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ForteKitty

Ideal_Rock
Joined
Oct 7, 2004
Messages
4,561
A lot of people have owned these homes for a long time, way before the major jumps recently. Many of these people own multiple homes that they rent out.

If they were to buy in today''s market, they probably wont be making any money. But since they bought it much cheaper, they''re making money. Nobody''s gonna sell it to you for cheap just because you''ve been renting for a long time, unless you''re really really lucky.
 

movie zombie

Super_Ideal_Rock
Joined
Jan 20, 2005
Messages
11,879
yes, many of these people didn't mean to become landlords. they bought homes back in the 1970's and in some cases the 60's. they were able to move and buy another house and hold onto the other. they paid at max $30,000 for that original home. for them its been easy and they see themselves making $ easily....which they are.

you on the other hand are a young investor crunching the numbers. they are older landowners. they have the goods and their keeping them. all they know is they've got houses paid for and bringing in income and they're happy.

i've seen it in santa cruz also. little box houses that are actually rented by landords sometimes for a decent price if they like you. but they won't sell to you. they've got paid property and they know if they let it go they won't be able to buy another property. they've got family that may want to move back into the area and may kick the renter out to allow the family member in. they're holding the property and that's all to it.

for many paid property is better than money iin the bank and trying to convince them with numbers that they should sell just isn't going to work.

movie zombie
 

Mara

Super_Ideal_Rock
Joined
Oct 30, 2002
Messages
31,003
yep honestly if you ask almost any bayarea person who has been here for a while, they will all hands down stay put your money in the RE market if you plan to hold long-term. i have a few friends with two properties, my parents own multiple properties. i have 2 friends who rent out their townhouses in the south bay (and cover all expenses) and then rent in SF....basically breaking even at the end of the day (due to appreciation vs prop taxes/HOA/mortgage) they can keep their property but party it up in SF for a year or two.

pretty much anyone who ''got in'' 5-10 years ago was sooo lucky!!! my girlfriend bought her townhouse for 250 and within 3 years it was selling for 450. now it''s probably more like 650. ours has appreciated over 30% in 3 years. its kind of crazy. and no we couldn''t afford to buy in today''s market or the market a year ago or probably the market a year from now.

i always tell friends who are hemming and hawing over buying, if you intend to stay here a while, then just get into a property. and so far no one has regretted it, knock on wood of course!!
 

Beacon

Ideal_Rock
Joined
Jul 14, 2006
Messages
2,037
Date: 1/23/2007 10:27:52 AM
Author: nejarb
''landlords aren''t interested in turning over their inventory to realize a profit because they''re already making money from renters.'' -MZ

but the amt of $ they are making from thier renters should corrospond with what the asset is worth. this is my whole point--if i own something worth 1mil i want to make AT LEAST 50k every year of net income on this asset. otherwise i''m selling it and buying an asset that will produce that much income. OR i''m keeping it IF i know i can sell it later for so much more than 1mil that i can make up the difference in loss of income over the years that i''ve held on to it despite its production of a mere 1.5-2% in income. what i''m hearing is that in northern california, this is the case. i can see that it has been in the last 10 years.

beacon--who buys stocks on margin? i honestly cannot even imagine. is this common? everyday people who work as teachers, doctors, insurance sales, etc are watching kramer on cnbc, getting all excited, and calling thier broker? or is this something that hedgefunds or institutional investors do? your analogy is interesting. i''d say buying google on margin is like financing a real estate investment in LA (risky). taking out a mrtgage for a real estate investment in houston is more like buying coca cola on margin (not risky)...then again you have to get a good deal too. low risk + good deals = over time, you''re going to get just as rich as if you frantically buy into risky/high upside investments, except you won''t be so stressed out, and you won''t look so stupid while you''re doing it.
Your question re: margin

Not to sound pedantic, but - most people use a mortgage to buy real estate, an equity investment. Often, this is 80-90% of the property value and sometimes more.

This is IDENTICAL to using margin (borrowed funds with the underlying asset pledged as collateral). People have been conditioned not to recognize the big risk they take buying real estate on a highly leveraged basis. But if you discuss buying stocks on margin, they think it is a gambler''s folly.

What I was saying was that the returns on real estate, prodigious as they are, would not be achieved w/o margin (mortgage) and if you were to buy an S&P 500 exchange traded fund (low risk) with margin you would definitely achieve, if not out perform, the returns of real estate. You would also have complete liquidity, and not have the VERY risky non diversification you have with holding one unique piece of real estate.

