Cupertino, CA · Member since 2016 · 4 posts · 0 votes
Hello BP!
Looking to get some advice for my family. We've invested in a KB home property nearby Santana Row in San Jose California. The current tenants will be moving out and the rental price has gone up from 3800 to around 4000-4100.
We're in a situation right now where we'll either continue renting out the home or we can sell the home. The value of the home is around 1.1m in 2016 and we bought around 680k in 2013. The property has appreciated quite a bit because it's silicon valley and the area has been booming in the past few years.
We've also looked at the reviews for the quality of KB homes long term and there are a lot of disaster stories that scare me just from googling them. We haven't had very many problems since the tenants have moved in and has been the best investment my family has made. I'm also a bit concerned whether or not there's another tech bubble that's about to burst in the bay area. I've heard from a lot of people that we're due for some price readjustments.
We've constantly been positive cash flow because we got a great deal on the home.
Just looking for some advice... thanks BP!
This is the property btw http://www.zillow.com/homedetails/493-La-Scena-Pl-San-Jose-CA-95128/122248592_zpid/
Residential Real Estate Broker · San Mateo, CA · Member since 2013 · 585 posts · 264 votes
10y
@Theodore Lin have you been renting it out since you bought it back in 2013? If not, there may be some other paths you might want to take.
@Lauren Heart is right in terms of aligning your investment goals with your decision. Depending on what you are trying to accomplish, that really will influence what you do with your property.
Investor · Northern California · Member since 2015 · 126 posts · 40 votes
10y
Morning Theodore! Here is my two cents...
If you have a newer property that cash flows in CA...continue to hold onto it!!! Unless you have some overarching goals that do not comply with this? You didn't mention your investing goals. Yes...we may see a "correction" of sorts in the next year...however, it won't last long...and prices will only continue to increase here in the Bay Area. (Just look at history for that!). This continues to be a very desirable area to live in, with jobs, and no shortage of Standford and Berkley graduating the brains to keep up with it all! ;) Again...my opinion.
Residential Real Estate Broker · San Mateo, CA · Member since 2013 · 585 posts · 264 votes
10y
@Theodore Lin have you been renting it out since you bought it back in 2013? If not, there may be some other paths you might want to take.
@Lauren Heart is right in terms of aligning your investment goals with your decision. Depending on what you are trying to accomplish, that really will influence what you do with your property.
Looking to get some advice for my family. We've invested in a KB home property nearby Santana Row in San Jose California. The current tenants will be moving out and the rental price has gone up from 3800 to around 4000-4100.
We're in a situation right now where we'll either continue renting out the home or we can sell the home. The value of the home is around 1.1m in 2016 and we bought around 680k in 2013. The property has appreciated quite a bit because it's silicon valley and the area has been booming in the past few years.
We've also looked at the reviews for the quality of KB homes long term and there are a lot of disaster stories that scare me just from googling them. We haven't had very many problems since the tenants have moved in and has been the best investment my family has made. I'm also a bit concerned whether or not there's another tech bubble that's about to burst in the bay area. I've heard from a lot of people that we're due for some price readjustments.
We've constantly been positive cash flow because we got a great deal on the home.
I managed a 25 unit building in Santa Clara from 2006 - 2014. When the market crashed, we ended up with a 25% vacancy rate almost overnight. Apartment complexes were lowering rents like mad and offering incentives. Some even saying "no credit checks!" Not sure if you remember that.
But, within a year, the market was back. All those displaced people who lost their homes, were now renters. And in that first really bad year, we just changed our focus from renting to mainly working people, to students, and we even quickly filled the building back up with just a different type of tenant.
And the jobs and rents came back with a fury, as you know, within a short period of time.
That was the worst crash I'm aware of in my lifetime, and I'm a senior citizen, native Californian. And as far as it affecting the ability to rent and get a decent rent amount, the worst crash ever basically fixed itself in a year.
So, I wouldn't worry about it. Just have a safety net savings account, in the event you end up with a month or two vacancy or have to lower the rent for a year.
As far as KB homes having problems - well, if you haven't had any yet, I'd assume the basic structure is fine. After that, any home will need maintenance, just like your car.
If it was me, I'd hold onto it. Congrats on getting a good deal and managing it well.
Cupertino, CA · Member since 2016 · 4 posts · 0 votes
10y
@sue Kelly
You make a good point. Long term the price will come back up even if market crashes. Can I ask why you are no longer managing the 25 unit complex after 8 years?
@Lauren heart
Makes a lot of sense in terms of long term!
@Ryan Landis
Yeah, we've rented it out since we got it. I was lucky to have no vacancy on the property. We listed it while we were closing on the property. First tenants turned out to be great and they have kept it in good condition.
thanks all for the advice! We'll be keeping the property and let the property continue with positive cash flow. Hopefully we can get some good tenants. I think we got lucky the last time we rented the place out.
Need to talk with the family about investment goals. I think we'll continue with the buy and hold method though.