All Forum Posts by: Andrew Fingado

@Account Closed Welcome my friend, you've come to the right place. It's nice to see another bay area member on here. Seems like we are getting a few a week introducing themselves. The bay area is taking over!

@Petra Ibrahim Glad to see another bay area member on here. I am up here in the East Bay. Good luck with your investing. Hope to see you at the meeting.

@Pierre Belanger Nice to meet you and welcome to the forums. I am also from the bay area. J Martin holds a meeting once a month or so for local bay area investors, if you decide to come out I look forward to seeing you!

@Elizabeth Colegrove Thanks so much for the intro. This place is the bible for real estate investors.

@Steve Hyduchak I am so jealous of those companies. I bet they are making a killing.....

Where is this again?

@Anna Warren Good job. The tests are not easy.

@Account Closed It is indeed very difficult for landlords in Berkeley to make money. You know exactly what I am talking about first hand. Some have to spend tens of thousands of dollars out of their own pocket getting a rent controlled tenant out. Luckily the Berkeley Property Owner's Association is a very vocal supporter of landlords and has tried scaling back Rent Control, but in the long run many of their efforts are futile since the City Council has their own agenda. In their mind, they are protecting tenants...when in reality they are really only protecting a very small minority....while the other 90% have to pay through the nose who are not even from the area. Many times with borrowed money, double ouch.

@J. Martin What you said is one of the main risks of renting to college students. Sometimes everything looks good on paper, but you never know. Certainly some of it has a lot of it has to do with the college itself. I suspect there are a lot more tenant issues near Chico State than there are at Stanford.

@Steve Hyduchak I guess the whole thing about student rentals it is not cut and dry, just like any other aspect of real estate. In many cases you get higher rents, but you have to do your research (look at the housing supply, type of students you get, enrollment levels, etc). You seem to be aware of the risks though, and there is a huge upside. I laughed when I heard the story about the students waiting outside for an apartment at 4:30AM, that's pretty amazing. Just remember though, if you do ever buy and rent out to anyone: if you get that much demand (i.e. people waiting outside your office at 4:30AM) there is a good chance it is priced too low. Then again, if it is a college town with low housing supply you never know.

@Steve Hyduchak You got the right idea. I personally love college towns as investments. My father who is an experienced investor almost exclusively looked and bought in areas located near colleges because of what you just said. Although I think the federal government giving guaranteed loans to students is half the reason colleges can get away with charging so much, it is also much of the reason you can fetch rents for so much. High demand, low supply, late teens and twenty somethings with money to spend=investors dream. Most of them are willing to get a few roommates and each will rent out a single room, so although the rent is high they try to make it as affordable as possible by doing it this way.

There is a lot of upside. Like I said, I do management in Berkeley and there is rent control which can create some problems with longer term tenants in terms of getting a good return. However, the upside is that because most of the new rentals are rented out to college students very few of them continue to stay longer than 2 or 3 years. So you can continue to fetch market rent on the new units which can make up for the life tenants under rent control (who in many cases are eventually bought out with cash). Not an ideal situation, but we make it work.

Although Mark mentioned there is a higher turnover and more costs, in a rent controlled city that is exactly what you want. Higher turnover means less chance of someone staying there for life under super low rent. He is right though, much more management and there is always that summer window in which if you don't get them rented you are looking at a possible vacancy. Hence why it is important you put in the lease a clause which does not allow tenancy to revert month to month.

@Raghuveer M. As a fellow bay area native, I sympathize with your pain! Cash flowing properties in the 2% range seem like a pipe dream. My Dad always told me never to do out of state, but I would think if you can get the right team of people it may work. Another thing I have noticed as well, mobile home parks in Northern California make pretty good cash flow. You would have to check out local rent ordinances though to make sure they aren't rent controlled. Mobile home parks are not my area of expertise.

I manage property in Berkeley (right near the UC) and let me tell you the rent control laws here have done more to hike up rent for new tenants than any other factor. Costs for rent in college towns is going to be naturally higher than others based on supply/demand and their access to student loans, but believe me, rent control makes it so much worse. How else are owners going to make money when they have one or more life tenants paying 50% or less of market rent? It's simple math.

As if students needed any more expenses in their life.