Real Estate

By Gr8Full!, July 19, 2016

I enjoy real estate also.
A number of people have indicated
preference for tangible assets so I think there
would be a fair number of participants. – Hendrixnuzzles
So here we go:

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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50 Comments on " Real Estate"

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Vijay
Irregular
504

Hi Ben, Where is the subscribe button? TIA

Vijay
Irregular
504

Thanks, it showed up after I asked the question.

hendrixnuzzles
Member
9860
Hi everyone. Some thoughts and stories from my first modest activities in real estate. A while back I became convinced that world central bank and government policies will eventually result in high monetary inflation and loss of value in fiat money, and that real tangible assets would benefit. And there were bubbles in the assets that are attracting the cheap money and benefitting from low interest…specifically stocks, bonds, and real estate. The risk in the bubble assets is mostly interest rate related, and this is especially true for real estate. Yet I still decided that direct ownership of real estate… Read more »
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Griffin
Irregular
2570
I’l start by saying I’m looking to buy my first house at the age of 70. The one thing I’m not sure about is insurance just what does it normally cover, forget earth quake, flooding, and weather. What I’m concerned about is how much of the structure is covered from termites, dry rot, a tree falling on it, or a car running in to it. HN started with some nice examples and mentioned pricing. I don’t know that we can get away from stating actuals in our area and from left to right coast. Even in the San Francisco Bay… Read more »
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hendrixnuzzles
Member
9860
I always get a professional appraisal and inspection. IMO it is a cost of due diligence that should not be dispensed with. The SF Bay Area is so expensive and pumped up, I would not begin to offer an opinion about investing there. I lived there for twelve years and benefitted greatly from rising prices. But they went even higher after I left. Thought I did well, bought for $340 and sold for $750. But five years later the property sold for $2.5 million. Right now, my daughter lives in San Francisco. She shares a modest and ordinary 4 bedroom… Read more »
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hendrixnuzzles
Member
9860

Griffin…why not google the San Jose house and see what it is worth now ? The people who bought in 2008 have likely taken a haircut.

Griffin
Irregular
2570
That was interesting. I was wrong on the sqf it is 1200. The house was sold 10/12 for 550k cash. The real estate companies are estimating current value at 900k, unreal. There is a track, 1/2 a block from a busy mall, and 4 blocks from 2 freeways. There is another house on the south(freeway) side of street 1800 sqf est price 1.2 mil. Oakdale is about 100 miles from the bay area, and I was a little surprised when the donut started opening at 4 in the morn to sell donuts. Now I have to go to the donut… Read more »
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hendrixnuzzles
Member
9860
$400 a foot…$450 a foot…$500 a foot…close enough for horseshoes. At over $400 a foot I am a seller. When I say ” new construction”, I do not mean to say I think one should build. It is simply a measure of the intrinsic value of housing as a commodity…what it costs to replace. Another simple measure is to compare what the rental value is compared to the theoretical selling price. The monthly rental should be HIGHER than 1.0% of the selling price. Lower than this, one is counting on price appreciation more than cash flow to make anything. Tell… Read more »
Griffin
Irregular
2570

I just took a quick look on craigslist and I’m shocked 2.5-3.5k a month and there seem to be plenty.

http://sfbay.craigslist.org/search/sby/apa

hendrixnuzzles
Member
9860
Hi Griffin, If you can only get $2500 to $3500 a month rent for a $900,000 real estate investment, you are going to come to grief on cash flow and profit (unless your cost basis is a lot lower than $900,000). You also need to know what the taxes are…more fixed expense that must be paid for from your rent receipts. From what I understand you to say, there are lots of similar properties for rent. This means you will be stuck on the low end of the rent scale for similar properties. If you paid all cash for a… Read more »
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Griffin
Irregular
2570

I only use Silicon Valley as an example because I was born and raised there. I move to Oakdale in 2004 and I’m much happier here. I have considered other areas and have been looking in Oregon on craigslist and at;
http://www.move2oregon.com/
The property there seems to be much more reasonable. I just haven’t found a place to get exited enough about to cut myself a little short. For the last week there has been more red in portfolios than I care for and MUX took a beating today.

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hendrixnuzzles
Member
9860

Griffin…to earn 4.0%, you can buy PFE for $36 and take their dividend.

If you are looking to buy a residence for yourself to live in, the main question is whether you want to live there and can afford it. At my age I am not do concerned with the resale of my residence because I intend to live in it.

Question for you. Since you want to be in the country anyway,
why not consider other areas in the US where there are lower costs ?

hendrixnuzzles
Member
9860

Hi Griffin. I looked up Oakdale and see it is near Modesto.
I am somewhat familiar with that are, my Dad was there for a while.

