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I am actively thinking of buying my second home for upgrading and good schools. The area where I am looking is a gated and gurded good community with a lot of paid facilities and with a lot of open space which is rare to have in bay area. Prices are expensive but you get what you pay for. Since rates are low and Bay area home prices have slowed down and I am in a position w.r.t my first mortagege where I can afford a second mortagege. Feds are expected to reduce the rates by half a point but as per an article in Bloomberg today, sentiment of economist towards recession next year's stands at 30% compared to 15% last year.
Second option is a new community right in the backyard of Facebook.Scool district isn't good but it's a new development where new homes were selling for 1M 3 years ago, sold for 1.35M 6 months ago and I am getting a deal for 1.2M from the builder. It's all due to Facebook's backyard and development plans facebook have been proposing.
Would love to hear the wisdom of people here.
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07-01-2019, 09:19 PM
(This post was last modified: 07-01-2019, 09:22 PM by rayray.)
I'm a firm believer in your home is your home and not necessarily an investment even if it turns out that way as time passes.
Having said that:
I don't know what w.r.t means?
If I'm understanding this correctly, it sounds like you're upgrading to a new home for the betterment of your family, i.e., a better school district/nicer neighborhood, and keeping your first home as a rental? If so, are you prepared to be a landlord of a single unit? Maybe I'm misunderstanding what your plan will be?
Even if rates are not lowered they are low, historically speaking.
As far as a future recession? Well, I'm fairly certain it will happen but when it will happen is anyone's guess. The one thing I would put money on is that we will be in a recession before anyone, including some economists, start saying we're in a recession!! When the reports start telling us we're in a recession we're already waist deep in a recession. Friends, some with finance degrees, have been telling me about a coming recession since 2013.
"It's tough to make predictions, especially about the future." --Yogi Berra
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(07-01-2019, 09:19 PM)rayray Wrote: I don't know what w.r.t means?
With Regard To
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IMO rental property is an investment. I suppose if you intend to flip it at a higher price some year soon it could be an investment.
Some risk in that plan of course. Other than that you have to wait until you downsize later in life to realize any gain. I'm not an expert on Bay Area property but that price you quoted is terrifying to me. 
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07-01-2019, 10:38 PM
(This post was last modified: 07-01-2019, 10:43 PM by vbin.)
Thank you
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07-01-2019, 10:41 PM
(This post was last modified: 07-01-2019, 10:44 PM by vbin.)
Thank you
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(07-01-2019, 09:19 PM)rayray Wrote: I'm a firm believer in your home is your home and not necessarily an investment even if it turns out that way as time passes.
Having said that:
I don't know what w.r.t means?
If I'm understanding this correctly, it sounds like you're upgrading to a new home for the betterment of your family, i.e., a better school district/nicer neighborhood, and keeping your first home as a rental? If so, are you prepared to be a landlord of a single unit? Maybe I'm misunderstanding what your plan will be?
Even if rates are not lowered they are low, historically speaking.
As far as a future recession? Well, I'm fairly certain it will happen but when it will happen is anyone's guess. The one thing I would put money on is that we will be in a recession before anyone, including some economists, start saying we're in a recession!! When the reports start telling us we're in a recession we're already waist deep in a recession. Friends, some with finance degrees, have been telling me about a coming recession since 2013.
"It's tough to make predictions, especially about the future." --Yogi Berra
I agree with u that we are due for a recession that's why the question and I am trying to decide between the 2 options I mentioned. One is a great home with a high price tag( gated community etc) other is an ok home with a huge discount(but not cheap) but great potential for growth if Facebook executs the plan as being marketed.
Yes my first property is going to be a rental. It's in a great community aswell. Its valuation is down by 100k plus aswell since last year reflecting the slowdown.
Now as a post mentioned above that we will be already in recession before the reports start showing up. I am wondering if it's already there as reflected in slow down and I should wait. Let's say if I don't wait then which property is a better option?
