Wholesaling in San Francisco

Wholesaling
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Wholesaling in San Francisco

Gregory Hodges
Greenville, SC · Member since 2013 · 11 posts · 2 votes

Im thinking of doing some wholesaling in San Francisco does anyone have any experience doing that there my profits are just to thin to keep wholesaling here in South Carolina. Thanks

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Amit M.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
12y

I'll third what has been said- there should almost be a biggerpockets/Bay Area edition, as not only are our numbers so radically different, they are actually counter intuitive to the rest-of-country investors. Months ago I remember posting about a typical SF deal, only to have people pleading with me; I think it got the worse deal imaginable award or something!

The bottom line is that you need serious money to make money in the Bay Area. It's almost impossible for a starting investor to get in unless you won the lottery, have a trust fund, rocked out an IPO (choose one.)

But for those of us who are already players, accessing existing equity is a great advantage. It's basically trading cash flow for future appreciation. In SF rents have been at an absolute tear. Example: an 800 sq ft unit in the über-tech-hipster mission district rented for $2200 in early 2011. Just re rented it for $3500. Got to admit it was rather fun having people line up/kiss butt/compete. I ended up taking this sweet techie couple who threw in a $200 bonus. Some nice sushi lunches, here I come :) So it's time for me to trade in some cash flow and get another asset under my belt.

I just recently started making offers, and yes I'm shocked that even POS's in lesser neighborhoods are getting snapped up. Lots of Chinese money and established SF families and investors buying all cash. I actually think my best bet is the fool who over prices, then his bldg sits on the market 30-60 days. Sometimes they soften and you can come in with a marginally lower bid and get the deal. The smart sellers put out the teaser price, and watch punters fall all over themselves in the typical bidding war.

So I quickly adjusted my attitude from "find a deal" to "just get something that is ****ing reasonable." I have a very specific building type and neighborhood demographic that I'm targeting. It takes advantage of SF's screwy rent control laws and gentrification. I'm confident if I get what I want that it will be worth $$ hundred of thousands more over the next 2-4 years.

How about all you guys? How bullish are you on appreciation in the Bay Area over the next 2-4 years? The tech bubble/no tech bubble is the sixty thousand $$ question, isn't it!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Johnson H.

    Now I am aging myself.. But there was a RE broker investor who had a I buy houses in the SF chronicle want ads every day of the year for 25 years that I know of.. Can't remember his name.. And does anyone still read the want adds in the newspaper.. Does the Chron still have them. I think the Chron brought back the Green sheet right? I picked one up at SFO last time I was in the bay and seem to recall that.

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  • Johnson H.Pro Member
    Investor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
    12y

    @Jay Hinrichs

    Funny you say that because I was just reading the Examiner this morning! Agents still have big spreads in the paper, with many of them showing properties SOLD! I dont recieve a copy of the SF Chronicle but you can check out the real estate portion of the website to find him.

    http://www.sfgate.com/realestate/

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  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    12y

    @Johnson H. ,

    I have never intended to purchase any properties in SF. I heard the Ellis Act is a hot issue in SF. Basically, getting the long-term tenants out is possible using the Ellis Act. However, it comes down to....at what cost? Sometimes it makes sense to bite the bullet and let the property sit vacant for 5 years.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Account Closed

    our Mid west Bp ers are probably wondering What the F is going on out there how could you leave a house that you paid a million dollars for vacant for 5 years.

    Well this type of market is what spawned the whole turn key industry. Buy a house in the mid west for the price of a car.

    or for the Aussies buy a house for the price of Stamp duty ( transfer tax)

    LOL

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  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    12y

    @Jay Hinrichs ,

    LOL!!! No doubt you have been around the blocks.

    My Aussie cousin said his stamp duty (transfer tax) was like $25k - $30k. The good thing is that their property tax is extremely low. If I have a choice, I'd rather pay for a one time high stamp duty fee instead of our killer property tax every year. Fortunately, we have Prop 13 in CA, which helps. Another thing that I learned from my cousin is that they collect rents each week in Aussie. Make it sounds like a roomy house operation here in the U.S.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Account Closed

    Ok now your stepping into it... as I learned about collecting rent weekly like they do in AU.. I wondered why the heck would they do that.

    Well then I realized that there are 52 weeks in a year. And only 12 months so they are picking up an extra month a year in rent if they collect every week.

    I have done a ton of bizz with the Aussies, doing 5 year financing for them on Rentals in Atlanta and Orlando. They are great borrowers and they love real estate.

    Unfortunatly they were also pretty nieve about the socio demographics of the US> many of them thought that they could buy a 30k property and that the tenant would be exponentially like any other tenant and they would get their rent and cash flow as a Turn key passive investor sitting 6k miles away. Well as we all know those types of properties are management dark holes and the Aussies took some pretty serious loses.. And some were taken by out and out felons....

    And yes I have been around the block a time or two

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  • Johnson H.Pro Member
    Investor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
    12y

    @Account Closed

    The new regulations being proposed to curb Ellis Act evictions make it so expensive for landlords that it would financially make sense. Gotta love SF!

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  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    @Johnson H. , I hear you on the neighborhood changing and gentrification vs. the forces of capitalism and profit maximization.. As @Amit M. points out, you can do buyouts. And at least that gives them the option to go for whatever it is worth to them. As @Account Closed points out, Ellis Act is another way if you're going to sell it out. But I think Amit looks for longer-term cash flow, rather than turning and selling... Operators like CitiApartments used to send out their "associates" with jackhammers, knock on doors w/ .45's holstered, etc.. Some people go off the deep end..

    @Jay Hinrichs , btw, did I ask you if you had chatted with @Bill Gulley much? I was messaging back and forth with you about a month back about real estate, economic cycles, banking, and those pesky examiners! He's in the group of usual suspects..

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    LOL, nope, not in the same circle. :)

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  • Jeffrey Reyes
    Involved In Real Estate · Modesto, CA · Member since 2014 · 17 posts · 7 votes
    12y

    There is a lot of doom and gloom in this thread. We have funded many projects in 2013 and this year in San Francisco and the greater bay area. Are deals harder to get? Yes, but they are out there. One way to have less competition is to do more creative projects such as TIC conversions. The San Francisco Bay Area market is still a deal compared to other world class cities like New York, Paris, etc. The driving force behind property values continues to be the rent vs. buy calculation. In San Francisco's Noe Valley you will pay around $3,900/month to rent a 2 bedroom+ flat, that same flat would sell for $1,000/SF (average of $1million). So based on rent cost, purchase cost, living in the property for 10 years, 4.25% interest rate, and 25% tax rate you end up with BUYING being 26% CHEAPER than renting!?! Who would have ever thought that a million dollar flat in the city would be a steal compared to renting?

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  • Account Closed
    Los Angeles, CA · Member since 2014 · 85 posts · 10 votes
    12y

    @Tyson Cross @Johnson H.  Yes true indeed it is competitive in SF.

    I'm working with an agent who has an off market property in Alamo Square looking for an cash buyer. Most of the investors I've shown the numbers to say the projected ARV was too high for its neighborhood. The comps that are located just a few blocks away are the same price though.

    One of the investors said that a 4bed/3bath on one block could be $2mill but a similar 4/3 on another block would be worth $3mill...

    Very interesting market in SF. Location... location....... location.

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  • Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    ^ more like micro-location....micro-location....micro-location....:)

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