Yes I get almost daily calls from SF agents offering up to 40% discount on listing price for high priced multi-family properties.
Savvy investors who aren’t scared of rent control have lots of bargains to go thru in SF now.
Including SFH?
Mostly on the condo side. But I remember seeing some SFH listings and said to myself “huh?”. Didn’t do any systematic study.
Why scared of rent control if heavy cash flow positive on day 1.
Because I am old and have a weak heart?
But if you are cash flow positive from day 1 nothing to worry about no?
If you enter cash flow negative then you should be worried irrespective of rent control or not.
What if you got tenant from hell that you can’t kick out even after they stop paying rent? Personally, I don’t mind about how much rent you can raise (if you do proper management that can be mitigated), but what I don’t want is restriction around my ability to deal with bad tenants.
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Tenant from hell scenario:
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These stories often also involve clueless landlords. If you craft proper lease agreements and don’t be stupid to avoid rent to ownership type clauses and have lawyers ready on your side, then why worry?
That has been my point all along. It takes a sharp investor on top of their games, have the patience and expertise to deal with drama and BS. I am not that type of investor. If you are, power to you.
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All it takes is a good lawyer on your side. You don’t need to learn everything to run a business. You need to hire the right help that’s all.
Even if you do all these, it is the painful process to go through it, wait for the court date to prove that you are right, judge will agree with you, but just the hassle. One thing that work has been is targeting the tenant demographic that value their time as you - so far that has been most effective way even under rent control area.
Having said that, I am definitely thinking of adding SFH in SF to my portfolio as long as my target tenant profile fits above.
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Makes sense. There are many such folks in SF and Bay Area.
Not as good deals on those in SF.
What is the best cap rate that you have found in SF multi family? Let’s see what Prop 21 and Prop 15 do to cap rates.
Around 7% based on the reduced rents. Based on the precovid rent it’s almost 10%.
Go for it. But stay away from retail and commercial.
How are rates now for CRE? Is it at historic low like the residential side?
10 cap is unheard of in SF. Pre-Covid it’s usually 3 to 3.5. So with leverage you could 10x your cash in a few years! No wonder you are so excited.