A more comparable investment would be real estate investment trusts, which are traded on the stock exchanges. Check the long term return of owning something like Essex Property (ESS), a Bay area apartment REIT. It is much more effective than Bay area property ownership.

My point of view runs contrary to what most people are trained to think, but the numbers don''t lie. It is what it is once you take the emotion out of it.
 

nejarb

Shiny_Rock
Joined
Aug 3, 2006
Messages
324
beacon: if you buy a house (or an apt building), and you can afford to pay the mortgage payments, it doesn''t matter if the real estate market changes in such a way that for a period of time you owe more on the mortgage than the property is worth. Maybe the market will change, maybe it won''t. it doesn''t matter. you''re not going to lose the property unless you stop paying the mortgatge.

if you own stocks on margin, and the prices go down too low, you''re broker is probably going to sell the stock. if the market goes back up, it''s too late for you. this is my understanding at least. i don''t understand what emotion has to do with it.

MZ: you make a really good point about the long-time owners who are just happy to get income from properties that they own outright and haven''t done any number-crunching.
 

Beacon

Ideal_Rock
Joined
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Messages
2,037
Well, it is true that the broker could make a margin call upon you. There are structures that could prevent this, but more complicated than we need here. That is a thing that mortgage holders generally do not face, with exceptions of some neg am reprice situations, but those are rare.

What I am saying is that mortgages are risky things that people do cause everyone else does them. Margin bought stock portfolios carry some risks too. Both are risky. Both will produce good returns when done correctly. That is what I am getting at.

I wrote this because you had a startled reaction to my mention of buying stock on margin. In fact, the two are very similar.
 

jorman

Brilliant_Rock
Joined
Jul 15, 2004
Messages
658
Nejarb & Emeraldfan:

I thought I would put in my 2 cents because I have a different perspective than the bay area lifers. My husband and I moved to San Jose from Lubbock, Texas.

Lubbock, Texas, is small town Texas. The average home is a ranch style 3 bedroom 2 bath on 1/2 acre with 2 car garage and averages between $90,000 and $150,000. These homes are in nice, well school neighborhoods.

When we moved here, we had major sticker shock. We rented for the better part of a year. Our monthly rent for a 3bed/2bath house was $1800. Nejarb, I am sure you are thinking, "SEE! $1800 is much better than a mortgage there!" If that works for you, that is great, but you are losing the chance at an amazing investment. The reason my landlord could rent his home for $1800 a month was because he bought it 30 years ago for $35,000. A house 3 doors down with the exact same flooplan sold for $735,000 and had 21 bidders! This was just a year ago.

After liviing here for a year, we experienced the Bay Area and we visited many towns. We discovered which places had amenities we liked and others we didn''t. With the exception of a few places each town has something good to offer and you have to decide what is best for you. Do you like being able to walk to the local tapas restaurant and the Sunday Farmer''s Market? Then San Mateo is for you! Do you like the idea of nationally applauded schools and the ability to say you live in an uppity area? then Cupertino or Palo Alto are for you. Does a walking trail lined with dog parks, a cute downtown with weekly markets and $10 orchids appeal to you? Check out Campbell...the list goes on...

My advice is to come here, rent for a year, explore all the areas the Bay area has to offer. Go to farmer''s markets where you can see the locals, take weekend drive trips to Campbell, downtown San Jose, Mountain View, Los Gatos, Milpitas, etc. and after a year, I suspect your feelings about the bay area will be extremely different.

A good place to look at real estate is www.mlslistings.com. You can enter a city or zip code, minimum home needs (i.e. fireplace, garage, etc.) and even price caps and see what you come up with. It is surprising.

In June we bought a loft in downtown San Jose. It was a conversion from an old fruit cannery and the units are just about 2 years old. The value of the units has already grown by $150,000 in those 2 years. I am about 9 blocks from my office and my husband is about 12 blocks from his, we can meet at home for lunch, etc. So I know it seems unreal, I know it is like working with pretend monopoly money, but it is true. The market here may drop to 5% max, but it is nothing when you look at the grand scheme of things and it corrects itself quickly.

