All Forum Posts by: Amit M.

^ for SF, most renters have rent control and pay a fraction of market rent. People who pay market rents make way more than the median. as for Sacramento, prop 21 (oppressive statewide rent control, sponsored by a nut) just got flushed down the toilet by CA voters.  

Just saw this report on new leases being way up in Manhattan, for the reasons I discussed ^. I bet we’ll see a similar report on SF by summertime :)  https://www.millersamuel.com/f...

@Annie Shao I own a few residential properties in S.F. and also entertained 1031 into NNN or DSTs, but decided against it for several reasons. NNN isn't as secure as you'd think (look at all the major formerly solid retailers that are going banckrupt), and the secure ones have pretty low rate of returns. DSTs have significant fees, and you're not in control of the investments. When I get tired of managing my properties, I'll just pass them over to a property manager, so they'll be mostly hands off. Long term appreciation is still great in prime Bay Area IMO, so I should see better returns and cash flow than the above options too.
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my2c

Yeah, there are a lot of bogus click bait type articles claiming 30-35% drop in San Francisco rents. (Oh! The horrors!) 

That is only true for specific properties (mostly high rise condos) in specific neighborhoods (soma, downtown areas), and a couple tech heavy hipstery neighborhoods have also fallen a lot (the mission.) I can tell you for a fact that many other neighborhoods dropped almost nothing to 10%. And if you’re holding for the long run, which is most SF investors, who cares?

There is also tremendous hype with the sudden infatuation of work from home. Remember, work from home existed as an option way before covid. It’s not like companies were extolling its amazing benefits back when they had a choice. I believe there will be a strong reaction against work from home once vaccines dominate. People are quickly tiring of: families having to work and deal with kids/family members 24/7 at home; lack of work-home separation; singles feeling very alienated, especially young singles; companies loosing their corp culture due to lifeless and generic zoom interactions, etc. etc.

I think especially a vibrant city like SF, once the people who bailed realize that sitting on zoom 8 hours a day in some boring *** town, with crappy weather and nothing to do, really sucks! You’ll see, things will start to improve later this coming summer, and 1-2 years it’ll be business as usual in SF. Smart peeps are already starting to plot their returns, to secure a good apartment at relatively good rents, including those who have dreamed of living in SF but couldn’t previously afford to, those that were compelled to the East bay, etc., are paying attention. 1-2 years it’ll be like, S.F. landlord- we’re back bitches!

For all you guys hoping to BRRR-R*, one major hurdle is that (unfortunately) appraisers are giving laughable value's to ADU's. They see it as a "bonus", like a second garage, pool, or extra large yard. So that will effect your ability to carry out the last refi *R, as you're not gaining a lot of after rehab value, yet spending significant $$ on the ADU.

If you're able to buy duplexes or triplexes, you may have an easier time having the ADU count as a full extra unit, a duplex > triplex, etc. This will allow you to leverage the added value for your cash out refi. You may need to have your city update the property records to reflect the added unit. Although I haven't pursued this fully yet, I believe the way San Francisco building dept records work, once you update the records (usually for a new sale, but you can do it without selling too), the added unit is reflected in the unit count for multi family properties.

Food for thought...

@Lawrence Leung interesting comment on compass. From your perspective as a realtor/broker, what do you dislike about compass?

@Nick Robinson A focus on immediate cash flow is short term thinking vs long term returns. When looking at overall returns, an investment in San Francisco has outperformed cash flow oriented locations by a wide margin, not only due to incredible appreciation, but also in long term cash flow returns.

@Al Lee smart move. Especially now that we are shutting down again!

A bird in hand...the law of unintended consequences...choose your metaphor :)

@Lawrence Leung yes I agree we had at least some small local wins. But for me, the defeat of prop 21 was a HUGE win for SF property owners, as I’m sure vacancy control would have come to SF, and that’s a real game changer and a terrible policy for the city at large in the long run.

The other interesting long term prospect is that there is some chance that the US Supreme Court will hear a case on rent control from NY, which SF is also trying to partake in. And given the composition of the court now, there is a chance that they will strike down rent control wholesale (as a taking of private property.) that would be the holy grail! In the meantime the more SFs board of stupidvisors encumbers property owners, the more likely the Supreme Court will see it as an overreach of government...you reap what you sow...

@Sid Naik unless the lower rents sustain for a number of years, most sellers will hold off and not sell their buildings. Sure there may be a small handful of owners that will need to sell, but you have to remember that most SF building owners are not exactly poor, and know that the rental market is going to bounce back in their favor. Your mission, should you choose to accept it, is to find the few sellers that are pressured to sell now, and will entertain a discount (although I highly doubt it'll be a direct correlation with decreased rent of say 30%.) The 1 to 1 direct correlation of CAP/NOI to building price you are seeking only happens in lesser markets, not blue chip markets like SF. Call it the blue chip premium ;)

@Lawrence Leung yeah the rent registry is a real disappointment. But I’m wondering if it will get challenged in court, or it may have enough holes in it that enterprising LL’s will find work arounds ;)

Vacancy control is a different animal, because that needs to change on a state level (basically dismantling costa-Hawkins) and fortunately both prop 10 in 2018 and prop 21 in 2020 which offered that got their butts kicked by the general CA population :) But yeah, if it were up to S.F. alone, vacancy control would pass here in a heartbeat.

Probably as a reaction to the trump presidency, S.F. board of stupidvisors has never been more left leaning, and I think the city’s population has shifted more left too. Look at the last election, *every* nutty local proposition that expands S.F. gov and costs property owners more $$ passed. It’s crazy! Although there is a lot of hyperbole with right wing republicans (calling Biden or Harris socialists is ridiculous imo), but in the case of San Francisco local government they are right. Unfortunately