All Forum Posts by: Account Closed

It's difficult for us to help you with opinions on the condo conversion because we don't know a) its location, b) condition of structure, c) configuration of units, d) specific costs. 

There will obviously be legal costs and permits, but we don't know how the plumbing is laid out or what the party wall/floor assemblies are like or what the parking situation is etc. Zoning may or may not allow conversion if the current density is grandfathered in, or zoning may allow a greater density or commercial use. 

There may be solutions that don't fit into one of your two scenarios, but there's not enough info in your post to figure that out.

It sounds like you already renovated the 1/1 SFR so at this point razing it to build new would waste that reno cash.

Near a freeway, you're probably better off holding/renting. The differences in sale prices near freeways vs non-freeways are much bigger than the differences in rents near freeways vs non-freeways. e.g. a condo might sell for $75k less but rent for only $75/mo less due to proximity to the freeway. 

Also renters are more tolerant of the noise and pollution because they're not making a huge long term commitment in renting the place. Different story for a family buying a place in which to live. 

I'm rehabbing a rental on Columbia Blvd and have done a lot of research into sound proofing. Happy to share what I've learned over coffee. 

As far as maximizing use of the site, it makes sense to add as many units as possible if you're holding or selling to another investor. Without having any info about the specific location (but it sounds like maybe Arbor Lodge on the west side of I-5? Piedmont on the east side is zoned R5) my guess is that, without razing the site and maximizing the lot for construction of attached rowhouses, it may not be ideal as owner-occupied spec housing. 

Being close to the air pollution is something families tend to want to avoid, so you might consider a plex that's designed with young singles in mind. But I think RH is still based on units per sf density rather than on FAR, so it makes sense to build larger units. 

It might pay off to design units that are condusive to roommates, with bedroom/bath suites and a shared kitchen. You could rent out "suites" separately and earn higher rents than if you just rented a 3br apartment to a family.

It depends on the lot, but you might also be able to subdivide and put in skinny attached houses facing the other street. A well-designed space that's 15' wide can seem ample and even spacious. A designer would be able to help. Happy to give my opinions if you'd like.

Aside from a couple people above, has anyone else read the literature about where we are technologically in terms of artificial intelligence??  Machines are learning.  Soon, they will be smarter than people and will build a new generation of even smarter machines.  Those smarter machines will in turn build even smarter machines, and the level of AI will be incomprehensible to humans.  

This is happening now.  Computers are solving problems in 15 minutes that would otherwise take a team of experts years to solve.  It's only a matter of [very little] time before machine intelligence overtakes human intelligence.  Yes, this has been happening for a couple years already, but I just learned about the extent and immediacy of it, which is why I posted here.  

We can bury our heads in the sand or convince ourselves that super-intelligent machines are not an imminently impeding threat, but we'd still be dead wrong.  

I personally am terrified and am glad I do not have children.  Maybe the best strategy is to make as much money as possible while simultaneously taking the biggest bite out of life as humanly possible, while we still have the freedom and natural resources to do so.  

 The question was, "If you care about this, what are your strategies for REI and how might you invest differently in the future?" 

Furthermore, it is a distraction from the argument and a logical fallacy to state that because past predictions from a certain segment of people have been incorrect, that future predictions from a different segment of people will also be incorrect.  It would be a logical fallacy even if such future predictions were from the same segment of people who were previously incorrect (though that's not the case here).  

The articles I cited above are from reliable, credible sources such as Time, Forbes and NPR.   The articles are based not just on research from people who are much smarter than you and me, but also on the reality of what our current technology can already do.  

You do not have to agree with the premise, but if you must chime in with your opinion then please contribute productively to answer the question posed and/or at least provide reliable evidence-based sources to back up your opinion.  

 Do you promise even when humans are permanently wired to the Machine network and being used as batteries for the proliferation of Machine consciousness?  

This is the TED talk that made my stomach turn: 

This is not your parents' technological revolution.  

From :  

"All that horsepower could be put in the service of emulating whatever it is our brains are doing when they create consciousness — not just doing arithmetic very quickly or composing piano music but also driving cars, writing books, making ethical decisions, appreciating fancy paintings, making witty observations at cocktail parties.

If you can swallow that idea, and Kurzweil and a lot of other very smart people can, then all bets are off. From that point on, there's no reason to think computers would stop getting more powerful. They would keep on developing until they were far more intelligent than we are. Their rate of development would also continue to increase, because they would take over their own development from their slower-thinking human creators. ... 

