Sell or rent advice for our properties in San Diego, CA

Sell or rent advice for our properties in San Diego, CA

San Diego, CA · Member since 2018 · 31 posts · 25 votes

Hello! My wife and I have found ourselves in a state of "analysis paralysis" and are in dire need of some "Rent or Sell or Other" help from someone (or someones!) more experienced than us. I am trying to learn more about REI as quickly as possible, but time is conspiring against us since we just bought our forever home in Del Cerro (central San Diego). This means we need to make a relatively quick decision about whether we will rent or sell our current residence. Which then got us thinking about our other rental too... Now months later we've run all sorts of numbers but are no closer to a decision!

In January of 2010 I bought a 2 br / 2 ba 1,000 sq ft condo in Kearny Mesa (central San Diego) for $287,000. In December of 2011, I refinanced to a 15 year mortgage at 3.125% to take advantage of the historical low rates and I could afford the higher monthly payments. I was not really thinking much about it as a future investment at the time, it was just my primary home. I started renting it out (self-managed) in October of 2016 after moving in with my wife.

We just recently renegotiated a higher rent with our tenant for $2,250/mo starting in October which should bring us up to about a break-even. We never considered this a bad thing because we could afford it (and have enough of a safety net to cover a market downturn) and knew that San Diego real estate has an excellent historical track record for appreciating over time. It will be paid off in 8.5 years at which point we assumed it would make the break-even periods worthwhile. Based on comps, we estimate its value at around $460k. We still owe $140k on it which leaves us with about $320k equity.

In April of 2014 my wife bought a 3 br / 2.5 ba 1,500 sq ft townhouse in Santee (east San Diego) for $359,000. In March of 2016, she refinanced to a 20 year mortgage at 3.5% because it was going to be our new primary home and we felt at the time that it made sense to expedite our payments and lock in a lower interest rate. Based on comps, we estimate its value around $465k. We still owe $255k on it which leaves us with about $210k equity. Rent-wise, comps are about $2500/mo, which is just above break-even, but it's almost 18 years before it will be paid off.

From an income tax-perspective, we are in the 24% bracket and both properties at this point mostly offset the principal gains with only ~$250/yr due for our KM condo and ~$100/yr due (estimated) for our Santee condo.

Now that I am really attempting to understand these numbers for the first time, I see that we have a ton of equity that is producing zero cash flow. Is it worth holding on to these properties or should we be taking advantage of the already rather large appreciation and the fact that we could stagger the sales of them as our primary residences and keep the capital gains tax-free? Is there another strategy you could recommend with financing to make them cash flow now without selling?

Thank you very much for your time and any assistance you can offer!

Respectfully,

Steve and Jessica

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New to Real Estate · San Diego, CA · Member since 2013 · 101 posts · 78 votes
8y
Wow @Thomas s. What a great strategy to make friends. Tearing apart a new investor wanting to learn. Life could be worse mate. Not all kids squander their parents hard work. :)
See this reply in the discussion

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  • Rental Property Investor · Caledonia, IL · Member since 2015 · 290 posts · 213 votes
    8y

    My number 1 CY proverb " You can NEVER lose money by taking a profit". EZ to read sometime difficult to execute. Personally I am not familiar with your market but I am familiar on when to pull the trigger.Case in point - I have 8 SFR on 7 year amortizations 7 year term with 6 years 7 months left for payoffs. I just did the loan mod in December but . . . back to my # 1 proverb. Appraised value when I purchased 2 years ago was 85 - tenant is going to buy for 110. I owe 55k - a no brainer to me. Sure it changes my elite 8 portfolio but I will just flip another one of my rentals into the program. Small scale compared to your numbers but the strategy is the same. Now onto your question 2 things to consider:

    1.) Only 8 years left thats getting after it but leads to ? # 2

    2.) Do you have something / idea of what to replace it with? In other words unless you can reinvest and create more equity why bother? Let the tenants pay off your home.

