[surveyor]

SDR:

I’ve remained silent on this issue for awhile because for one thing I didn’t want to make an uninformed statement. However, it did puzzle me that people were thinking that a huge amount of foreclosures, REO’s, and the bubble bursting would lead to a huge amount of rentals available and that rent would go down.

It would seem more reasonable to me that there would be an increased demand for rentals and that would increase rent prices up. With all these former homeowners now becoming renters, they would put pressure onto the existing rental inventory and they would increase rents.

The best scenario I can think of that would support a decrease of rent is that as the banks finally give up and start dumping their REO’s at a good enough discount, investors and flippers would gradually start bringing these properties into rental shape. Because of the new focus on credit and lending, many investors are being required to put in about 25% down. With this environment, this in my view is a process that would take years longer than the “bottom” of the San Diego real estate cycle.

[surveyor]

SDR:

I’ve remained silent on this issue for awhile because for one thing I didn’t want to make an uninformed statement. However, it did puzzle me that people were thinking that a huge amount of foreclosures, REO’s, and the bubble bursting would lead to a huge amount of rentals available and that rent would go down.

It would seem more reasonable to me that there would be an increased demand for rentals and that would increase rent prices up. With all these former homeowners now becoming renters, they would put pressure onto the existing rental inventory and they would increase rents.

The best scenario I can think of that would support a decrease of rent is that as the banks finally give up and start dumping their REO’s at a good enough discount, investors and flippers would gradually start bringing these properties into rental shape. Because of the new focus on credit and lending, many investors are being required to put in about 25% down. With this environment, this in my view is a process that would take years longer than the “bottom” of the San Diego real estate cycle.

[surveyor]

SDR:

I’ve remained silent on this issue for awhile because for one thing I didn’t want to make an uninformed statement. However, it did puzzle me that people were thinking that a huge amount of foreclosures, REO’s, and the bubble bursting would lead to a huge amount of rentals available and that rent would go down.

It would seem more reasonable to me that there would be an increased demand for rentals and that would increase rent prices up. With all these former homeowners now becoming renters, they would put pressure onto the existing rental inventory and they would increase rents.

The best scenario I can think of that would support a decrease of rent is that as the banks finally give up and start dumping their REO’s at a good enough discount, investors and flippers would gradually start bringing these properties into rental shape. Because of the new focus on credit and lending, many investors are being required to put in about 25% down. With this environment, this in my view is a process that would take years longer than the “bottom” of the San Diego real estate cycle.

[surveyor]

Appreciation

The 4% appreciation is only one aspect of the return on real estate. When you take into account the other aspects, your return on your real estate scenario above (rough numbers only of course) translates to about 9.5% return on investment.

(although your scenario does have a negative cash flow of about $1000 per month, which might be a little bit high because of the assumed $2000 rent).

[surveyor]

Appreciation

The 4% appreciation is only one aspect of the return on real estate. When you take into account the other aspects, your return on your real estate scenario above (rough numbers only of course) translates to about 9.5% return on investment.

(although your scenario does have a negative cash flow of about $1000 per month, which might be a little bit high because of the assumed $2000 rent).

[surveyor]

Appreciation

The 4% appreciation is only one aspect of the return on real estate. When you take into account the other aspects, your return on your real estate scenario above (rough numbers only of course) translates to about 9.5% return on investment.

(although your scenario does have a negative cash flow of about $1000 per month, which might be a little bit high because of the assumed $2000 rent).

[surveyor]

pricing

I can’t really tell you much about pricing. I’ve heard from D.R. Horton that they do have a little bit of leeway in terms of pricing so that they can basically sell it really low, but it probably won’t be the low that most people here would consider attractive.

As for projects down the pipe, we just finished one for Barratt American in Hemet (approx. 140 units). I’ve got another large project in Hemet that will come online as soon as the friggin’ County of Riverside stops being a total arse, approx. 80 units. I know there is another large project that is close to being finished in Riverside that is approximately 1400 units. There is one community that is being started that is still very new and that is in the Winchester area east of Temecula (south of Lake Skinner). Still very early stages though.

As for totally new master planned communities that are still on the drawing board and getting started, the two projects I’ve seen are in Imperial County.

[surveyor]

pricing

I can’t really tell you much about pricing. I’ve heard from D.R. Horton that they do have a little bit of leeway in terms of pricing so that they can basically sell it really low, but it probably won’t be the low that most people here would consider attractive.

As for projects down the pipe, we just finished one for Barratt American in Hemet (approx. 140 units). I’ve got another large project in Hemet that will come online as soon as the friggin’ County of Riverside stops being a total arse, approx. 80 units. I know there is another large project that is close to being finished in Riverside that is approximately 1400 units. There is one community that is being started that is still very new and that is in the Winchester area east of Temecula (south of Lake Skinner). Still very early stages though.

