All Forum Posts by: Alex Vidal

@Amit M.

Yeh that dude must be on something because he made absolutely no sense...It's sad that people trust someone like that to invest their money for them. 

Sounds like you're reaping the benefits of buy and hold investing! I plan to be in that same situation within the next 10-15 years.

@Brent Seehusen I'm not sure why you'd be comparing things to 2010 stats when it's 2015 haha are we just going to ignore the past 5 years? It seems like you're trying to manipulate the stats to favor your argument by comparing SF to it's lowest point and the historical long term appreciation rates are still very high. I thoroughly cover this topic in the first link and the 2nd link is an article which contains updated stats:

http://www.biggerpockets.com/forums/55/topics/2140...

http://www.zillow.com/research/landlord-profit-735...

To expand upon these posts, here are the historical annual appreciation numbers for SF, which I believe are undeniable:

5 Years - 8%/Yr.

10 Years - 0%/Yr.

20 Years - 5.8%/Yr.

30 Years - 5.6%/Yr.

I view long term buy and hold investing as a 15+ year time horizon and SF has returned extremely attractive gains over those periods. I've challenged people on this site multiple times to show me a market that has done better and provide me with the data to back it up....But no one has.

Anyone can point to the fact that prices are now just reaching their 2005-2006 levels in SF and that homeowners who bought in 2005-2006 haven't made any money. This is a simplistic statement and it ignores the fact that, as I stated previously, those people were buying negative amortizing assets and gambling on appreciation. In today's market it's impossible to get a negative amortizing loan and you're still able to cash flow day 1 in the Bay Area and buy excellently located properties with great fundamentals. This is the exact opposite of 2005-2006 and the majority of other markets across the country have already greatly exceeded their 2005-2006 pricing, while SF is only back to it. That makes me cautious to invest out of state and extremely optimistic about the Bay Area in the long term. 

Anyone can lose money if they choose to buy/sell at the worst possible times in recent history, that's undeniable in any market. But why would you sell for a loss unless if you really needed to and why would you need to if you were experiencing exponential rent growth as I demonstrated to you here: http://www.biggerpockets.com/forums/55/topics/2113...

There's no need for everyone to agree with me, but the historical stats clearly demonstrate that if you hold in the Bay Area for 15-30 years you will do very well. 

@William Hochstedler

I totally agree, I don't think we're headed for a crash just a correction because the fundamentals are still there. If someone's able to lock into a 4% or sub-4% interest rate in the Bay Area that cash flows even slightly today, they'll do well if they ignore the short term and focus on the long term. Also over time, prop 13 becomes a huge benefit for buy and hold investors in CA.

Socal is a different animal, I lived down there for 6 years and it's amazing how expensive it is when there isn't the same massive white collar job force. It has a lot more retirees and 2nd homeowners in the wealthy areas along the coast. I think Socal also offers more opportunities for multi-family purchases and flips. Also if you're looking for buy and hold investments, nothing beats being near the ocean. My grandparents have been investing in La Jolla, Pacific Beach and Mission Beach in SD since the 70's when properties were around $50K and I imagine people were also saying how those markets were overpriced back then!

@William Hochstedler

It's still possible to purchase properties that cash flow day 1 because of the low interest rate environment that were currently in. It will just take a little work and a competitive spirit to find and successfully go after the right deal. Just because something goes $100K or $200K over asking doesn't necessarily mean it can't cash flow. Realtors in the Bay Area are strategically pricing properties below market to create a competitive bidding environment. 

Supply is extremely tight in the Bay Area and it will always be tight because there's very little developable land available and there's huge demand to live here. If someone is priced out of Marin, why not look to Napa, Sonoma, Santa Rosa, etc. or the East Bay as others have said where there are plenty of deals in the sub-$1M range. 

The difference between 2005 and now, is that back in 2005 deals were bought at a massive negative amortization, as you stated and they were purchased solely as a gamble for appreciation. Today, lending is much stricter and the numbers will need to and can pencil out on deals. The Bay Area is actually historically the best market for buy and hold investors and the stats prove it. Investors who can afford to invest here but choose to go elsewhere for their first couple deals are in my opinion taking the easy way out and have a myopic view of the market. 

You can also take a look at these other recent forum posts on the topic for additional information:

http://www.biggerpockets.com/forums/55/topics/2140...

http://www.biggerpockets.com/forums/55/topics/2113...

@Account Closed I never said anything about Dallas participating in a bubble, I said that they're currently way above their all times highs while SF is not. Once again you're unable to get your facts straight.

Why would I google it and trust some random article on the Internet (probably put out by an unscrupulous broker like yourself) that has no basis and isn't substantiated with hard data. Especially when I can correctly analyze the appreciation rate (which you're unable to do) based on Case-Shiller data which is the most widely accepted data in the SFR industry?

