All Forum Posts by: Sam Josh

I have been reading articles on falling property prices in London and a softening condo market in NYC. Is this the start of a gradual but sustained broader recession in the overall housing market? I have read similar articles on Toronto and markets across Australia. I know quite far fetched from the US but wondering if there is a trend there.

Four reasons to buy in established and high price markets: 1) Park extra cash 2) In it for the long term appreciation 3) Not in it for cash flow income 4) Have a lot of faith in the sustainability of the area There was a similar debate a few weeks back about NYC. To my memory the debate ended up overwhelming favoring an investment in NYC if one had the means to do that and did not need rental income to survive.

I see an undertone in many discussions here on BP that the next downturn will be as severe or worst than 2008 and housing will behave similar to how it played out in 2008. I wonder how realistic that scenario is. In my 20 years of investing I have only seen 2008 as the one period where housing got kicked in the pants with a pointed shoe. That I believe was not something that happens in every downturn. But I wonder what veterans think of the pain housing will endure in the next downturn?

Here in SF we have seen rents flatten or drop and this started in late 2016. But it’s no disaster yet. The next leg could be up or down. Rents or home values depend on population growth and jobs. Before we talk about rents, let’s talk about jobs. If jobs are slowing, rents will come down. To me it’s a myth that any thing low price is insulated from a downturn because “people need a place to live”. Fact is lower income people have the lowest barriers to moving from one job to another and from one place to another. There is a reason why Midwest ghost towns got created during the 2008 downturn.

Shiloh Lundahl Frankly if you call people with NW exceeding $20 million as ones with a middle class mindset, we unfortunately have a difference of opinion there. Getting a solid education and climbing the corporate ladder is not a losers game as Kiyosaki preaches. Here around me in Silicon Valley that’s exactly how people have made fortunes by selling their specialized skills and helping build valuable companies. I’d say the same for folks who work on Wall Street, went to the best schools and climbed the ladder. I think Kiyosaki actually targets the lost and ignorant by showing them a hypothetical lifestyle to get rich and in the process selling books and seminars. I think Kiyosaki and his peers should be asked to offer more disclosure about their own finances given they are out there doling financial advice to millions of people. That I will say for sure make up for very interesting reading.

I know a ton of people who: 1) Have Solid college and post grad degrees 2) Work in “cubicles” 3) Draw very high salaries and hold stock in their companies 4) Have bright career prospects for many years to come 5) Are wisely invested in stocks and real estate By most measures none of them followed the advice of the mythical “rich dad” but are doing extremely well. Kiyosaki on the other hand looks down on college and people with regular jobs. I find it weird.

I am contemplating doing a cash out refi on of my rentals to do a remodel on my primary residence. Is that possible? Has anyone done it? Any pros and cons of going down this path?

I think people live where they live and they don't live there (or leave that place) purely for financial reasons. For example I used to travel to a Midwest city for work few years back and was amazed and how people lived there in tight communities and across generations and they just could not be lured to move anywhere else. That Midwest city had very little to offer in terms of job growth or scenic beauty, or nightlife or restaurants or outdoor activities but hey the locals loved it. Weather was darn harsh, hot summers and sub zero cold winters.

In fact, after becoming friends with the locals, they as ked me why I was not thinking of moving from San Francisco to that city. When I asked them why they would not move to SF, they said, they could not bear the "cold summers" and how it was hard to pin down on proper seasons. That they said was absolutely non negotiable for them.

In the end it was clear they wont move, their roots were so deep and they had the most important factors to live where they lived which was family.

 I would say the same for CA or any other place. If you have your life set in a place, have family around, friends that you like, every place becomes special. For many of us, the natural beauty, the job opportunities, the weather, the diversity, the liberal mindset of people etc. are an icing on the cake and trust me that icing is awesome even if it costs an extra dime or two.

I do feel for people at the lower end of the economic ladder but i cant speak for everyone. Its for sure not easy. But there are other examples. For instance, I know the lady who used to clear our home 3 years back used to live in a garage with 3 kids. Today she employs 8 people, cleans large homes in affluent areas like Saratoga, Cupertino, Los Altos and also gets subcontracted work at tech companies. The lady has long since moved out of the garage and into a 2 bedroom place which she rents. Just an example of how life is like for some of those starting at the very bottom of the ladder. I bet she feels glad she did not rent the uhual to escape.

None of these fit into the conventional cash flow equation. I think Seattle has max potential for appreciation, followed by San Jose. Both markets have long term staying power and are fueled by local economic growth vs investor growth. Vegas sounds good for a 12 month flip. Can’t speak to it’s long term durability.

@ Roger Steciak. It’s not different this time except that we are bouncing off the deepest recession in modern times on the back of low interest rates and heavy doses of QE. Bluntly those apply just as much to other parts of the country as they do to the Bay Area. The Bay Area is benefiting from all that stimulus plus the digitization of the world. That won’t of course last forever and new trends will take over. As for “peak tech”, we have see that happen over and over again. For example, In the early days the world wanted to go work for FairChild Semi. Then it was the likes of 3Com and Sun Microsystems and HP that were the hot companies oh also there was Silicon Graphics, Siebel Systems, Peoplesoft and Sybase. This era was replaced by the likes of eBay and Yahoo who were then pushed aside by the likes of Google, Apple, Facebook and Salesforce. So if you notice there is a difference here between a rapidly innovating and disrupting tech ecosystem model we have here in Silicon Valley versus what we have in the great city of Detroit where we had 3 automobile giants who refused to innovate. So I will buy into the bubble and the recession but I don’t think that the DNA of the valley matches the DNA of Detroit as a fair comparison.