    My thoughts

  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    8y
    Steve O'Keefe you got to look at your goals and think about what you would do with the profits. Having a couple of properties paid off would be preferable to me than 401k but everyone is different. Also, you may have to go out of state if you want cashflowing properties, if you’d rather stay local then hanging on to those wouldn’t be the worst idea. Good luck.
  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y
    Originally posted by @Chris Youssi:

    My number 1 CY proverb " You can NEVER lose money by taking a profit". EZ to read sometime difficult to execute. Personally I am not familiar with your market but I am familiar on when to pull the trigger.Case in point - I have 8 SFR on 7 year amortizations 7 year term with 6 years 7 months left for payoffs. I just did the loan mod in December but . . . back to my # 1 proverb. Appraised value when I purchased 2 years ago was 85 - tenant is going to buy for 110. I owe 55k - a no brainer to me. Sure it changes my elite 8 portfolio but I will just flip another one of my rentals into the program. Small scale compared to your numbers but the strategy is the same. Now onto your question 2 things to consider:

    1.) Only 8 years left thats getting after it but leads to ? # 2

    2.) Do you have something / idea of what to replace it with? In other words unless you can reinvest and create more equity why bother? Let the tenants pay off your home.

    My thoughts

     Hi Chris,

    Thanks for your reply! I know the big question is what to do with the money if we decide to pull it out. I am still learning about REI (a little late to this party, I should've been learning about it much sooner) but it seems like OOS would be our best bet for monthly cash flow. In the interim, while we learn more, I was thinking about just using the funds as an accredited investor in a crowdfunded commercial real estate platform. We have about a 50/50 split with our funding in the stock market and in real estate so we'd be looking to maintain a similar balance moving forward.

    I am okay with putting off gains until further down the road, I just don't know if the expected rental appreciation over time is enough to offset the tax-free equity we can apply towards something that will pay us now.  We're not really hurting for the money, but I just want to make sure I'm not making a poor financial decision because it's easy to just stay the course and not deviate from what we've already been doing (buying as a primary residence and just holding on to it after we move on without any real thought or analysis).

  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y
    Originally posted by @Twana Rasoul:

    Steve O'Keefe you got to look at your goals and think about what you would do with the profits. Having a couple of properties paid off would be preferable to me than 401k but everyone is different. Also, you may have to go out of state if you want cashflowing properties, if you’d rather stay local then hanging on to those wouldn’t be the worst idea. Good luck.

    Thanks for the response, Twana! I think my main goal at this point is not squandering a good opportunity (if one exists outside of keeping our properties). I am brand new to REI, so my inexperience is an obvious limitation to going OOS in the near future. I have never felt that selling our places would be to our advantage because I just expected it to become relatively simple passive income once paid off. As I learn more about REI however, I worry that we're just holding property because that's what my parents did without any real thought or analysis. Their SFH has appreciated about 600% since they bought it in the early 80s and while I don't expect similar appreciation for our rentals, I know that significant appreciation is definitely a likelihood based on historical San Diego data.

  • Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    8y

    personally I wouldn’t want to rent out 450k houses for 2500/mo

    For me there would be better use of my money to sell and buy houses/apts with much better cap rate

  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    8y
    Steve O'Keefe no problem. Best of luck. I’m local here, if you ever feel the need to discuss feel free to reach out.
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    8y
    I think you’ve got to match up your goals and what you do with the properties. You are sitting on a ton of equity that isn’t giving you a high return. However, it’s parked in assets that will be hard to buy back again and can be passed on to your children. If I didn’t need the money I would tend to hold, not for the cash flow but just because an asset in SD is so valuable and hard to buy again, long term it will likely continue to appreciate. If I wanted a small amount of money I might take out a HELOC. I personally would sell or do a cash out refi to buy cash flow so that I could not be tied to a W2 job. If that’s not your goal then maybe just sit on the properties. I always think you have to think what do I really want? How can I use this to get what I want? So really think about your goals in life not the value or the props or the ROI. Checkout the podcast with Michael Swan I would do exactly what he did, but that’s just good for my goals, not necessarily yours!
  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    8y

    Hi @Lee Ripma

    Thank you for the mention.  If you listened to the podcast 238 you know I am really worried about dead equity sitting in pricey San Diego RE.  My little 3br house, you walk outside to get to the garage, 1040 square feet, 5,000 sf lot is now worth $550,000. 