And Nejarb- I am from Houston. Born and raised.
 

nejarb

Shiny_Rock
Joined
Aug 3, 2006
Messages
324
Beacon: my reaction wasn''t startled. i know people do stupid things, so i''m not startled by it. i asked "who buys stocks on margin?" it wasn''t a rhetorical Q--i really wanted to know! i asked my fi about it and he confirmed my suspicion that it was mostly regular people who watch kramer and get excited, and not $ managers.

i see the similarity (leverage), but i disagree about how similar they are as far as risk. for owner-occupied, it''s not risky if the monthly payments are well w/in budget. for investments, you''re bringing in cash to pay the mortgage payments (unless you''re in palo alto, i guess). not all stocks pay out cash, so if you buy on margin the stock HAS to go up for it to be a good idea. if you know for sure that the stock is going to go up, then you''re such a darn financial wiz that my only question is "why in the heck aren''t you already so rich that you don''t need to borrow $ from your broker to buy a stock?".
oh, another difference is higher interest rates (hmm...maybe b/c stocks are volatile???)

beacon, do you own a brokerage firm? this is the only reason i can think of to get on a public forum and advocate margin buys. wait, maybe i''m wrong and you never advocated them. if that''s the case i''m sorry. just agree it''s very different and the only similarity is leverage and we''ll call it a day. actually i probably wouldn''t even respond if i were you. i''m just extremely bored and i''m probably being obnoxious!
 

movie zombie

Super_Ideal_Rock
Joined
Jan 20, 2005
Messages
11,879
jorman,

i agree completely about taking a year to find the location to actually buy in....that''s why i suggested renting a condo in sf.

i really like what is happening in downtown san jose and would opt for a loft like you did if i could stand living in the city again. san jose''s very own film festival is just around the corner: cinequest. there is the august FREE jazz festival. the rep and the stage company for theatre. let''s not forget the camera 12. and also the restaurants. walking distance to public transit. ability to come home for lunch. you''ve got it all!

movie zombie
 

jorman

Brilliant_Rock
Joined
Jul 15, 2004
Messages
658
Nejarb & EF:

Here are some properties from a resent search on mlslistings.com.

Cheapest listed single family home in Palo Alto: Palo Alto sfh
*note that it is under 1200 square feet.

Cheapest listed condo in Palo Alto: Palo Alto Condo
*note that it is 1 bed 1 bath and 804 square feet

Cheapest listed single family home in Mountain View: Mountain View sfm

Cheapest listed condo in Mountain View: Mountain View Condo

Cheapest listed single family home in Campbell: Campbell sfh

Cheapest listed condo in Campbell: Campbell Condo

Cheapest listed single family home in downtown San Jose: Downtown San Jose sfh

Cheapest listed condo in downtown San Jose: Downtown San Jose Condo

Not a single one of these properties is under $300,000 and not one is over 1100 sf.
 

movie zombie

Super_Ideal_Rock
Joined
Jan 20, 2005
Messages
11,879
seeing is believing?!

movie zombie
 

Kismet

Ideal_Rock
Joined
May 6, 2005
Messages
2,991
*looks at Mountain View house* Wow, 5 bedrooms in an 800 sq ft house. They must be teeny tiny rooms. I would certainly be knocking down walls in that one. :)

I don''t mean to thread-jack but why is lot size given as a range rather than an exact amount?
 

jorman

Brilliant_Rock
Joined
Jul 15, 2004
Messages
658
Kismet- my guess is they use a template to fill out the information and they have ranges for the lot size (i.e. 2000-4000, 4000-6000, 6000-8000, etc.)

MZ- isn''t that the truth! It is amazing what half a million dollars won''t buy you here! Ha! We learned and found the best home for us. I think that happens for everyone.

Oh- and here is another are for you N & EF: Willow Glen

Also, for the first time San Jose is building high rise condominiums. The first of which is City Heights which the developer I work for is building. We will be starting a reservation list in early February. It''s a very neat project in close proximity to lots of great downtown places. FYI.
 

Beacon

Ideal_Rock
Joined
Jul 14, 2006
Messages
2,037
Date: 1/23/2007 10:08:12 PM
Author: nejarb
Beacon: my reaction wasn''t startled. i know people do stupid things, so i''m not startled by it. i asked ''who buys stocks on margin?'' it wasn''t a rhetorical Q--i really wanted to know! i asked my fi about it and he confirmed my suspicion that it was mostly regular people who watch kramer and get excited, and not $ managers.

