cove Carlsbad area. Of course it’s always “preferable’ to buy an SFR for a number of reasons, but I think there are opportunities in condo’s as well in certain areas.

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