Officially a speculation market!!

Investor · WA · Member since 2015 · 63 posts · 21 votes

This "investment" property just went pending at 643,000 here in Oakland. It's a 2 unit each 1 bed 1 bath. Realistic rent on each unit is max $1800. $43200 gross - taxes of $9452 (actual tax for this house) insurance of ~$1500. Maintenance, capex, utilities, and vacancy of ~ $9000 (napkin math ).

Net : $23248 for a cap rate of 3.61%. Assuming max market rents and low Maintenance, capex, utilities, and vacancy.

Someone help me understand how these numbers work out for the buyer?

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Amit M.

Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes

10y

@Jay Hinrichs "Many like me personally owe our whole careers to Bay Area appreciation."

I'm in exactly the same camp as you :) I started as an (innocent) home owner in SF in 1994, though I was innovative by buying a 2 unit building as a TIC with a college buddy (back when TIC's were a lot less common.) So I did get an education in city processes and tic to condo conversions. But back then I was deep into my tech career, and home was just a home.

Fast forward 9 years, I'm burned out on the ups and downs of the tech life, and meantime I make a killing on my condo by just living in it. When rates dropped super low in 2003 and I refied, it was like hey, I can just pull cash out and buy another property. Ok, maybe I'll do that. I did just that, and I never looked back

Fast forward to today- some savvy purchases, repositioning/condo conversions, correct targeting of neighborhood gentrification, survival of the Great Recession and 5 SF buildings later, I've acquired some serious cash flow, not to mention more equity than I know what to do with. Outside of optimizing my current projects, I'm ready to stop buying property and coast for awhile. So yes, Bay Area RE was (and is) everything to me. Otherwise I'd still be stuck at the tech game ;)

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Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
Originally posted by @J Scott:

Originally posted by @Jeff B.:
@Jay Hinrichs '93 bought in Cupertino at 37k, following year house next door went for 64k and when we 1031'd it went for 300k. Today, the same 1200sqft 3/2 exceeds 1mil. If we only knew :sigh:
Eichler?
Nope, West of De Anza, South of McClellan Rd
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Jeff B. you mean Hwy 9 ?
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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
10y
Originally posted by @Jeff B.:

Originally posted by @J Scott:
Originally posted by @Jeff B.:

@Jay Hinrichs '93 bought in Cupertino at 37k, following year house next door went for 64k and when we 1031'd it went for 300k. Today, the same 1200sqft 3/2 exceeds 1mil. If we only knew :sigh:
Eichler?
Nope, West of De Anza, South of McClellan Rd
Sorry, I meant was the house an "Eichler"...which is a common (and for some reason, very popular) design style in that area. Eichler was an architect in the 50s who designed a lot of neighborhoods in Cupertino, and those houses are pretty ugly (in my opinion), but come with a heavy price-tag (I guess other people don't think they're ugly :).
But yes, stuff in that area has appreciated immensely...
I used to live two blocks from where you describe (off Bollinger)...I lived in an Eichler that was worth about $700K in 2007 (before the recession) and is now at about $1.2M.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@J Scott I know we have had this discussion .. Eichler built about 30,000 of these homes from Redwood city down to Cupertino.
Someone Named Rummer knocked them off and built them in Portland .. if you get an original Rummer you will pay 50k more or so for the brand name.
they were way ahead of their time and Eichler was not familiar with LEED... LOL
Merry Merry
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Account Closed
Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
10y
Originally posted by @Jay Hinrichs:
@J Scott I know we have had this discussion .. Eichler built about 30,000 of these homes from Redwood city down to Cupertino.
Someone Named Rummer knocked them off and built them in Portland .. if you get an original Rummer you will pay 50k more or so for the brand name.
they were way ahead of their time and Eichler was not familiar with LEED... LOL
Merry Merry
For those that don't know what @Jay Hinrichs is talking about,
http://www.essential-architecture.com/STYLE/STY-13...
Perfect house for CA weather. My CA home is a knockoff but still embraces the courtyard style approach to the outdoors.
And in a recent commercial,
https://www.youtube.com/watch?v=kvT-keAxwVs
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David C.
Investor · Hillsboro, OR · Member since 2014 · 77 posts · 35 votes
10y
Originally posted by @Jay Hinrichs:

@J Scott I know we have had this discussion .. Eichler built about 30,000 of these homes from Redwood city down to Cupertino.
Someone Named Rummer knocked them off and built them in Portland .. if you get an original Rummer you will pay 50k more or so for the brand name.
they were way ahead of their time and Eichler was not familiar with LEED... LOL
Merry Merry
Thanks for that name to google, I'm finishing up a mid-century "monster" in cedar hills and just love the style.
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Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
10y
Originally posted by @Jay Hinrichs:

@Luke Mccandless having grown up in the Bay Area its always been an anomaly in my mind when houses got to 100k in Cupertino we certainly new there was a huge bubble brewing and that those prices were not sustainable... Same when the houses got to 500k then 1 million... IN my mind any prime Bay area location that throws off any positive cash flow with 20 % down or 25% down is a good investment if for nothing more than a forced savings.. nothing wrong with having a Prime Bay Area property paid off in years or so.. regardless of the economics as long as you don't have to feed it to much and or too often if they are positive that whole time..
Many like me personally owe our whole careers to Bay Area appreciation.. WE just do. and it was simply buying homes to live in... The tax free 500k when you sell can change your life and I know it did mine as I did it 4 times in the last 20 years LOL...
Change your life as in, were you able to purchase that jet? ;)
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Amit M.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
10y
@Jay Hinrichs "Many like me personally owe our whole careers to Bay Area appreciation."
I'm in exactly the same camp as you :) I started as an (innocent) home owner in SF in 1994, though I was innovative by buying a 2 unit building as a TIC with a college buddy (back when TIC's were a lot less common.) So I did get an education in city processes and tic to condo conversions. But back then I was deep into my tech career, and home was just a home.
Fast forward 9 years, I'm burned out on the ups and downs of the tech life, and meantime I make a killing on my condo by just living in it. When rates dropped super low in 2003 and I refied, it was like hey, I can just pull cash out and buy another property. Ok, maybe I'll do that. I did just that, and I never looked back
Fast forward to today- some savvy purchases, repositioning/condo conversions, correct targeting of neighborhood gentrification, survival of the Great Recession and 5 SF buildings later, I've acquired some serious cash flow, not to mention more equity than I know what to do with. Outside of optimizing my current projects, I'm ready to stop buying property and coast for awhile. So yes, Bay Area RE was (and is) everything to me. Otherwise I'd still be stuck at the tech game ;)
6 Reply
Account Closed
Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
10y
Originally posted by @Amit M.:

@Jay Hinrichs
and 5 SF buildings later, I've acquired some serious cash flow, not to mention more equity than I know what to do with.
Now that's investing!
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