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(07-01-2019, 10:28 PM)fenders53 Wrote: IMO rental property is an investment. I suppose if you intend to flip it at a higher price some year soon it could be an investment.
Some risk in that plan of course. Other than that you have to wait until you downsize later in life to realize any gain. I'm not an expert on Bay Area property but that price you quoted is terrifying to me.
This isn't abnormal for Bay area properties. 1M is start for a townhome in good communities and 1.1M+ for single fam homes with few extra miles of drive.
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07-01-2019, 11:01 PM
(This post was last modified: 07-01-2019, 11:04 PM by fenders53.)
(07-01-2019, 10:44 PM)vbin Wrote: (07-01-2019, 10:28 PM)fenders53 Wrote: IMO rental property is an investment. I suppose if you intend to flip it at a higher price some year soon it could be an investment.
Some risk in that plan of course. Other than that you have to wait until you downsize later in life to realize any gain. I'm not an expert on Bay Area property but that price you quoted is terrifying to me.
This isn't abnormal for Bay area properties. 1M is start for a townhome in good communities and 1.1M+ for single fam homes with few extra miles of drive.
I was aware it's not hard to spend $1M on a home there. Here you can buy a new 4000 square foot for under $500K. $250K will by a real nice home in a high quality and safe school district. $100K is a pretty nice but old starter home. Much less than that and you are living in the "hood". You can get along very well on $100K family annual income. Much less if you really need to.
I have a rental property. It's modest but renters paid almost the entire mortgage off so it was a good return on small investment.
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I can only speak for myself...I was a reluctant landlord due to the fact we bought our current home before we sold the previous home--hated being a landlord--had to kick one person out which I did not like doing but had to be done.
My father was a landlord off and on for 20 plus years--he said even the good tenants were a pain in the ass.
A step-fathers friend was a very successful landlord, made millions. And when he sold he acted as the bank, sometimes getting the property back and selling it again. Rental income was close to 200k per year, add in another 175k in salaries between him and his wife, then his stock investments? forgetaboutit....when he buys stocks it's in 1000 lots ...worth millions....and what does he do now, with all his millions? Sells hot dogs and beer at a ballpark--he gets paid to exercise. I asked him if he could do it all over again, would he be a landlord? He said, yes...but no apartments only rental storage facilities.
A guy I worked with was a landlord his whole life, his father was too. Made a small fortune. He hated it but the money was too good to pass up. He had this great tenant, never late for over 20 years, never complained. Then one day, late, no rent check...couldn't get a hold of him...thought the guy died so he went over to the apartment.. no answer..oh oh...he's dead!! No, he stole everything, completely gutted the apartment, stole everything, literally the whole kitchen was gone, cabinets, sinks, fixtures....the toilet!! Yes the Toilet was gone too. I think he spent close to 40k redoing the apartment. His father died from a heart attack sleeping with his much much younger wife--she walked away with all the money and a 10k square foot house--no will. The guy I worked with? Killed over self-medicating with online meds.
I like REITS
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(07-01-2019, 11:18 PM)rayray Wrote: I can only speak for myself...I was a reluctant landlord due to the fact we bought our current home before we sold the previous home--hated being a landlord--had to kick one person out which I did not like doing but had to be done.
My father was a landlord off and on for 20 plus years--he said even the good tenants were a pain in the ass.
A step-fathers friend was a very successful landlord, made millions. And when he sold he acted as the bank, sometimes getting the property back and selling it again. Rental income was close to 200k per year, add in another 175k in salaries between him and his wife, then his stock investments? forgetaboutit....when he buys stocks it's in 1000 lots ...worth millions....and what does he do now, with all his millions? Sells hot dogs and beer at a ballpark--he gets paid to exercise. I asked him if he could do it all over again, would he be a landlord? He said, yes...but no apartments only rental storage facilities.
