All Forum Posts by: Adam Kuszczak

@Arlen Chou I am planning to stay in Bay only couple years, but when I move out I was not planning to sell but switch that property to be rental, so as long as it covers mortgage, property tax and insurance, it would be good. I wonder if maintenance could kill it. @Jaron Walling wrote that his estimate is -$820 cashflow per month, but maybe it is on pessimistic side of fixed costs being 3.6k but rent being 3k, plus $220 for maintenance. I see a lot of competition in rentals too. Like check this one out https://www.zillow.com/homedet... bought for 727k, renting for $3275, no idea how this make sense.

I run numbers without maintenance for 730k property (mortgage 3%, property tax 1.26%) giving $3485 per month and I believe it could be rented for 3.5k now (yes, that could change to less in couple year, however I would rather say it is more likely to change to more). Also, from what I see, almost all the rentals are going within 7d being on the market have dozens of applicants according to Zillow.

I compare this to renting. If I rent for 3y for even 3k, I am throwing away 108k. Versus owning (1k per month towards principal) - 90k (=(3.5k-1k)*3*12). So 18k. If I rent for 3.5k, then difference is 36k. Yes, that is a question for me to answer

Thanks all for insight and opinions

@Brian Garlington

yeah that is what I plan, to buy out of state anyway. 

There is almost no duplexes or triplexes in nice neighborhoods in Brentwood, especially after 1990, that is the problem. All the house hacking, I read about it, so know the topic but at this stage of my life it is not an option. The question then becomes if it is worth overpaying around Bay vs spending that money (loan) out of state. And I know the answer is always: it is better out of state in this situation, unless you want to live in your own house and not rent. That is question for me to answer.

The main opinion I am seeking here is if this crazy market was always there in Bay, or is it extra crazy now. MeetKevin and Grapham have some videos showing stats that house inventory is super low, so I am already 6 months late to the party....

Yeah, I do realize from investing perspective they are terrible. My thinking is more like, I will live there for 2-5 years and then rent out to keep good loan instead of selling. Brentwood,CA seems the best from the worse. Other places like Livermore, San Jose have even worse numbers. I feel like picking home that does have some sense in renting vs the one that you are force to sell when moving out is better option (don't want to bet on prices going up + closing costs will hurt when living <10y). 

Jaron, may I ask if you used 1% home price as maintenance costs per year? I am not sure if we could use the home sale price for it, given that prices are artificially higher. Like if you buy home there for 600k, maybe for the maintenance cost we should use 300-400k. I dunno, it is tricky to pick the best from terrible...

New to the forum, but not a total newbie. I wanted to hear people's opinion about housing market around Bay. 

I've been looking into Brentwood, CA which seems to be last area with house prices that make some sense. 

Math:

- 4 bed, ~2000 sq ft, ~5000+ sq ft lot, good schools 6+, 1990+

- 630-670k asking price

- property tax 1.3-1.6%, mortgage 3.2%

- after running some numbers, it gives me 3.3k-3.6k per month to own (mortgage, insurance, property tax, sometimes HOA, not counting utilities and maintenance)

- rents in the area are closer to 3k tho, but everything goes within a week or two, so I bet if you are patient, you could rent it with cashflow (saw couple houses that went on Zillow for rent 3d after closing and were rented out with cashflow after 7d)

So there is this upper limit of ~700k above which owning costs are way higher than avg rent (for same reason locations inside Bay do not make sense, I think). The case would be to buy to live in, and I know you should not mix investment with home to live in, but still, knowing that you can move somewhere else and rent this one out without loosing too much money is much more compelling. So then you can stick to 30y fixed and treat it as free money as some Youtubers say:D

However, there seems to be like 10 buyers per house, making it very competitive and final sales going for 30-100k above asking price (especially when it seems a trend to artificially lower asking price to get more people into the race).

I've only been looking at this since beginning of March and real estate agents told me that this crazy thing is going on for over a year and it is just getting worse, that you had to bid more and more, essentially driving prices up and up. 

I do realize this is worse scenario to buy RE if you even remotely think about it as investment but I want to stop paying someone's else mortgage:D

What are others thoughts about that market? Was it always that crazy? Would you stay away and buy 5 SFH with cashflow in other states?

Adam