All Forum Posts by: Robert C.

@Amit M. Hey Amit, just an update from our last conversation. There was still a bit of a traffic hit that week of the shelter in place announcement. However, leads have picked up reasonably again, and we've signed 2 leases since then, with a possible third coming up. One thing I've noticed is that move in dates are pushed back to the mid/end of April (which I'm fine with). 

So it does seem like people are looking and moving. I am also finding that most prospects have more disposable income (our nicer units are being viewed more than our lower end ones). 

@Russell Brazil, You know... it sounds as if Trump may be unwilling to continue the social distancing and economic restraints beyond a month or so. If that ends up being true, and the federal government opens everything up again early, this question could get pretty "interesting". You'll end up having some states that will try to keep quarantine procedures going, and then you'll have other states that will try to go back to business as usual. You could have very different results as to which locations become economically resilient sooner even if local healthcare systems are a mess. 

@Shiloh Lundahl, My crystal ball says time is running out for those refi’s and many people probably should have started several weeks back before the glut in applications. But in principle we agree. My point is people should be shifting gears by now, and some folks are asking the wrong questions. 

I feel like a lot of people are posting about the Fed cutting interest rates in hopes that it’s a good thing for investors, and that’s probably because it was a good thing over the past 10 years. But, cutting rates is only good for investors until it ISN’T good any longer - meaning at some point (probably like today), they cut it because there is something VERY wrong with the economy. I think it would be prudent for investors to think less about how to “take advantage” of the interest rates, and instead do a gut check/strategy check on their portfolio while they wait for potential repercussions. 

They used up their tool kit way early with likely small affect. Hello negative interest rates?

It means that things are bad and the public data hasn’t even caught up yet. 

@Jay Hinrichs

1. Agree that many people are misinterpreting your question. It’s not really about the “morality”. But the fact is if the market impacts rentals enough, then the smart business decision is to cut people breaks rather then risking long term vacant units in addition to eviction costs. Correct me if I’m wrong. It’s market dependent but a very possible decision landlords will need to make during this correction or in the future.

2. It doesn’t matter whether people think the corona virus has been overblown by the media or not. The fact is there are now REAL market consequences headed our way due to supply impacts plus the oil trouble on top. 

3. There’s always room for some sort of exception unless you are a totally soulless human being, in my opinion. Or else people have the luxury of ignoring those exceptions because they are not self managing, or not tuned in. 

@Hari Narayanan, My reading of the law is that the 750 sq. ft. threshold is a "per ADU" number. So as long as each ADU is under 750, you should be good on impact fees. Of course this is all so new, you should just asking your local building department how they are treating it.

@Bruce P., You said your friend started the process, so I assume that means the ADU was not approved yet? If not, I would think they would have to refund the impact fee if they restart the application. And I believe the new law requires approval within 60 days. Obviously, every local jurisdiction works different - just offering an idea.

@Mitchell Rusten, I think the answer you’re looking for is that it’s just one of those things that’s different with real estate investing as treated by the IRS. It might feel the same as flipping burgers on a large scale, but it’s treated as a different category of business with unique rules. Some of those rules are more advantageous than a traditional business but it’s different and you can’t expense real estate purchases as “inventory” or some such. 

I get what you’re asking though and if you dig deep into tax code there are so many rules that seem arbitrary and apply to one industry but not another. 

@Jon Q., Even with a poor performing 2020, I don't think this one year will be a good enough datapoint to show how investing in the Bay Area has done comparatively this cycle, or even if it's a good idea to re-invest OOS at this time. My impression has been that if the Bay Area falls significantly, then most of those other hot markets drop quickly behind it.

So, if you were someone with absolute perfect timing, maybe the optimal play would have been to get out of the Bay Area a couple years ago, to continue riding the perfect wave upwards in markets that are now outperforming us (and subsequently getting out before the next correction). But, barring that perfect scenario, making the same move in 2020 could equally end up a disaster by transferring your wealth and local knowledge out of a "safe" market at a bad time.

Also, I wouldn't be surprised to see certain local Multi-family markets diverge more drastically from SFR performance, which definitely wouldn't be reflected in national headlines.

@Steven Ko, And yeah the peninsula does have massive wealth! How the heck do we get BP to create a local "Peninsula Real Estate Forum"? I'm tired of clicking on either San Jose or San Francisco or Oakland.