All Forum Posts by: Sunir Manandhar

@Sunir Manandhar I do think it will continue to grow year over year. I believe that real estate values will continue to creep higher over the years and become increasingly less affordable for younger generations. I believe that the incentives set up for owning real estate help to create an attractive environment for investors and currently with inflation so high, real estate is a tangible asset that can provide unique advantages over other investment vehicles.

@Sunir Manandhar

1) I mostly mean by landlords although I am not educated on SF's city policies so I can't speak to that. I would think they in theory would encourage this but know that the wealthy generally own the RE in SF and would likely lobby against the "forcing" of landlords to comply to policies increasing density in their properties.

2) For what @Bruce Woodruff mentions above. A lot of risk with not much reward. Sure, a landlord/owner can maximize their gross revenue potential with a rent by the room strategy but it requires a commensurate amount of work and administrative hassle. More wear and tear, higher turnover, higher likelihood of problem tenants, etc. Most landlords who bought 10+ years ago are happy with the cash flow they already have and don't see the upside in revenue as worth their time. Not the case for all, but certainly for many especially in the wealthy parts of SF.

3) Investors are definitely doing this. Maybe by house-hacking or even partnering on a deal like I mentioned. David Greene talks a lot about this strategy in SF and the surrounding areas. It takes a lot more work, but the deals can be found if investors know what to look for and have the ability to manage the asset properly post acquisition. On their own, investors cannot buy enough to fulfill demand. And as I said, I just don't think this is a scalable venture in the socioeconomic environment that is SF. The juice isn't worth the squeeze for the real players with the capital sitting around. Hedge funds, REITs, VCs, and even syndicators look for other more manageable strategies to deploy their capital if investing in real estate. 

4) If I knew, I would run for the mayor of LA. The problem is that nobody can best agree on how to solve it in the private sector or through the government. Socialists and anti-capitalists will say rich real estate investors are making too much $ if they are offered incentives to deliver a solution. Conversely, capitalists or libertarians will say that the government will be ineffective at redirecting tax payer dollars efficiently in solving these problems that require non-governmental industry experience and knowledge. Nobody will ever agree. This is generally why the government does incentivize real estate owners and investors because they are often solving problems that the government itself knows it would be inadequate at tackling.

@Sunir Manandhar

1) I mostly mean by landlords although I am not educated on SF's city policies so I can't speak to that. I would think they in theory would encourage this but know that the wealthy generally own the RE in SF and would likely lobby against the "forcing" of landlords to comply to policies increasing density in their properties.

2) For what @Bruce Woodruff mentions above. A lot of risk with not much reward. Sure, a landlord/owner can maximize their gross revenue potential with a rent by the room strategy but it requires a commensurate amount of work and administrative hassle. More wear and tear, higher turnover, higher likelihood of problem tenants, etc. Most landlords who bought 10+ years ago are happy with the cash flow they already have and don't see the upside in revenue as worth their time. Not the case for all, but certainly for many especially in the wealthy parts of SF.

3) Investors are definitely doing this. Maybe by house-hacking or even partnering on a deal like I mentioned. David Greene talks a lot about this strategy in SF and the surrounding areas. It takes a lot more work, but the deals can be found if investors know what to look for and have the ability to manage the asset properly post acquisition. On their own, investors cannot buy enough to fulfill demand. And as I said, I just don't think this is a scalable venture in the socioeconomic environment that is SF. The juice isn't worth the squeeze for the real players with the capital sitting around. Hedge funds, REITs, VCs, and even syndicators look for other more manageable strategies to deploy their capital if investing in real estate. 

4) If I knew, I would run for the mayor of LA. The problem is that nobody can best agree on how to solve it in the private sector or through the government. Socialists and anti-capitalists will say rich real estate investors are making too much $ if they are offered incentives to deliver a solution. Conversely, capitalists or libertarians will say that the government will be ineffective at redirecting tax payer dollars efficiently in solving these problems that require non-governmental industry experience and knowledge. Nobody will ever agree. This is generally why the government does incentivize real estate owners and investors because they are often solving problems that the government itself knows it would be inadequate at tackling.

Well if you think like a property owner, more people crammed into a place means more wear and tear, more problems, issues between tenants, broken stuff, etc....

I would not be interested in this if you approached me as a landlord....

@Sunir Manandhar There is opportunity but I don't see it as a startup with potential to scale for the exact reason you reference: subletting. You may find a handful of owners who may allow it, but overall, you'll have a difficult time getting approval to sublet (especially in SF!). Although it makes sense economically (fitting more people into existing structures), not many owners in their right minds would absorb the risks. 

The opportunity here is really for those (single person or group of investors) who can afford to buy the asset up front and lease each room separately in the home. However, even in SF, it will be a challenge to find a deal that makes sense with current interest rates...unless of course the investor is putting a large amount down.