Readers Ask: Readers Know (Usually)

The Frontsteps is littered with experts, so when a reader asks a question, seems like the highest form of logic is to simply pose that question to the aforementioned experts.

Yesterday I asked if any, any, any reduction in price could make being a landlord for a full occupied, multi-unit property worthwhile. One reader, in response, asked:

By deliadelia on Oct 1, 2009 |

Hey all, is any reader on here a landlord? Is it really as bad as all I hear? I am thinking of trying to leverage a tenant as income to buy a 2 unit building (1 empty, 1 occupied). I’m not sure what I’m getting into.

I’m nowhere near a landlord, not even in my dreams, so I can’t say much here. Anyone else able to help Delia?

Vultures, Commence Your Circling

 

Well, all, few and far between are homes we can look at and positively say: That’d be a good investment. Yet here is one, that frankly, given the size and location, has to be just that. The downside– yes, sorry, these days there simply has to be one- is that this could be a lonnnnng term investment indeed. It could also bring out the evil in a person that he or she didn’t even know existed; but the latter, I suspect, is often the result of becoming a landlord in this city.

Welcome to 1847 Stockton, 2/1 TIC on Telegraph Hill, listed at just $250K. At issue is the tenant currently occupying the property. This tenant is “protected,” and “is not moving.” Now, if we know our tenant/landlord laws in SF as well as we should, we know protected tenants are either:

  • Ill, too ill to move, or that moving may make them worse
  • Disabled: Again, the burden and expense of moving has been deemed unacceptable to these persons
  • Elderly: Same logic as above, given the large number of very fixed incomes allotted to those no longer working
  • Long term resident: 10 years or more in the residency= you cannot get rid of this person legally.

Andy Sirkin, oft credited as the pre-eminent font of knowledge on all things eviction and TIC related (which incidentally, this property is both) puts it this way:

Protected Tenants: Certain tenants are “protected” and cannot be evicted for owner-occupancy except in very limited circumstances. Protected tenants are those 60 or over or disabled who have occupied for 10 years, and those catastrophically ill who have occupied for 5 years. Also remember that no tenant with an unexpired lease can be evicted, and that tenants who occupy a unit during conversion to a condominium are entitled to remain for one year after conversion, or for life if they are over 62 or disabled.

We have no way of telling from this listing alone what group this tenant belongs too, but it could easily be any of the above, including the long term residency, since the current rent being collected on a 2 unit in North Beach several years beyond what this tenant pays: $795 a month. (Um, no wonder the tenant is “not moving!”)

So how then is this a good investment? Well, I already said: It’s a 2 bedroom TIC in a highly desirable area, also in a building that looks well cared for. We don’t know how the unit itself looks (no pics: bad sign), but we can find out by attending the open house on 11/22 or 12/6 from 9am to 10am. In fact, if anyone goes, email some details to The Frontsteps as I’d love to do a follow-up. And hey: if we find the tenant to be ill or elderly, maybe we can project that lifespan he or she has left and plan our investment accordingly. Or, perhaps if you know a good hit man? Ha, ha. Calm down, people! Of course, I’m kidding; but you can see how the tenancy laws might bring out the worst in landlords, or landlords to be.

In any case, this property does offer some potential if you can wait it out. The rent collected now won’t cover the mortgage, so it’s a good bet for someone who can pay cash for the whole shebang. And, kismet: The listing says “all cash sale.” That means then in 333 months (27 years) or so, you’d have your principal investment back and could commence profiting. Or, you get lucky, and the tenant would …disappear first.

Verbatim: “Is this the time to invest in land?”

From the recent New York Times article Sure, Land Is Cheaper. So Is It Time to Buy?:

THE real estate market may have cooled, but investor demand may soon be heating up for at least one type of property: land.

“The time is ripe to start looking; I haven’t seen this market in 20 years,” said Jaime Raskulinecz, a real estate investor and property manager from Verona, N.J., who wants to buy land in the hard-hit market of Cape Coral, Fla. During a recent visit there, she found lots for sale on or near the water at about a third to half below their peak prices of two years ago.