As for totally new master planned communities that are still on the drawing board and getting started, the two projects I’ve seen are in Imperial County.

[surveyor]

pricing

I can’t really tell you much about pricing. I’ve heard from D.R. Horton that they do have a little bit of leeway in terms of pricing so that they can basically sell it really low, but it probably won’t be the low that most people here would consider attractive.

As for projects down the pipe, we just finished one for Barratt American in Hemet (approx. 140 units). I’ve got another large project in Hemet that will come online as soon as the friggin’ County of Riverside stops being a total arse, approx. 80 units. I know there is another large project that is close to being finished in Riverside that is approximately 1400 units. There is one community that is being started that is still very new and that is in the Winchester area east of Temecula (south of Lake Skinner). Still very early stages though.

As for totally new master planned communities that are still on the drawing board and getting started, the two projects I’ve seen are in Imperial County.

[surveyor]

limits

Yes, there are general limits as to what they can do. The type of change you describe is drastic and would require a re-review of the plans (changing from SFR to condos). There is already a specific density requirement for the project and as long as they stay within those density requirements, they can make changes, but SFRs to condos is a major change.

For builders like 4S Ranch and Del Sur, they are already almost finished. They do not have any new plans at the tentative map stage (which is where they could negotiate changing SFRs to condos). The only possible change they could do (which is what some builders have done) is build smaller and more affordable houses in order to meet demand at that price range. Still, changing in midstream like this requires a lot out of a builder, their construction crews, and design.

[surveyor]

limits

Yes, there are general limits as to what they can do. The type of change you describe is drastic and would require a re-review of the plans (changing from SFR to condos). There is already a specific density requirement for the project and as long as they stay within those density requirements, they can make changes, but SFRs to condos is a major change.

For builders like 4S Ranch and Del Sur, they are already almost finished. They do not have any new plans at the tentative map stage (which is where they could negotiate changing SFRs to condos). The only possible change they could do (which is what some builders have done) is build smaller and more affordable houses in order to meet demand at that price range. Still, changing in midstream like this requires a lot out of a builder, their construction crews, and design.

[surveyor]

limits

Yes, there are general limits as to what they can do. The type of change you describe is drastic and would require a re-review of the plans (changing from SFR to condos). There is already a specific density requirement for the project and as long as they stay within those density requirements, they can make changes, but SFRs to condos is a major change.

For builders like 4S Ranch and Del Sur, they are already almost finished. They do not have any new plans at the tentative map stage (which is where they could negotiate changing SFRs to condos). The only possible change they could do (which is what some builders have done) is build smaller and more affordable houses in order to meet demand at that price range. Still, changing in midstream like this requires a lot out of a builder, their construction crews, and design.

[surveyor]

As a landlord myself, I basically look for evictions, judgements, and general financial health. That can include having the same job for the past few years, and other signs of stability.

I would usually run the credit check myself, because some of those free reports don’t show evictions and court judgements.

The thing they tell you as a landlord, you have to do your due diligence. Some landlords are better judges of characters than others but at the end of it, a landlord is entrusting a renter with a valuable piece of property and it helps to at least do your homework.

I’m willing to wager that those landlords that you’ve dealt with that were willing to look at you and rent to you without a whole lot of documentation haven’t been screwed over by a tenant often enough.

[surveyor]

As a landlord myself, I basically look for evictions, judgements, and general financial health. That can include having the same job for the past few years, and other signs of stability.

I would usually run the credit check myself, because some of those free reports don’t show evictions and court judgements.

The thing they tell you as a landlord, you have to do your due diligence. Some landlords are better judges of characters than others but at the end of it, a landlord is entrusting a renter with a valuable piece of property and it helps to at least do your homework.

I’m willing to wager that those landlords that you’ve dealt with that were willing to look at you and rent to you without a whole lot of documentation haven’t been screwed over by a tenant often enough.

[surveyor]

As a landlord myself, I basically look for evictions, judgements, and general financial health. That can include having the same job for the past few years, and other signs of stability.

I would usually run the credit check myself, because some of those free reports don’t show evictions and court judgements.

The thing they tell you as a landlord, you have to do your due diligence. Some landlords are better judges of characters than others but at the end of it, a landlord is entrusting a renter with a valuable piece of property and it helps to at least do your homework.

I’m willing to wager that those landlords that you’ve dealt with that were willing to look at you and rent to you without a whole lot of documentation haven’t been screwed over by a tenant often enough.

[Author]

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