i see the similarity (leverage), but i disagree about how similar they are as far as risk. for owner-occupied, it''s not risky if the monthly payments are well w/in budget. for investments, you''re bringing in cash to pay the mortgage payments (unless you''re in palo alto, i guess). not all stocks pay out cash, so if you buy on margin the stock HAS to go up for it to be a good idea. if you know for sure that the stock is going to go up, then you''re such a darn financial wiz that my only question is ''why in the heck aren''t you already so rich that you don''t need to borrow $ from your broker to buy a stock?''.
oh, another difference is higher interest rates (hmm...maybe b/c stocks are volatile???)

beacon, do you own a brokerage firm? this is the only reason i can think of to get on a public forum and advocate margin buys. wait, maybe i''m wrong and you never advocated them. if that''s the case i''m sorry. just agree it''s very different and the only similarity is leverage and we''ll call it a day. actually i probably wouldn''t even respond if i were you. i''m just extremely bored and i''m probably being obnoxious!
Nejarb, I am all about harmony these days and not sure why you are fixing on this. No, I do not own a brokerage firm, no I am not advocating that the public buy stock on margin.

Kramer is for entertainment, (for those who find him entertaining) not for investment.

I have a somewhat academic turn of mind and I need it by profession. For 14 years I have been general partner of a California Limited Partnership whose charter is to make money through the public stock markets. I am a past employee of a major investment bank where I worked in option price modeling and institutional portfolio risk management.

I have never been a "stockbroker" and have no interest in persuading anyone to buy or sell anything.

I tried to explain this margin vs. mortgage concept but apparently I am not communicating with you effectively. Sorry about that.

Let me add that I am not trying to postulate a direction for anyone''s personal investments, but am an expressing a mathmatical similarity between two equity investments and their potential for leveraged returns.

I appreciate your point of view and I appreciate your respectful comments when we are discussing an issue that has multiple points of view.
 

movie zombie

Super_Ideal_Rock
Joined
Jan 20, 2005
Messages
11,879
Date: 1/24/2007 2:09:28 PM
Author: jorman
Kismet- my guess is they use a template to fill out the information and they have ranges for the lot size (i.e. 2000-4000, 4000-6000, 6000-8000, etc.)

MZ- isn''t that the truth! It is amazing what half a million dollars won''t buy you here! Ha! We learned and found the best home for us. I think that happens for everyone.

Oh- and here is another are for you N & EF: Willow Glen

Also, for the first time San Jose is building high rise condominiums. The first of which is City Heights which the developer I work for is building. We will be starting a reservation list in early February. It''s a very neat project in close proximity to lots of great downtown places. FYI.
a very very very very nice san jose area.....and while in san jose also check out the area around the rosecrucian museum and the old towne theatre. in that area are new $1m townhouse type homes and older rennovated victorian''s....also at $1M or more.

jorman, can you imagine even beginning to buy one of those at today''s prices to have as a rental?! however, as a home, the new owner will more than likely demolish the existing structure and build something new on it. land is the valuable part of real estate, especially in the bay area. in fact, a developer might buy the stand alones for just that reason: get the land, demolish the house, build out as much as zoning will allow and sell for lots of $$$. i''ve seen houses out towards the marina district in sf for these prices [$800k] that were better buys.

you can read about it all you want, ask questions and shake your head in puzzlement about why things are the way they are here, but until you actually get here it is hard to understand/appreciate.

movie zombie
 

nejarb

Shiny_Rock
Joined
Aug 3, 2006
Messages
324
hi beacon. i really don''t know anything about the stock market, but i''m trying to learn more about that and how the world works in general, and i guess that''s why i was fixed on it. saying kramer is for entertainment is like saying fox news or cnn is for entertainment--while true, don''t you think that alot of people don''t realize it?

by the way, i like your bird.
 

Mara

Super_Ideal_Rock
Joined
Oct 30, 2002
Messages
31,003
MZ we live near the rosecrutian area and we love going for walks in the neighborhoods. we are a bit more over near the HP pavilion side but we love taking walks around this neighborhood. we love looking at houses over there too. we actually looked at those townhouses that are over right across the street from them...the funny thing is that i was sure they''d appreciate hugely being that they were right across from the rosegarden and there aren''t any potential entry level new townhouses there. but actually ours were the same selling price and ours have appreciated a fair amount over those. so we were really happy that we chose these even though they weren''t in ''as nice'' of an area 3 years ago. it really is kinda random and funny how the whole thing works!!
 