    It is very scary.  I live in by no means an upscale area of San Diego called Mira Mesa.  My house was built in 1971.  My mortgage is $1900.00 a month and I have $320,000 in debt left on the property.  I just replaced all gutters and rotted out fascia etc... Your personal residence is a money pit and is clearly a liability, not an asset.

    I can't get my wife to sell and take that over $200,000 tax free equity and rent somewhere.  I don't want to Refinance and leverage my personal residence and go upside down in the next RE correction.  In the last RE correction my same residence went down in value to $270,000. Having $320,000 current debt is as far as I want to go right now.  

    If my little money pit goes to $650,000, I don't care we will sell in two years, before this entire thing implodes.

    $300,000 tax free would be way too good to resist then.  Right now we have about $200,000 equity after commissions etc if we sold.

    If that happens and I sell, then I will rent somewhere, retire from my teaching job in about 3 years at 55 or 56 years old.  That way I could focus exclusively on RE at that time when cash will be king!!!

    Swanny

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Unfortunately you do not understand the value of money. If you sold and invested in a nice income fund you could probably achieve a 10% return on average.

    Dead equity does nothing except buy very expensive cash flow and is really only hoarding of useless cash. Faith investors have two options sell and enjoy your profits or hold till you die, pass the properties along to children and let them sell and squander your money. 

    If you do not know that equity is cash that is being wasted and know when to sell you are not a investor you are a hoarder.

  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y

    @Lee Ripma Thank you for the reply, I appreciate the help!  I am going to look into cash out refi as an option.  I know that we need to take some action and really determine our short-term and long-term goals for the properties, but your post provided a lot of good ideas and options available.  I'm going to listen to @Michael Swan's episode tomorrow on my way to work!

    Speaking of "Swanny", thanks for your response as well.  I look forward to hearing your episode of the podcast!  I have several friends who live in Mira Mesa and one of them was lucky enough to buy at the bottom like I did.  It's crazy seeing a $250k house go to over $500k in less than a decade!

    @Thomas S. Thank you for your reply.  I am on here to try and learn and get better with my real estate investments.  I realize that I have been lucky thus far with timing, but I think it's a little harsh to say I don't understand the value of money.  It may be accurate to say that I don't yet understand how to properly utilize the equity I've built in my properties, but I plan to learn.

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    8y

    @Steve O'Keefe

    After you listen to that podcast reach out to me.  I always leave Mon, Thurs, and Friday's to talk with BP Nation members from 3:15-6:15pm after I get home from teaching during the school year, advising and talking shop.

    I love this stuff.

    Swanny

  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y
    Originally posted by @Michael Swan:

    @Steve O'Keefe

    After you listen to that podcast reach out to me.  I always leave Mon, Thurs, and Friday's to talk with BP Nation members from 3:15-6:15pm after I get home from teaching during the school year, advising and talking shop.

    I love this stuff.

    Swanny

     That's awesome, thank you Swanny!

  • New to Real Estate · San Diego, CA · Member since 2013 · 101 posts · 78 votes
    8y
    Wow @Thomas s. What a great strategy to make friends. Tearing apart a new investor wanting to learn. Life could be worse mate. Not all kids squander their parents hard work. :)
  • Realtor · Murrieta, CA · Member since 2016 · 373 posts · 203 votes
    8y

    My question would be--do you need the cash flow?

    That would be where I would start. I wouldn't necessarily say there is anything wrong with just keeping the properties if you have a strong financial base to keep them afloat.

    But that would lead me to ask, what are your family goals? What do you want to accomplish in the next 10 years? Because if you are looking at 10 years down the road, wanting "X" in cash flow, or "X" in wealth, that will help dictate an answer as well. 

    If you want to just build wealth, love your job, and have a strong financial base and could hold them through a downturn--I would just keep the properties. If you want to accomplish more than that, I would start looking at other options where your equity would be better at work. 

    Hope this helps!

