All Forum Posts by: Robert C.

@David J., I’m not saying that I like having rights taken away, and I agree landlords are not being treated the same way as other businesses during this. BUT, I’ve always had the underlying opinion that owning real estate means you are participating in a regulated industry. And “ownership” is more like having a lifetime lease from the government. I’m sure people will disagree with this perspective, but perhaps it would benefit more investors if they got into this business knowing that the rules can change at any time through government intervention. Understanding the rules of the game are important in any business and best not to be naive about all the possible outcomes and how best to strategize. 

@Derrick StClair, Hey Derrick - have you already spoken with a tax attorney about all of your exposure on the inheritance? That would be step one and make sure you’re very clear on it. Your tax basis on these properties is going to get reassessed I believe. There may be opportunity to get a lower assessment right now because of the market. 

I do 90% of my investing in San Mateo County, so I’m pretty familiar. Up until a few weeks ago with the virus, I would say your estimated values are probably a little bit UNDER without knowing anything about location or condition. So after you sort out all the   true tax implications, my second piece of advice is to get someone you can trust to do a real appraisal. 

Assuming you don’t need this money to live day-to-day, and you’re able to handle expenses on the property, AND you get along really good with your siblings, then my opinion would be hold for now while the market shakes out. Free and clear puts you at your strongest position in a downturn and gives you time to think without pressure. 

I agree that you should be selective with the advice you get from BP. 

@Joel Owens, @Jay Hinrichs, @Russell Brazil - As I listen to you guys talk about your expectations/ethics as service providers, I can't help but think about how it seems like "the art of the relationship" is a dying sentiment in the brokerage world. I mean that as a compliment to you and what you bring to your respective businesses. I can honestly only count on a couple fingers the number of brokers that I can say I truly trust, and they happen to be older guys who've been in business for a very long time. The new class of agents I meet tend to be very transactional (even if they are successful), and they don't seem to know how to back up their talk of "building relationships" with consistent actions. Is that a trend? Or maybe it's just the bubble I live in...

@Ben McMahon, In the realtor world in the Bay Area at least, my impression of the "big box" agencies is that they are super transactional, and feel more like working with Wall Street from the 80's then going to Barnes and Noble. I'm not sure how technology would make that any better. But to your point, if technology does have any affect on real estate brokerage, it will probably segment the industry rather than replace all of the traditional components.

@Russell Brazil, I do agree with a lot of what you're saying. But (and this is to your industry's credit for its members), brokers as a whole do a pretty good job of holding the line on the commission numbers. Either that, or I'm a wretched negotiator... 

@Ben McMahon, I have a healthy respect for technology, but there are still so many structural barriers in place, too, to prevent realtor replacement. For example, while maybe you could argue a good portion of buyers (the shoppers) wouldn't mind cutting out the middle man, what about the sellers? There's huge value to sellers using an agent just in terms of marketing, sales, and negotiating top dollar. Lots of people like shopping, but I don't think a lot of people are really that enthused about figuring out the selling part for one of their most important assets. And as long as the sellers are using agents... that pretty much locks most buyers into using agents, too.

I've said before that if there were ever a truly definitive tech source for appraising properties, that could be a game changer. Zillow and Redfin are just not accurate enough. However, there are certainly many other parts of the transaction that need understanding, as @Jay Hinrichs pointed out. 

I do agree that some agents are overpaid. While I think folks like @Russell Brazil and Jay's wife earn what they bring to the table, there are plenty of lousy agents out there, and I think the commission should be more commensurate with their abilities and the local marketplace. I find it a little bit galling that commissions essentially doubled or tripled in highly appreciating areas over a few years, with little change to the work load. 

@Colton T., I agree that the decision should be market driven. Where I'm at, a brand new 50 unit building would need to have amenities to attract top dollar, compete with the other new buildings, and pencil out. Then again, a 50-unit here is a $25-$30 million project. 

On another note, I've been working on a 42-unit value add building, and been able to hit above projections without adding any external amenities (although interior laundry and A/C are being put in). The rents are slightly less than what new buildings with amenities get, but that's the niche I'm after. You can't assume you can get the same rents with less product. 

I wonder what people on BP think about this interview with Harry Dent on Rich Dad Radio: https://www.richdad.com/podcasts/harry-dent-4

I mean, the BP podcasts make it seem like everybody's favorite book is "Rich Dad, Poor Dad" (I'm neither a fan or a critic). Quick summary is that Kiyosaki and Harry Dent are talking about this is the beginning of a 20-30 year retraction, where values will recede and won't be back to where it was for a very long time. It fits in pretty perfect with the OP title. And at least Dent is saying Real Estate is the worst investment to stay in for this downturn. 

@Account Closed, So even if they can’t be evicted for non payment prior to May 31st, then simply any payment they make after May should first be applied to April/May missed rent. If they don’t catch up and pay June and after, then you can evict based on non-payment of June and after rent, no? 

I'm also not an STR person. How is VRBO handling this?

I do think there is an important question as to whether AirBnb is a “platform” or if they are a hotel/franchise like the McDonald’s example. As an outsider from Silicon Valley, their image has always been that of a platform. To me, that means they have no business adjusting the cancellation terms that are already spelled out for the hosts who are then technically individual business owners. 

@Russell Brazil, $2 trillion is what passed. I believe the $6 trillion is being tossed around as what someone from the Fed said it will actually take to get through the crisis. Don't quote me on that though - I've been absorbing a lot of random news snippets these past couple weeks!