You're all talk and no substance and your responses prove nothing but your obvious lack of knowledge on the subject.

Since you're evidently set in your ways and unwilling to listen to reason I'll leave you to your naïveté. I look forward to circling back with you in 5-10 years to see how these phantom 20%+ IRRs pan out!

@Account Closed

You're points make no sense at all and are just full of contradictions. I disproved your point re Austin and Dallas not having a runup in prices. Additionally, per the charts the Dallas index went from a 100 index in January 2000 to 148 today (15.5 years later). Obviously math is not your strong suit because that's a historical appreciation of 2.55% per year because it compouds, not the 5%/yr that you're claiming. In that same time period, the SF index more than doubled on 2 separate occasions going from 100 in January 2000 to 218 in May 2006 (12.75% appreciation per year) and 210 today (4.9% appreciation per year). 

As I said previously you're obviously selling snake oil and have nothing to back up your wild claims so good luck in your endeavors, but people like you should be the last people giving newbies advice. 

@Max Maloney

I'm invested in buy and hold SFR in an A+ location in the East Bay, but the deals there are all now over $1M and there are better investments out there. There's a sweet spot in SFR where you have great safety because of the location but you can still achieve monthly cash flow and lock in for 30 years at an extremely low interest rate.

That being said, I'm now looking to house hack a 2-4 unit property because that will give me better scale and I'll be able to live rent free rather than sinking thousands into some SF landlord apt owners pocket each month. I'd recommend this strategy if you're willing to do it, but if not I think with your potential capital available a 2-4 plex would still be best in my opinion.

With the 2-4 plexes you can still get residential 30 year financing like a SFR. Unlike an SFR, you have less vacancy if you lose a tenant and any increase in rent will not only greatly increase value but increasing the rent for 2-4 tenants is much better for your bottom line than only one potential rent increase.

As for markets, I only know the East Bay and out there, I'd recommend Lafayette, Walnut Creek and Pleasant Hill. If you grew up somewhere in the Bay Area, I'd start there looking for deals in that area because you know it so well and you get in touch with a local broker who specializes in these types of smaller apt buildings. Either you can find one on bigger pockets or some google searching should yield some results. You'll want to look for incomes in the area, crime, public transportation (esp BART and Cal Train), school districts (very popular among renters), and large companies/jobs nearby. 

Jon - I dont know where you're getting your facts from but they're wrong. Dallas and Austin have had huge runups in housing prices in recent years. 

Dallas/Austin (Above All Time Highs) - http://blogs.wsj.com/economics/2014/12/30/eight-ci...

Dallas Home Index (Approx 18% Above All Time High Austin isnt Tracked) - http://us.spindices.com/indices/real-estate/sp-cas...

SF Home Index (4% Below the All Time High) - http://us.spindices.com/indices/real-estate/sp-cas...

@Account Closed

Long term 5%/yr appreciation is very high in any market and 10%/yr per year is extremely high even in historically massive appreciation markets like the Bay Area. 2-3% is conservative and you contradicted yourself again because you just said he could get 10%/year appreciation. You also said - "The markets I'm now invested in have experienced 7% appreciation in the last three months." Once again you previously stated that appreciation is speculation, how are you not speculating on this, did you actually sell these properties? 

According to your resume, it appears that you've worked a total of 9 different jobs over the past 10 years, which includes 5 months at BlackRock (nice name drop though). I'm sure your short time there taught you a lot! Additionally, your company has only been in business for a year and a half, so your short term numbers mean very little. 

I've underwritten multiple billions of dollars worth of real estate all over the country, so I'm pretty sure I do know what I'm talking about and I'd be happy to poke more holes in your analyses but there aren't any detailed case studies on your website. 

Where are you buying properties "in desirable areas near city centers" that are new? There is very little new construction near any city centers in the U.S. and if you buy a new property you are undoubtedly buying it a premium. 

You are correct the properties I own are older, but that's nothing $50K strategically spent up front (and included in my cash on cash calculation) can't correct. That $50K also easily adds some easy equity to the property. Also you should realize that just because you're buying a newer property doesn't mean there will be zero repairs/capex. Oftentimes  properties today are built much with cheaper materials and shoddier construction than in the past. This will be especially noticeable in any property under $300K.

If you're budgeting no capex or repairs in your projections (which judging by your other unfounded assumptions is likely) then you're kidding yourself. You may be able to fool newbies with your pie in the sky numbers, but not me, we'll see how your projections match up with reality in 5-10 years!

 So is this! How can you definitely say rents will rise each year? Also newer homes=new subdivision=plenty of excess land for development. What happens when an even newer subdivision is built next door and the price of your home/your rent decreases because no one wants to live in your subdivision any more?