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    @Olena M.

    "What a great strategy to make friends."

    Friends are expensive. I do not need more expenses. Friends can not be trusted to be honest. Strangers can be honest since they don't have to consider feelings. OP came here for advice might as well learn harsh realities early and save both time and money.

    Rule #1: Money has no emotions, neither should investors.

  • New to Real Estate · San Diego, CA · Member since 2013 · 101 posts · 78 votes
    8y
    @Thomas s I hope your rich enough to buy company. Sounds like your going to die old and alone.
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    8y
    Originally posted by @Olena M.:

    Wow @Thomas s. What a great strategy to make friends. Tearing apart a new investor wanting to learn.

    Life could be worse mate. Not all kids squander their parents hard work. :)

     Other than not having any friends his math sucks if he thinks 10% return is better than what has been achieved here.  

    @Steve O’Keefe

    Let's just do the first property as representative. As owner occupied he could have put very little money down but if we use 10% down he purchased for $29k down. With closing costs let's conservatively call it $40k in to purchase. In just over 8 years he has had $173k appreciation and around $100k equity paydown for a ~$273k return. His annual ROI, if cash neutral all years, would be 27%. Overall 580% return.

    Few properties purchased anywhere would cash flow with 15 year financing.  However I did not see a cap expense estimate in the calculations.  

    This does not imply that I am advocating keeping the properties.  I have an ex-Home of mine (near Mesa College so close to one of the OPs) in my rentals.   It is our worst performing property.  This is because it was purchased to be a good home and not necessarily a good rental property.  

    So a decision to keep or sell in my view comes down to expected return if you keep it versus expected return of other opportunities.  I cannot state anything about your other opportunities but it is my view that there will be continued rent appreciation in San Diego over the next 4 or 5 years.  If you desire my rationale for my belief on increased rents in the San Diego market you can PM me.  

    Good luck

  • Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
    8y
    Hi Steve, I am not in SD but in SF and we face similar dilemmas of holding out for asset value, asset appreciation with a trade off on cash flow. In urban California the game is different. Cash flow won’t come easily but odds are your appreciation will make up for it. Like most of CA based posters have said, your goals matter. For example I brought a breakeven property in a San Francisco high rise late last year because it was selling at a discount to comps and the location was awesome. I’ll be holding on to this property and pass it on to my kids to use when they grow up. I am already up 15% in value on that deal, thanks to Market momentum and the discounted price I paid for it. This property however is my last purchase for appreciation. I am now focussed on building on my cash flow centric portfolio which I hope to do going forward. I don’t intend to sell any of my SF assets. They will be hard to replace locally. Just know it is easier to shift capital out of CA assets into OOS and very difficult to do so in the reverse.
  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    8y

    Good info here. What Dan says is common I think in that trading for assets outside of Cali could be a challenging thing to replace. 

    Swanny says his personal SD home is a money pit, it could be although money pits don't increase in values thus the term money pit otherwise alternative outcomes definitions apply right. Many add sqft/ADUs in areas that sqft values cover that and or that can add enough value to justify. 

    For a historical perspective SD ranks #3 natIonally for total profits cash flow + equity since 2000 (SFR). LA and SF are #1 and 2. Good luck!

  • Dylan VargasPro Member
    Rental Property Investor · Chico, CA · Member since 2016 · 633 posts · 336 votes
    8y

    @Steve O'Keefe Welcome! i realize people think the money (equity) is sitting idle and not earning a return but look at it this way also. 140k paid off in 8 years is giving you 17.5k a year in income you will see in 8 years. 255k paid off in 18 years gives you approx 14.16 k per year in income you just dont see it for 18 years. I am not an economist or brainiac such as others on here but sometimes we can look t things another way. Make sense? Basically for the next 8 years you are silently making 31.6k per year and your money is safe. Next downturn hits San Diego you can unlock equity and by like crazy. You can also take out equity or sell when you feel the time is right for you and your wife. My take away is this, you are making money and its not dead equity. All things being equal as holding will eventually need repairs on homes etc. Good luck and keep us posted. Again though....31.6k per year for no less than 8 years.