Before you go thinking it’s all gravy, read further:

“Because everyone’s running away, some people think it’s time to invest, but it’s not for the faint of heart,” said C. Joseph Blackbourn, the president and chief executive of Everest Holdings in Scottsdale, Ariz., an active buyer of home-building lots in the Southwest since late last year. “There are a lot of expenses in holding land.”

Land investors will need to have cash on hand to cover most of those expenses. “Lending has all but disappeared,” said Joel B. Shapiro, the chief executive of Timbervest, an Atlanta investment company that manages about 900,000 acres of timberland nationwide. Just as the credit crisis has made terms on home mortgages more stringent, land loans, already deemed riskier by lenders, are harder to get and typically carry even higher down payments and interest rates.

So what are some of the other costs associated with land ownership, besides high borrowing expenses? There are property taxes, of course, and there may be liability insurance (in case someone is injured on the property) and maintenance expenses (to cut the grass or provide other upkeep).

Owners will also need to ensure that the land is environmentally safe. Sometimes toxic trash may be dumped on the property “unbeknownst to you, and you’ll be responsible for the cleanup,” said John T. Reed, the publisher of Real Estate Investor’s Monthly, a newsletter. “At 2 o’clock in the morning on a moonless night, who’s to say what’s being put there?”

The point being (and reason we posted this), there are always opportunities in real estate out there (even in down markets), and many, many people get very rich dealing in real estate, many also go bankrupt. With a little education, a bit of timing, and a lot of discipline, now might be the time for you to pull the trigger on some real estate investments. Key to the equation…it doesn’t have to be in San Francisco, and it doesn’t have to be millions of dollars.

-Sure, Land Is Cheaper. So Is It Time to Buy? [New York Times]

Green prefab?

by Tiffany Elston

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I know what you’re probably thinking: a “green” prefab? Aren’t prefabs generally characterized by their cheap (and toxic) materials with no real aesthetic appeal?

Well that was until now! West Coast Green has decided to bring in a whole, full size beautiful green prefab to sit in Civic Center Plaza for the remainder of the week.

The mkLotus is designed by noted architect, Michelle Kaufman and built by XtremeHomes. The off site modular technology results in 50-70% less waste than traditional site building and has all the bells and whistles. The mkLotus comes equipped with a green roof, 100% solar generated power, rain and groundwater catchment system, gray water system, on-demand hot water heater and much more. The house was also designed to maximize daylight and cross ventilation while protecting occupant health with the use of no-VOC paints and other non-toxic materials.

If you don’t have time to attend the whole conference, at least make time to check out the mkLotus. And if you’ve got some extra time, Saturday of West Coast Green is specifically designed for homeowners. In addition to 250 (+) exhibitors on the trade show floor, there will be presentations on topics such as healthy homes, green design 101, and marketing and investing green.

[Tiffany has informed me that she has some passes, one of which I'll take for sure, so if you're interested, email her at tiffany @ greenkeyrealestate .com and you might get in for free to the trade show.]

-West Coast Green

-mkLotus official site

-West Coast green mkLotus details

-XtremeHomes

-Saturday presenter schedule

The FlippingPad.com Launches…a First Impression

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What the hell is the FlippingPad…besides a cool name? Actually, it’s a pretty cool site with very good intentions. In a nutshell, it is is a forum/blog/site for all you property flippers, aspiring property flippers, and past property flippers to get together and talk story. It has a national audience, albeit small but definitely growing, and there could be some good advice and/or deals to be found there. If you’re into real estate, it should be on your radar.  The message below is from one of the founders:

“We were fed up with current real estate communities. While many offer a wealth of information, we got lost in the shuffle. Our goal was to create a place to share and discuss real estate investing without being inundated by the get rich quick packages of the site’s founders. Many lesson packages and seminars are useful, we just wanted a site free of outside influence, where active investors could  potentially post projects, find partners and get “objective” advice.
 ———————- 
The Flipping Pad promotes ethically responsible investing through shared knowledge. You’ll always get both sides of the coin on our site, or at least we hope so!”
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