All Forum Posts by: Johnson H.

@J. Martin, you are killing it with these meetups! I feel like I can talk to @Account Closed hours. Have fun you guys!

@Jay Hinrichs

Funny you say that because I was just reading the Examiner this morning! Agents still have big spreads in the paper, with many of them showing properties SOLD! I dont recieve a copy of the SF Chronicle but you can check out the real estate portion of the website to find him.

http://www.sfgate.com/realestate/

@Account Closed I know a bit about the Ellis Act. Basically, you can invoke it for a rental building if you change the use of the building, ie from apartments to condos. All tenants must be evicted and you cannot rent out the units unless at the same rental rates as before within 5 years. One year notice needs to be given to senior and disabled tenants and 120 days for the rest. Payments of up to $18k need to made to each tenant.

Andy Sirkin is the leading lawyer on Ellis Act, condo conversions and TIC's. I have emailed him before and he answered my questions promptly. For more information, take a look at his website here.

http://www.andysirkin.com/HTMLArticle.cfm?Article=3

The Ellis Act has been in the media recently due to some sad evictions that had the media spotlight. The Board of Supervisors are trying to slow down the pace of Ellis Act evictions.

Are you thinking about using it in the city?

Thanks for your comments @Amit M.! I think we are both in agreement that San Francisco is a difficult place to get deals. However, anything is possible and if you keep working hard at it, eventually you'll find one!

I guess the people you have talked to are luckier than the landlords I have talked to. It's been very difficult to get a tenant buy out these past few years during the rental run up from what I have heard.

Talking from a purely capitalistic standpoint, I completely agree. I would want all of my units to be renting at market rent and I would not like to subsidize anyone. I enforce late fees and even though I have a tenant that lose their job, they will have to go. I run my real estate like a business and completely understand.

However, as a native of San Francisco, I see the gentrification of the city and it saddens me. Chinatown is becoming smaller and smaller as FiDi and North Beach continue to encroach on the area, evoke the Ellis Act and kick out low income folks. The Mission, Dolores Park, and Dog Patch are filled with techies able to afford a lot more pushing people out. Sadly, I will probably leave in a few years as well due to the cost of real estate.

@Jay Hinrichs

That's nuts! I have seen $200 a month rent when the remaining 7 units are at market rent at $2400 in San Francisco. However, these long time San Franciscian's made it what it is today. Sucks to be the landlord but I think they have every right to stay. However, the tech money elite is taking over San Francisco these days and its not looking pretty.

In San Francisco, excluding condo purchases, the average price of a home is over $1 million now. Permitting and rental laws are far more restrictive than most areas in America. I saw a complete tare down in Pacific Heights that went for $4 million and they probably paid all cash for the property. Think you could buy a property with low rents and just jack it up? NO WAY! It is against the law and you can only follow strict guidance from the rent board on the amount you can increase annually.

Think you can do cash for keys for a low paying tenant? Nope! I have heard tenants denying $50-100k because their rent is $1-2k below market and they would not be able to live in the city if they have left. Thinking about doing direct mailing? Many realtors and investors already do it.

People out here have a ton of money and they accept a lower rate of return for doing business locally. I have heard of a flipper that returned his investors money in his second multimillion dollar fund cause he cannot find enough deals.

Sorry to be a negative Nancy here but I would not try to wholesale in San Francisco. I'm sure there are better markets for you close by.

Hi Andrew,

The east bay meet up was a blast! I am looking to start up the San Francisco meetup again. Let's connect and I'll let you know!

My day job allows me to review bank loans. During the downtown, I saw these items with borrowers that went bankrupt:

1. Not enough cash flow

2. Too much debt (high LTV)

3. Not enough cash reserves

4. Over speculated (ie buying too much land to develop)

The borrowers that weathered the economic downturn had low amounts of debt, lots of cash and investments for liquidity purposes, and cash coming in everywhere. In addition, these borrowers were able to take advantage of the downturn as they were able to borrow easily and acquire additional properties at fire sale prices. Finally, many of these borrowers hold on to their investments for decades and allowed the cash flow to grow annually. They didn't buy when the market got super hot and they don't do anything fancy. The majority of them stick with what they know and kept doing it, either investing in SFH, apartment buildings, mobile home parks, motels and hotels.

Looking forward to seeing your finished product. You got an amazing package deal from the bank!

Jacob, dont let these setbacks get to you. I've had break in's and vandalism before in my flips and rentals. Just keep going until you have the money wired in your account and it will all be worth it!