  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y

    @Michael Swan I just finished your podcast episode and you almost made me regret listening at 1.25x speed.  You're hard to keep up with!  Obviously you have a ton of energy and passion for what you do and thanks for being such a great member of the community.  I got a lot of great takeaways and will be sure to start looking into the books you recommended.  I am definitely interested in OOS investments, so my wife and I will be discussing and researching that over the next few weeks in detail.  I'll be sure to reach out as questions come up.

    @Travis Rasmussen Thanks for the reply!  I would not say we need the cash flow.  We both work full-time and make good money doing it.  I would like to retire early (I'm 33 now - so hopefully by 45) so cash flow will be more important at that stage than it is now.  I was primarily concerned that my equity wasn't working hard enough for me and there was a black and white answer of which I was on the wrong side.  It seems like that is not 100% the case.  The idea of a cash out refinance or just saving up more money for OOS investments in the near future is appealing if we decide to keep the properties.

    @Dan H. Thanks for the reply! I'd seen you in some of the other posts that I'd found that were San Diego related and was hoping you'd chime in. The investment basis for both properties was 20% down (so ~$57k on my Kearny Mesa rental and ~$72k on our Santee property). I do have a CAP rate in the original post in the spreadsheet screenshots I included. I suppose it's all relative to your comfort level, but if it were paid off today, is a NOI of ~$20k from a property worth $465k the type of return you'd be striving for? Obviously the x factor in San Diego is how much that NOI will appreciate year over year. Is that the right way to be looking at it from a profitability standpoint?


    @Sam Josh Thanks for the reply!  There are definitely a lot of parallels in San Diego to the Bay area.  My in-laws own a house in San Francisco and my childhood best friend bought in Mill Valley a few years ago so I'm at least familiar with the market there.  I do like the idea of hanging on to my San Diego properties and working on just making future acquisitions that are better cash flow investments.  Cash out refinance is something I'm looking into or possibly even just trying to squeeze out an even higher savings rate between my wife and I so we can save enough over the next year or two to begin our OOS investments.


    @Matt R. Thanks for the reply!  I have to agree with you on the money pit analogy being a bit of a stretch.  I think most primary residences feel that way just because there is always something to fix or improve, but especially in a market like San Diego just going to bed at night and waking up the next morning tends to mean property appreciation.  The challenge I face is having bought our two rental properties as primary homes first, we never saw them as short-term investments and so finding a way to make money today on equity built is a goal but not a requirement.  I feel like I've been getting a lot of great advice for whatever we decide to prioritize in this thread so this helps give me an idea of all my options.

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    8y

    @Dylan Vargas That is a good point. Somehow BP with a million posts does not educate much on ROE. That is the annual increase in equity metric compared YOY as if you were going to sell minus sales cost and taxes. When this is calculated some will find out why many are more than happy owning in areas that have that most passive net gain built in. When this is measured and compared accordingly this can be become a six figure matter of difference.  For the most part this extra gain is realized for doing nothing more than just owning it overtime and no extra effort is required.  

  • San Diego, CA · Member since 2018 · 31 posts · 25 votes
    8y

    @Dylan Vargas Thank you, it's nice to be here!  I finally feel like I'm taking control of my (very fortunate) situation.  I've been on auto-pilot for too long and thankfully it hasn't cost me in any significant way.  Your post is basically how I've always looked at it.  Sure, it's not cash flowing now but in 8.5 years it will be hugely supplementing my income.  I certainly don't think I will "lose" by holding on to the properties long-term, it's more a matter of how much I could be squandering the opportunity cost of investing elsewhere.  There are lots of good strategies in this thread however, so I'm excited to sit down with my wife and figure out how we want to proceed.

  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    8y
    Originally posted by @Matt R.:

    @Dylan Vargas That is a good point. Somehow BP with a million posts does not educate much on ROE. That is the annual increase in equity metric compared YOY as if you were going to sell minus sales cost and taxes. When this is calculated some will find out why many are more than happy owning in areas that have that most passive net gain built in. When this is measured and compared accordingly this can be become a six figure matter of difference.  For the most part this extra gain is realized for doing nothing more than just owning it overtime and no extra effort is required.  