The difficult thing to keep sight of when you're talking about the Singularity is that even though it sounds like science fiction, it isn't, no more than a weather forecast is science fiction. It's not a fringe idea; it's a serious hypothesis about the future of life on Earth. There's an intellectual gag reflex that kicks in anytime you try to swallow an idea that involves super-intelligent immortal cyborgs, but suppress it if you can, because while the Singularity appears to be, on the face of it, preposterous, it's an idea that rewards sober, careful evaluation."

From : 

"Beyond opening up a Pandora’s box of forces that we may not fully understand, there is already evidence that technology is destroying jobs, stagnating incomes and increasing inequality. As the process accelerates, we will begin to face problems technology cannot help us with, such as the social strife created by those left behind as well as others in developing countries who will feel newly empowered and demand a greater political voice.

We will also have to change how we view work. Much like in the industrial revolution when machines replaced physical labor, new technologies are now replacing cognitive tasks. Humans, therefore, will have to become more adept at things that machines can’t do, namely dealing with other humans, and social skills will trump cognitive skills in the marketplace." 

Some arrangements off the top of my head: 

• An option to buy sometime between 18 weeks and a couple years (or whenever).  You can still give him 90 days' notice (or whatever you negotiate in the option), giving him time to move out.  
• No rent back and a firm closing date that suits your rehab/sell schedule (with some kind of consequence in the contract if it doesn't close on time), but you can also offer to pay for his housing elsewhere for some period of time after that.  
• His terms, your price. 18 weeks is fine, but you make up for the potentially lower ARV sale price from selling in the fall on the front end.

I'm sure there are many other creative strategies, but I wouldn't mess with renting it back.  Once they're a tenant, they will have lots of rights that could really throw a wrench in your plans.  It's 90 days to give a move-out notice in the state of Oregon, and evictions can take months.  I wouldn't buy an occupied property.  

I'm no lawyer and this isn't advice.  Just general ideas.  

I just listened to a TED talk that outlined the inevitability of artificial intelligence taking over the world. 80% of current jobs are service-based, and robots will very soon be able to replace all of them. We can't predict exponentially accelerated intelligence's effect on civilization but suffice it to say, there won't be jobs, and humans will have little utility on the planet, at least from the perspective of intelligent machines. 

The average year in which the singularity is predicted to occur is 2040. 

If you care about this, what are your strategies for REI and how might you invest differently in the future?

I'm troubled. The Matrix is within my lifetime. Only thing I can think of doing is nothing different from what I'm doing now because I have no idea what super intelligent machines will do. 

Dan, when one calculates the ROI on a buy and hold, one takes the sales price of the property + initial CapEx and compares that to the NOI before debt service. (Whether or not the property is financed has nothing to do with cap rate or GRM. Once you factor in debt service, you're talking about COCR, which applies to any type of investment.)  Paying today's retail RE prices in a place like Encinitas CA and then renting out that property won't yield a high annual percentage/capitalization rate on that investment (relative to a lot of other investments/RE markets--especially given the return on time invested in landlording).  

It doesn't matter where your market--if you bought 20 years ago and are renting out your property at today's rents, then of course you're going to have a decent ROI.  But this isn't what the OP is talking about.  The OP wants to buy a property at today's prices and rent it out at today's rents.  

You're talking about appreciation.  The OP is talking about buy and hold, which is cashflow.  The reality is, you won't get much initial cashflow buying retail RE and then renting out your property in a place like Encinitas.  

Appreciation is completely different.  If you're a flipper and know your market really well, or if your hold strategy is speculative (i.e. based on a need for appreciation), then Encinitas could potentially be a great place for that, no question.  It's more risky.  To reduce that risk, and if the OP is interested in this type of strategy, the OP could find out what his market wants, uncover his competitive advantage, and fill an underexplored niche.  Maybe this is what you're suggesting as well, but in different language?  

Regardless--as a strategy for housing yourself--no matter where you live, I 200% support "house hacking."  Changed the trajectory of my life, for sure.  

Hi Max, 

I grew up in Encinitas. It was a different place in the 80's. These days, the retail cost of RE just doesn't result in much ROI for buy and hold property there.

Listen to episode 222 with Jay Hinrichs. He talks about using the right strategy in different markets. Your market may not be ideal for the strategy you describe. I'm not saying don't do it, but you may get a much better ROI with a different strategy, and/or your current strategy but at a future time.

You can try fitting a square peg in a round hole, but that won't get you far.  Find what your market wants, uncover your competitive advantage, and fill an underexplored niche. . . . is what I'd do in your situation.