Posts Tagged ‘investment’

So you’re considering purchasing property in the Oakland-Berkeley area and maybe renting out rooms (house hacking) or buying a duplex or a place with an ADU?

Essentially becoming a landlord of some sort, and as a property owner you would get to do absolutely what you want with your property, right???

…. Well…. not so fast!

Owning property in the Bay Area is a wonderful privilege and invariably a good long term investment, but venture into rental income with your eyes open.

The housing market is tight, the laws are very specific, there are folks who may take advantage (sad but true), and the penalties for missteps can be Draconian!

Do yourself a HUGE favor if you have not purchased yet, and consult with a local qualified landlord tenant attorney so you know the lay of the land!

If you currently own property, join a LOCAL landlord advocacy group and consult with legal staff. These groups are an EXCELLENT resource for landlords.

Many homeowners become accidental landlords. A relocation enabled them to keep a property and rent it out, or they decided to rent out a room or convert part of their home to a rental.

And for the House Hackers…roommates? Can you raise the rent? Can you get them out?
This is current day California land of legislation… not the TV Wild West of my youth!
I’d suggest look into what you can and cannot do.

Whilst many Bay area cities including Berkeley and Oakland have had various levels of rent control and tenant eviction restrictions in place for years, the number and type of properties which fall under these restrictions has recently increased.

Many cities have “Just cause eviction” ordinances.

As a landlord in most cases you cannot blithely give your tenant notice  because you want to sell the property…. this is likely NOT a ” just cause” for eviction.

A local attorney who specializes in this area of the law can advise owners of options if they wish to sell. Several cities, including Oakland now have minimum mandatory buyout requirements for negotiating tenant move outs.

I regularly work with property owners who wish to sell and in conjunction with their landlord tenant attorney we figure out what works best for all involved.

Being a property owner is great, but know your rights and obligations… and stay safe!


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The First Quarter round up!
Q1 2016 click image

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We divide the market into different segments to look at data and review prices and volume.
In the charts here we compare 3rd quarters only and divide the market into above and below $800K.
The lower and upper ends of the market frequently adjust differently.

The link will take you to 6 local cities, and Oakland divided by neighborhoods.
Some quarters the data can be quite skewed by a few sales, so these brief windows are a snapshot in time and we review the whole year for a more balanced perspective!


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Several buyers who have visited my recent open houses have told me they hope to take advantage of the market and buy a higher priced home.
The low mortgage rates and price discounts have created an excellent opportunity for home owners who have equity or the financial ability to trade up to a more expensive home.
The graphic below illustrates how trading up can actually be a better deal now, even if the value of your current home is down.
If you wait for the prices to go up, the proportional cost of trading up will be higher.


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In the Oakland,Berkeley, El Cerrito, Piedmont, Kensington and Albany real estate market we are still experiencing low inventory. Below is a chart showing spikes and drops in inventory over the last 6 months. We saw a significant drop in new listings coming on the market in the last couple of weeks.

click for larger image

Below is a chart showing the same time period and a big spike of homes going into contract.
Homes selling and not many new ones coming on the market are resulting in a surprising number of multiple offer situations as buyers compete for the more desirable and well priced properties. With the recent world wide events and volatility in the stock market, it’s likely these numbers will bounce up and down for the next few weeks.

click for larger image


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We’ve come out of a slower 6 weeks and had a couple of good weeks of sales activity.
Mortgage rates continue to be amazing, with some volatility.
Despite the fact that this is primarily being called a buyers market, over 40% of our Pacific Union sales transactions in September had multiple offers.
Properties which show well and are priced correctly are getting the buyers attention and going into contract.

Lenders continue to put buyers through their paces, the majority of our escrows are closing, but it’s usually bumpy!

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Here is a graph of sales activity in the 6 East Bay cities I track.
This shows the number of properties priced between $500K-$1M going into contract every week for the last 6 months.
As you can see the volume has picked up quite a bit since last year and increased significantly in mid June.
Please click the graph to view a larger image

click on image to view full-screen

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As we were out on tour today we caught up with our latest observations on the local real estate market. The main topic of conversation was friends and potential clients asking about investment property.

With dismal returns on many investments, we’re all experiencing more occasions in a social setting where someone will say to us:

“If you ever see a really great deal, give me a call!”

Or perhaps, someone who is sort of interested will contact us once in a while when a low priced property catches their eye, and they’ll want to go out and see it.

How do you respond to this my colleagues and I wonder?

It would be nice if finding a great deal was that easy, if it was, a lot of agents would just make money buying properties for themselves!

The reality is that a buyer and agent do not usually stumble across great deals, but dedicate a large amount of time and energy into a focuesd search.

Figuring out what you want to spend, lining up your financing, establishing neighborhoods you want to purchase in are all good first steps. Your agent can help you with some, and others require your due diligence.

Do you have the financial resources or the expertise to purchase a fixer?
Are you looking to buy as a long term investment so your children can stay in the area?
Are you able to put enough money down so that the property breaks even or cash flows?
Have you researched market rents?
Do you know how to factor in expenses and vacancies?
Are you willing to take on potentially tricky legal situations and possibly get a better deal?
Have you looked into the local rental restrictions for different kinds of property and decided you are comfortable being a landlord?

When you have all your ducks lined up, you and your agent are ready to commit time to looking at specific property !

With time and hard work you will be able to make a good investment, and buy a good if not a great deal!

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