    ...

    > Thanks for the reply! I'd seen you in some of the other posts that I'd found that were San Diego related and was hoping you'd chime in. The investment basis for both properties was 20% down (so ~$57k on my Kearny Mesa rental and ~$72k on our Santee property). I do have a CAP rate in the original post in the spreadsheet screenshots I included. I suppose it's all relative to your comfort level, but if it were paid off today, is a NOI of ~$20k from a property worth $465k the type of return you'd be striving for? Obviously the x factor in San Diego is how much that NOI will appreciate year over year. Is that the right way to be looking at it from a profitability standpoint?

    BP is a site dedicate to RE investing and wealth building. The significant wealth building occurs with leverage. I have had a 15 year note in the past but my view has changed. My goal, which is sometimes tough to do, is to have a 75% to 80% LTV on all my properties with each note being conventional financing with a 30 year term. At the conventional rates over the last 6 or 7 years I view the loan as almost free money; there is no cheaper source of money for the majority of people/investors. So your question almost amounts to foreign to me. Note if I was in a market without the historical appreciation of our market then I would be more in favor of paying off properties as the leverage benefits from the appreciation (property and rent appreciation)

    However, I realize 1) sometimes the tortoise beats the hare 2) that there may be more risk involved with high leverage and that some people do not function well with risk.  I would not choose my leverage view if it was costing me sleep at night or other wise significantly impacting my quality of life.  So, I realize my perspective is not right for everyone however historically it has produced the best return in our market (this is very easy to verify if you desire).

    I showed the numbers on your property at 10% down. At 20% down your ROI basically was 50% of that depicted. If you had put 5% down it would have been 200% of what I calculated. If you leveraged your 20% down to purchase 2 properties for each one property you did purchase, you would have experienced the same ROI as I calculated (the ROI based on 10% down) but because your investment was doubled your profit would have been doubled. That is the leverage.

    Now to what Matt R indicates. I believe in what he indicates but calculating future ROI accounting for property or rent appreciation is a tricky task. Historically the 3 markets Matt quotes regularly (San Fran, LA, and San Diego) have a great historical rate of appreciation going back many years (at least 60 year in San Diego). However, 1) in those many years there have been multiple cycles of depreciation. Fortunately most of these have been less than 5 years and if not over extended is not a large concern to long-term buy n hold. It, however, sucks to purchase right before a 20% depreciation (Twice I have experienced close to 20% depreciation shortly after purchase - invest enough and it will happen) 2) As all my stock statements say to paraphrase: past performance is not necessarily and indicator of future performance. I see no indication that anything has change in our market but 1) that is today, maybe tomorrow there will be something 2) most of the things that cause depreciation cycles are seen by very few investors 3) Even if I miss nothing and the market stays highly desirable, any estimate ROE based significantly on appreciation (rent and property) is hardly more than an educated guess.

    My point is calculating expected ROE that has a significant dependence on appreciation is very difficult.  I am not implying that cash flow calculations that do not take into account appreciation (such as would be used in the Midwest) are also rock solid.  Just ask anyone invested in Detroit in 2006 what happened to their great cash flow.

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    8y

    @Dan H. Good points as always. At a certain point some investors might just decide when they want to jump on the equity build up train and in one of the few locations that requires no extra efforts to get that. Here is the simple Case Shiller chart going back to the 80s for SF sfrs. Yes there are down times during the overall positive direction, however in the past decades, only more time was required to get the higher rents and equity gains.  Which leads to the point, how much do you want to potentially make for your investments time frame and then also add all the required efforts ( management, liabilities, evictions etc) ? Consider many areas collecting just the rent ( cash flow profit) are just as speculative as the equity gains featured below if not more speculative IMO. 

    To sum it up, there are good reasons why something is worth 10X for the same sqft etc. Or let's understand 10 times the reasons ($$$) is some cases. Then add that some of the 1 bd rents in SF were $500 and now are $3500. 

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