A guy I worked with was a landlord his whole life, his father was too. Made a small fortune. He hated it but the money was too good to pass up. He had this great tenant, never late for over 20 years, never complained. Then one day, late, no rent check...couldn't get a hold of him...thought the guy died so he went over to the apartment.. no answer..oh oh...he's dead!! No, he stole everything, completely gutted the apartment, stole everything, literally the whole kitchen was gone, cabinets, sinks, fixtures....the toilet!! Yes the Toilet was gone too. I think he spent close to 40k redoing the apartment. His father died from a heart attack sleeping with his much much younger wife--she walked away with all the money and a 10k square foot house--no will. The guy I worked with? Killed over self-medicating with online meds.
I like REITS
This are great stories, thank you for sharing them. Off course there is some risk in rental lroperties. Bayarea rents are $3500 plus for a nice town home. People who are in stealing business can't rent these usually. Plus I will be renting to folks with a specific critiria with financial background n all so I am.not worried about all that.
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07-02-2019, 12:39 AM
(This post was last modified: 07-02-2019, 12:47 AM by fenders53.)
(07-01-2019, 11:42 PM)vbin Wrote: (07-01-2019, 11:18 PM)rayray Wrote: I can only speak for myself...I was a reluctant landlord due to the fact we bought our current home before we sold the previous home--hated being a landlord--had to kick one person out which I did not like doing but had to be done.
My father was a landlord off and on for 20 plus years--he said even the good tenants were a pain in the ass.
A step-fathers friend was a very successful landlord, made millions. And when he sold he acted as the bank, sometimes getting the property back and selling it again. Rental income was close to 200k per year, add in another 175k in salaries between him and his wife, then his stock investments? forgetaboutit....when he buys stocks it's in 1000 lots ...worth millions....and what does he do now, with all his millions? Sells hot dogs and beer at a ballpark--he gets paid to exercise. I asked him if he could do it all over again, would he be a landlord? He said, yes...but no apartments only rental storage facilities.
A guy I worked with was a landlord his whole life, his father was too. Made a small fortune. He hated it but the money was too good to pass up. He had this great tenant, never late for over 20 years, never complained. Then one day, late, no rent check...couldn't get a hold of him...thought the guy died so he went over to the apartment.. no answer..oh oh...he's dead!! No, he stole everything, completely gutted the apartment, stole everything, literally the whole kitchen was gone, cabinets, sinks, fixtures....the toilet!! Yes the Toilet was gone too. I think he spent close to 40k redoing the apartment. His father died from a heart attack sleeping with his much much younger wife--she walked away with all the money and a 10k square foot house--no will. The guy I worked with? Killed over self-medicating with online meds.
I like REITS
This are great stories, thank you for sharing them. Off course there is some risk in rental lroperties. Bayarea rents are $3500 plus for a nice town home. People who are in stealing business can't rent these usually. Plus I will be renting to folks with a specific critiria with financial background n all so I am.not worried about all that.
Just project the math out about five years and do the math conservatively. You're smart enough to compute the R.O.I. I've had 4 tenants in 19 years. The school district keeps them around. One tenant left a big mess to clean up. The other three were good. They paid the house off for me in about 14 years. I took little cash profit during that time. I'm left with a 15 bagger investment if I sell now. The past four years it pays the property taxes, insurance and utility bill on the house I live in. A little cash left over after that. There were surely some days when it was a hassle to be a landlord. I don't have any 15 bagger stock picks so no regrets overall. I can rent the house in 48HRs when I need too. It wouldn't take 30 days to sell it in a bad economy so I can quit when I want. I don't want to pay the capital gains tax right now, and it's paying my largest bills.
On a side note the most landlord excitement I've had lately was last week. An old man basically died at the wheel, clipped the telephone pole in front of the house and then flew around the property without ever attempting to slow down. Bounced off a big tree and mowed the garden shed over. Insurance already sent a check for all that, but it was pretty sobering it happened on my property.
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