All Forum Posts by: Carlos Ptriawan

House hack like Derrick mentioned definitely a possibility. In fact, I know few Airbnb arbitrage that generates income by reselling a unit. Back in 2000, Few a landlords rent several houses with 4-5 bedroom houses for $2K and renting out each room for $800-$1000/mo. So it's common in Bay Area. 
However OO duplex is not so common.

With the rising price in Bay Area, even tech engineers also feeling the pressure. Especially if you have small kids so they've to find a good school district and neighborhood. The average standard salary is $125K but with this salary, if only one parent is working, you could only afford a C class not-so-nice house in South Bay, although you may get a condo/decent B homes in North Bay/East bay. To really work comfortably, both parents need to work and produce at least $250K to have good DTI to afford a nice $1.2-$1.4 million house in A class neighborhood.

There's now a trend that citizen is moving out, especially retirees, they move either OOS or to new developed towns like Brentwood and Mt House. Or even modesto/manteca.

One trick that I found to "hedge" againts Bay Area craziness is to just keep buying house. If not, the wage growth will not be catching up with future expenses.

Regarding rental income: The fanny mae regulation is they recognized income rent from the appraisal assestment with 0.75 multipler.

All these new tech-PM: doorstead,hemlane,mynd is only good for A class neighborhood with the tenant that's tech-savvy and highly responsible. The PM invested in low-risk rental and neighborhood. They're usually do the self showing and do more virtual project management rather than having large local people presents in the market. So if you only have SFR or condo in A class neighborhood in san mateo for example, they're good.

If gov wants to have 100% exodus from California, there're two ways:
1) Move all Silicon Valley jobs to Utah. Hence Utah real estate will skyrocket in 5 years.
2) Don't offer 30 years fixed mortgage so people can't buy real estate with debts. This way home price is falling down quickly.

Now Yellen will print 50 years Treasury-Bond and give $15k first time home buyer, that will further going to raise real estate price even further. Tech jobs ? the tech jobs is making the most money during covid and most of them located in California.

@David Luor example, I wonder about the salaries of the people moving"----> This is very true, that's why in 2020 there's cross in rent chart. In San Jose and San Francisco specifically, average rent for apartment went down but SFR price is rising exponentially still which means those who can afford it (during covid) actually makes more saving these days but those who are economically challenged are leaving California.

If Texans and Floridians are used to paying 200 for homes and now they’re 450, they won’t see the value. However if Californians are used to see home prices for 1M and now they’re 450, they will jump all over it. Especially if they are selling their tiny home in Oakland for 700K and coming in with a cash offer.
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Kellie what does it mean ? can you please rephrase?

Yea I found sometimes Hayward present unique opportunity / setup like that, but only in that area/San Leandro. Not sure why.

As for someone that mention to buy owner occupied duplex, I run your number, with price per unit of $550K and 3.5% down Your mortgage plus PMI is between $3K-$4K. You can rent this unit maximum at 2.7K. You still have negative cash flow. If you just buy a decent house/condo in the east or north for $500-$600k, your mortgage is only $1.8-2.5K without people living next to you.

The only way OO duplex may work, according to my calculation, is only if the default cap rate is equal to 7%.

By the way, the weather is not the reason people moving TO California. If the weather is the reason, we'll move to Mexico and Hawaii, they're much nicer than in California haha. For most tech workers and companies, it's the most place that could provide so many jobs and unlimited returns.

Specifically to Bay Area. The one leaving Bay Area specifically is the citizen that has a past connection with non-California states likes family, friend,etc. The Bay Area economic are driven by the tech sector and these tech sector are very driven by the Asian immigrant. This tech sector is creating new wealth like a gold 100 years ago. What people doesn't realize, everytime there's new wealth creation,especially in tech, it drives real estate price anywhere in the world. It's the same story as in Bangalore,Singapore, Mumbai,London,Shanghai,Taiwan and other tech centers. For tech immigrants, the rising real estate is not something new as they see the price in California is still relatively cheaper since people can afford with 30 years mortgage anyway. The pressure then drives the citizen in non-tech jobs that have connections to non California state, it pressures their living style in such a way that their living quality is degraded because it's just becoming too expensive, thus what they call it mass exodus. But it already happened in any other cities anyway.

Derrick Are they all living on the same space or having different entry ?

Yes Harry, that's actually the problem. Think about it.
#Sponsor A promises 20% IRR 4 years holding time
#sponsor B promises 18% IRR 3 years holding time.
Not much difference. The difference between sponsor A is they're 3 person GP business, sponsor B is big fund multifamily with hundred employees, they operated their own property management with million in assets. Both has minimum investment of $50k.

Everyday I got offering like this, so it's actually not too hard to decide. The key is you need to confirm the number with other EXPERIENCED investors especially the one that already had experience working with them.

There's also a platform outthere where you can invest min 25k to different equity deals so your risk is much more lowered.