Glad to see you are not in Silicon Valley…unless you bought property years ago. If you like being in the country but near a small town, there are a lot of great choices for you all around the country. If you like where you are, at least the San Joaquin Valley doesn’t seem completely insane on price. Hot in the summer, though.

Griffin
Irregular
2570

Interestin article on organics. One of the properties I’m looking at is five acres on a road that runs along side a water reservoir, good fishing. I’ve had thoughts of a victory garden, produce stand, and certified organic, I wunder.

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hendrixnuzzles
Member
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Is the acreage farmland ?

Griffin
Irregular
2570

I think it has to be, as in pasture. There is a lot of checking I’m going to have to do. I’ll have to check to see what the building code is, how good the well is, and what limits there are on habitation. I haven’t actually seen it in person, but I will make a point this week to visit it and take some pictures.

arch1
Irregular
7782
Before committing yourself you need to find what the zoning is on the land, how much road access is allowed , if structures are allowed such as a produce stand , if a parking lot is allowed and required and how large, if water is available for irrigation and vegetable cleaning. if a well is allowed, how water runoff from the land is handled ( that close to a reservoir that could be a major concern) how fertile the soil is ( you should get it tested for mineral content. If you need to have your own lane to access… Read more »
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Griffin
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I’ll be checking into all of that except the run off, with organic that shouldn’t be a problem. The property is almost six acres on a gentle to medium slope with a 3bdr, 2bath house. The house appears to be vacant but who knows for how long. Considering the drought here in California, and the way they have been planting almond orchards no telling what the flow rate on the well is unless tested. I’ll have to consult with the local AG authorities for land and crops and who knows what else. Considering the slope of the land I don’t… Read more »
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hendrixnuzzles
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What I intend to do with real estate…fall 2016…cash, farms, and REITS Hi all. I am a typical retired guy with modest assets. I believe in hard assets. And I need income. Accordingly, more than 50% of my investment capital in residential income property, which makes sense given my outlook and needs. . The rest of my investment capital is in gold and silver (or surrogates), resource assets, small cap biotech, and some conventional stocks. Not a lot of income there, and capital appreciation is possible but not a sure thing. I have become a little uncomfortable with my total… Read more »
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jimt47
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824

I don’t know if anyone is still checking this thread, but I am curious about opinions concerning renting versus buying in the S. F. Bay Area (east bay). We will probably move there in two years – I will be 72 and my wife 65. Our current housing in a CA coastal area is provided for us as part of our job compensation (for past 30 yrs). Buying is financially possible, but is it smart at our age? I realize there is no perfect answer, just curious if there are opinions from those with more experience in real estate.

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Griffin
Irregular
2570
Jim, I can’t recommend the SF Bay area unless you have some particular reason to be there. The traffic is going to bad after work hours. What ever you price now won’t be the same in 2 years. Start with San Fran as your highest prices and radiate out for lower cost, the east bay is lower than the SF pennisula. If you don’t mind living on the coast check Half moon bay south to Santa Cruz even as far south as Watsonville. Might look at the north bay there are area there that might be reasonable.Since the late 60s… Read more »
hendrixnuzzles
Member
9860
The prices there give vertigo. They could stay high or even go higher…it’s just hard to imagine. When I left the Bay area, and the sales price of my property was one reason…of course, prices went even higher after I left. Today’s world is very unpredictable. I worry about higher rates, so I am even concerned about much less expensive real estate that I own in the Southeast. In a devaluation, economic crisis, or other higher-interest scenario, liquidity and nominal prices will be smashed. But I need income, and at least rental property is a real asset that provides income.… Read more »
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jimt47
Irregular
824

If the next two years are kind to our biotech holdings, the sacrifice will have less of a sting. $AKAO has been a nice start.

jimt47
Irregular
824

Thank you, Griffin. Our reason is the desire to be near our children, simply and essentially. So there will be no work commute involved, and, while traffic is always an issue, being retired gives you timing flexibility. We know that it makes no pure economic sense to retire in a CA metro area, but hope that a solution (either buying or renting) can be found.

hendrixnuzzles
Member
9860

Live with the children !

Griffin
Irregular
2570
I thought there might be a particular reason. Then thinking ahead as your are is good as there are always deals to be had for those with patience or time. I moved to the Central Valley about ten years ago and haven’t been back much since. The coast may still be the best place to look again if you like the coats. Santa Cruz is about 30 miles from San Jose has a board walk and Yacht harbor. Has always been a fun spot for a day trip so much so that they did a study of the ‘undesirable transient… Read more »
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