All Forum Posts by: Johnson H.

Yes, its pretty standard. Do you have something to sell? If so, maybe I would be interested in it. Let me know!

Hi John,

The property is a SFH already so there shouldn't be anything from holding you back once vacant to rent the entire house and not be subject to rent control any longer. Remember that with an illegal in law that the stove is probably illegal. Also some of the work could be completed without permits. Do note that the SFH is still subject to just cause in San Francisco.

Finally, I want to stress that I am not a lawyer and I don't have all the facts in your situation so what I have said in this thread could be wrong so please check with a good real estate lawyer if you intend to purchase the property and go through with an OMI. It seems like every year there is something new to learn. The 5 year OMI rule was just changed in the fall of last year. 

Regards,

Johnson

@Account Closed - Thanks for putting up what you learned. Before you jump into furnished rentals, be sure to learn about the downsides of putting that business into your rentals. There are downsides to all strategies but as long as you are comfortable with it, I think its fine. Don't wait too long, try to find some great value properties now.

@Moonhee Kim - Thanks for taking the courage to come out to my meetup! You don't need to be scared, many new people come all the time and everybody I have met have been very nice. Bring a friend if you feel uncomfortable, but that feeling will pass very quickly I bet. We are in the back of the pizza place so come find us tomorrow!

Hi John,

Yes it's possible for you to put it back as a SFH. Getting the tenant out via OMI is possible but it depends on the tenants situation like I mentioned above. However, if you don't have the intent to live there for 3 years then that could be the deal breaker.

Regards,

Johnson

Hi John,

You mention that there is a tenant in the house. Does the tenant live in the entire house or was the house split between a second floor unit and an illegal in law? If there is an illegal in law, the SFH is considered a two unit in San Francisco and rent control applies.

If this is a SFH with in law, the tenant has the right to move back into the unit at the prior rent except for any normal increases after capital improvements and rehabilitation of the units have been completed.

You can possibly complete a owner move in eviction. However, please note that the elderly, disabled and children have some protection over a owner move in eviction. Also, I believe the landlord has to have the intentions of living in the unit for three years and can re-rent at market rate after five years. 

http://sfrb.org/section-373-rent-limitations

Regards,

Johnson

Hi John, great thread here. Another reason for not holding onto the note, you have less risk in the deal if there was another rough downturn again. For example, lets say you lend at 70% LTV. If your market were to crash and decline 40-50% your borrowers would probably hand over the keys to you and now as the lender you are underwater as your collateral is less than the balance of your loan. However, if you sold the note you collected the points and removed the risk off your balance sheet. That said, if you know your borrowers, they have good character and you are not looking to grow much more in your lending, your risk is mitigated lending off your own balance sheet and money from others.

It's your choice if you want to be a service business by lining up the money for borrowers and lenders, collecting the points and shedding the risk or by being the bank by lending your own and other peoples money and holding onto the risk. Just my two cents.

Also, a good local property manager in the area would also be able to give you tips or even handle this situation for you. Local is key for both the PM and lawyer depending on what you want to do. No one should ever assume that rental control is the same everywhere because its not and it will get you into trouble assuming so. 

Hi Jack,

Rent control in every city in the Bay Area is slightly different so I would look to the laws and regulations of Hayward to see what is lawfully feasible. You should find out from the prior owner when was the last time rents were increased on each tenant. Then you need to find out from the city what the appropriate increases for each year are. For some cities in the bay area, you can only go back a few years. If you feel uncomfortable with raising rents via banked rents, I would find a good real estate lawyer that knows their stuff for the Hayward area. You could use them for one unit and learn from them or use them for all units knowing that everything was done lawfully. It's up to you on how you proceed, good luck!

Regards,

Johnson

@Account Closed - Thanks for the kind words and coming out every month! What was the top three ideas did you get out of J Martin's Summit?

@Charlie Brown - Looking forward to meeting you!

@Dilan Pradhan - Yes, we welcome newbies and yes it's always good to RSVP so that I can see the number of people showing up. Also, it helps to connect with other people that attended if you need to follow up with someone.

@Robin Singh, @Peter C.- Come out if you can!

@Account Closed - I bought pizza the past two months so I would not pass up on free pizza this month. Let me know if this is happening. I need to go see some flooring beforehand. 

@Jonny C. - SF meetup, not sure. I need to connect with J Martin on this one but he is away in Vietnam and I don't want to bother the guy!

@Peter C.

Hi Amit, great article here and can be backed by other articles showing that the high end luxury apartment market rent has plateaued. There is just so much Class A inventory currently on the market and upcoming inventory that can't be absorbed fast enough and each new building is cannibalizing the slightly older inventory. No landlord wants to lower rents and tank prices so they offer a ton of incentives to get someone in the door hoping they stay for the second year. 

However, I bet that Class B inventory is still strong just because the pricing differential is so large and no developer is building Class B inventory because the math doesn't work out for them with land prices and construction costs so high in SF. In addition, these new buildings have no rent control and they have been able to capture the large rent appreciation these past few years. Only so many people can afford a two bedroom unit for $5k a month. 

http://www.sfchronicle.com/business/networth/article/Free-rent-offers-abound-but-only-for-those-who-8000714.php