Stocks vs real estate


#422

I will share some pro-forma numbers here (as on some thought it’s not that confidential/needed to keep my identity anonymous):

Our worst performing property is our Sunnyvale property (from a yield for price basis):

  • Purchase price + repairs + updates = $2M
  • 4 units, total rent = $10,000/month
  • City of Sunnyvale utilities = $800/2 month
  • Property tax - $2M * 1.25% = $24,000/yr or $2,000/month
  • minor repairs (since i did the big ticket items already) = $100/month
  • landscaping $40/month
  • Insurance $1000 - $1200 / yr

so gross cash flow (you can stick in whatever amount of leverage/interest rate you want) is
$10,000 (rent) - $2,000 (tax) - $540 (utilities, repairs, landscaping) - $100 (insurance) = $7,360 / month

if you are decently leveraged and have a decent interest rate, you will make money.


#423

For your utilities expense is that for water? I guess you include water but have separate meters for gas/electric?

What about insurance usually on a multiplex? Is it a lot more than SFH?


#424

correct. but you also have a gas bill for the common water and an electric bill for the common lighting. btw PGE is separate from City of Sunnyvale (PGE covers gas and electric) but rolls up above in the utilities cost. City of Sunnyvale covers trash, sewage, water


#425

Tends to be all over the map for many reasons. Funnily enough my insurance on the sunnyvale property is among the lowest of what I pay at a little over $1,000/yr. Let me add it into the calculation above


#426

Can you share more about your 1031 experience? Did you have to 1031 multiple Sac properties into your Sunnyvale property? How do you handle the timing of everything?


#427

yep I 1031-ed multiple properties into 1 property. It’s pretty straightforward if you are not pulling money out as part of the exchange and I wasn’t pulling any money out. Basically I found a 1031 escrow agent to work with and told the title office that this was a 1031 and who my 1031 agent was and they took care of everything on both sides. I think i talked on the phone once and maybe exchanged 2-3 emails with the 1031 agent.

The panicky part was the clock ticking as I was in contract on the sell side before I started looking to buy. And it was just hard to find something. It is more expensive but gives you more time if you are a reverse 1031.


#428

But don’t you have to sell multiple Sac properties within the same timeframe? Wouldn’t it be hard to coordinate if you had to sell 5 properties all within the same 3 month window?


#429

Correct, but in the current market it’s fast to sell and you can arrange with the buyers for a simultaneous close or close within a few days of each other. Or you can go for the portfolio sale route (where you sell all to one buyer). I actually removed one of my properties from sale when I couldn’t close on the price I wanted and let another one slip for below what I wanted as I wanted to get rid of it for other reasons anyway


#430

That’s helpful to know. Because I think eventually I will have to 1031 all my East Bay properties into something in the Pennisula/South Bay as well…

However, I don’t think I would go with the portfolio sale route, because I would probably have to sell those below market for that…


#431

What happened to buy and hold forever?


#432

Nothing is forever. Eventually you will die. Better enjoy your assets while you’re still alive.


#433

Say say only :face_with_hand_over_mouth:


#434

Buy and hold forever is only for the trophy properties :slight_smile: He’s going to 1031 30 Antioch houses for 1 PA mansion.


#435

:open_mouth:


#436

This should do the trick. About the cost of 30 houses (~450k/each).


#437

Can I keep my East Bay houses and also have this one??? :laughing:


#438

Why is it good to keep 30 mistresses under one roof?


#439

How about the stock portion? What is the “end stable” state?
My end stable state is RE + index :slight_smile: Not rushing to move to end state as I believe growth stocks appreciating way faster than index :slight_smile:


#440

So you too are not holding AAPL forever?

:exploding_head:


#441

I don’t live forever!