DHS included RE sales as essential services
But the local ordinances need to be revised . We will hopefully hear soon
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Was regular listener of their podcast for about a year in 2017-2018. And attended their local meetup in Milpitas and made some friends with local investors. Hasnât been visited for awhile, but good resources in general but majority of people are after cash flow there, always see debate on Cash flow vs Appreciation on there.
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Whatâs your latest stand on this debate?
Depending on where you are in life cycle of accumulating wealth (I prefer to take risk so going for higher appreciation) or maintaining it (cash flow). You need money to make money, so I canât go to cashflow from day 1 when I donât have enough to consumer it. We work hard to save and use that money to grow. But I am starting to shift from accumulating to maintaining it since thatâs what I want out of my life in next 3-5 yrs (if the market let me). Even then I donât think there is no one size fit all.
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This current recession helps a lot to know. Wherever cash flow is high, appreciation is long shot.
Some thoughts for bay area:
- We need to have minimum break even cash flow at the worst recessionary period.
- Positive cash flow is a bonus.
- Appreciation comes with location, which is an added bonus and we need to have appreciation > 2% to defeat inflation, 3%-4% desirable, anything above is added bonus.
- If someone is behind appreciation, we are forced to sell.
- If someone is behind cash flow, forced to hold and maintain.
IMO, we need to balance both, but we can not get rid one for another.
Mandatory:
If minimum 2% appreciation year over year and good positive cash flow during hold period, that would be nice.
Avoid: Over leverage of mortgage going negative cash flow. It does not help. Has faced worst period 2019 time running against the lawsuit. I was lucky to get rid of lawsuit and sold one home to pay down highly leveraged mortgage! Never Never Never over leverage !
Reserve: Keep cash reserve of 6 months combined mortgages+our own expenses. 12 months cash reserve is far better to withstand all financial storms.
This is just my view based on my worst experience last year, it can vary for others.
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I have posted this several times. But, this summarizes the flow of money and value pretty well:
Appreciation and current income (rent) must add up to make economic sense:
In rough terms for homes:
In Texas = income 7 - 8 % + appreciation 2 - 3 % = about 10% ROI
In SFBA = income 3% + appreciation 7% = about 10% ROI
Because of huge swings in real estate prices (like the volatility of stock price), a lot of investors do not like CA (or SFBA) real estate because you end up locking your money for the same rate of return. I know some investors who could not sell their homes after 2009 for almost 5 years.
BiggerPockets is all about cap rate
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To of my coworkers bought single family homes to live in last two months. They must be very sad. One was pending before the shutdown started. I do not know if he actually closed.
I happened to visit few foreclosure auction places, in San Jose and San Mateo, there are big investors take the deal homes, within minutes, all cash, ranging $100k to $1.5M. There are specialized team/groups that focus Oakland homes with all cash deals. It was incredible to look at first time.
Such investors are there every downturn, no wonder.
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What do you think they are getting off of retail from 2 weeks ago?
We talk about it few years ago. You have been sleeping?
Edit: Many bloggers knew.
In other words, I am still young 
Aging so fast?
Those who bought from 2017 to 2020 canât achieve breakeven for cash purchase. So is forever negative cash flow.
Those who bought from 2017 to 2020 canât achieve break even for cash purchase => I doubt for cash purchases?
I am able to make this work with 2018 purchase, rent = mortgage interest + property tax + insurance + maintenance.
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Ditto. Purchased in 2018 here in Bay area, was able to cash flow with 25% down.
On the other hand, my Austin house is costing me a few capex expenses and pushing my yield down. Anyone want to buy one in Austin? 
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Austin sucks, as (almost) everyone knows.
Couple of days old, but:
The best real estate purchase is the one where the profit is made at the time of purchase, whichever market it may be in. All markets are good, the investor just needs to understand the character of the target market.
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What happen to Principal repayment? We are talking about cash flow!
What happen to PM or worth of your time spent? You should impute PM even if you didnât use.
Did you do any re-modeling? How do you treat those costs? Capitalize it or expense it?
Btw, yours is not in Fortress. I didnât bother to type in Fortress because most of the time I refer to Fortress (thought was understood just like I say Austin) when I say Bay Area or BARE because I have no idea of the sub-markets outside Fortress.
Ditto for @Boolean
What Capex? Actually is a good thing, no need to buy new houses to achieve zero net profit for rental portfolio!
Sour grapes.
Just look at the coronavirus issue. You know which one is suck. Talk is free. You can say anything. Data, data, data.
Exactly. The thing is sometimes that market made more, sometimes that the other markets made more, is the essence of diversification. Ditto for stocks, dividend paying vs growth, value vs growth, ⌠So long when you enter knowing what you are doing, youâre doing correctly. However, if you regret later - quite often due to changing expectations, then is a different issue.
In the heyday of excessively over-valued over-hyped valuation of startups, is not a surprise startups everywhere would start to layoff. As @pandeyathotmail will say there is no real news here.
True. But SF tenants suck too. My partner on my Discovery Bay house said his SF tenants told him flat out they donât have to pay rent thanks to Newsom. At least my Tahoe tenants havenât said that yet.
Defaulter, shirkers, thieves, robbers, prisnoers saying thanks to the government is not a good sign.