Emeraldfan

Shiny_Rock
Joined
Apr 27, 2006
Messages
299
Just an update on our move to the bay area. It''s been a crazy week and a half. We got into Palo Alto this past Monday and looked for a 2bed/2bath condo for rent at about 15 nicer apartment complexes (the avalon, the archstone san mateo, the metropolitan, etc.). The rents were from 2200-3000/mo. It was funny cause at that price we thought for sure there would be some units available, however, most complexes didn''t even have any 2 bedrooms available!! It was a lot harder than we thought it would be to find a place.

Anyway, thank goodness for craigslist and ps''ers directing us. We rented a house in the San Mateo hills right off of 280. It''s a 1950''s style house and needs some work, but at least it was in getting a house for that price rather than a small 2 bedroom condo. The landlord told us if we were interested in buying it the cost would be about 1.2million (and it''s only 1600 square feet)!!

I do love the area so far though. Being up in the mountains with the views we have is amazing. We''re only about a 15 minute drive to Half Moon Bay and there is a great bike path along a lake right down the street. Much better here than living in Chicago in the freezing cold.

So, now we need to unpack and start our jobs on Monday. I hope we can get it all done before then. Thanks everyone for your help and suggestions.
 

movie zombie

Super_Ideal_Rock
Joined
Jan 20, 2005
Messages
11,879
so glad it worked out! i guess you''re a believer now re rentals and real estate prices?!

congratulations on your move, new space, and new jobs! glad you like the area thus far and have lots of fun exploring the wide and wonderful bay area!

movie zombie

ps check out fitzgerald state park just north of half moon bay.....
 

Mara

Super_Ideal_Rock
Joined
Oct 30, 2002
Messages
31,003
welcome to the bayarea EF!!!

since you are in san mateo, you guys should check out this wonderful place for breakfast that we love, it's called Patio Cafe on 25th street in san mateo, right off of el camino real kind of like a mile past the mall...closer to 92 than hillsdale. (you can take 92 to the el camino exit and head south for a few minutes then turn right on 25th street). there is like an asian bridal store with all sorts of gows in the window on the corner of 25th and EC. anyway we go there for breakfast once in a blue moon because we don't live over near there anymore, but when we are going to napa for the weekend or something and driving up that way, we always try to stop for breakfast. the man that owns it has been around for a while and he always recognizes us. their french toast is TO DIE FOR and everything else is pretty good too. it's a regular ole diner feel, nothing fancy or anything, but the food is basic yet really good. and they will do egg white omelettes too even though it's not on the menu.


and if you guys go up to half moon bay, mezza luna is a good italian restaurant up there (love their gnocchi), and it's where greg and i had our first date! we also go up there about once a month to go to barbara's fish trap...which is a total basic picnic table casual kinda place but the food is very good if you like seafood, it's mostly all fish and their chowder is really good, it's made with no dairy so it's a different version than the rich creamy one but it's still exceptional and packed with clams. mmmmm. oh and you can check out the ghost house...ummm i always forget the name but i think its like moss beach distillery where they have this legend that a ghost frequents the place and the cliffs etc...the food is pretty good but pricey, you pay more for the ambiance of the old house and to sit right alongside the water kinda thing. their bar food is actually quite good and it's a more casual atmosphere if you want to just check it out and have a few drinks. we go there sometimes when we want a break from barbaras. hehe.

lol can you tell that we like our food? the first thing i think of when going somewhere or when people come here is 'where to eat?!'...hehee. also you guys should check out burlingame which is like 10 min from you in SM...the main strip (bgame ave?) is super cute with lots of restaurants and stores, toppers jewelers is there as well as some other jewelry stores that have some must sees. if you like handbags, aka our balenciaga thread, check out Susan which is on that street as well and carries a lot of top end designer stuff that i cannot afford. if you have a pet, check out plaza de paws, the local pet boutique, super cute stuff in there.

oh and when the weather gets a little nicer, aka in march...check out filoli gardens right off of canada road off 280 (there's signs directing you to it)...it's an old managed/donated estate where they have acres of beautiful gardens, and each year they plant a couple HUNDRED thousand tulip and daffodil bulbs with other types of bulbs and flowers and around march is when they come up in our area (though my daffodils are starting to bloom rigth now!!). it's seriously breathtaking. you can call them before you go to see what is in bloom and then time the visit accordingly, i would only go when everything is up and blooming as it's such a great view. they are closed til i think feb 15th for 'winter'. and you guys can ride your bikes down canada road on sundays as they close the entire road off for families and people to bike ride...we have never done it but people who have said it was pretty fun.

oh i could go on forever!! in any case...have a fun time exploring.
 
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