Well I’m guessing their thinking goes like this:

If I put $20K into the place now, 20 years from now it would require another $35k, and another 20 years from then it would require another $55k or so. Costing roughly $90/month adjusted for inflation every month, that damages cashflow! It will never end. Plus it would make being a landlord, equal to working! (once every 20 years).

But back to the type of owners that are currently there, lets go back to our friend on Johnson street:
http://sfbay.craigslist.org/sby/apa/811787233.html

This property is probably worth 800K. Lets assume for a moment the owners have owned for a while and have sizeable equity. It would take $20K to clean this place up, why can’t they AT LEAST do that?

- driveway cracked and needs repair
- outside paint required
- kitchen hasn’t been updated since the 80s
- whats that a WALL HEATER? Are you fing kidding me?

It looks like these people haven’t put ONE CENT into this place since the 80s or maybe before. Come on! And the problem is, there are too many of these just like this in RR.

There have been some neighborhoods in Cupertino that are just as awful as RR, in particular I am thinking of the Blackberry Farm area, drive through there and some of them actually look like sharecropper shanties, but more than half have been torn down and replaced with bigger homes. The reason it happened there? Bloody old Monta Vista high school, the place everyone wants.

As I said earlier, RR has the worst scoring schools in Cupertino, so people with money to rebuild don’t choose to buy there. There are a couple of excellent elementary schools in Campbell or Moreland school districts, I am thinking of Marshall Lane and Country Lane respectively, but the middle and high schools are not in the same league as any Cup/Fremont Union school.

For those who want schools, this will drive any home purchase or rental decision.

I wouldn’t give an absolute price differential between equivalent quality Campbell vs Cupertino schools, I’d give a percent difference. The nicer the place, the bigger the spread, I’d say. So instead of $800, maybe 30-40% markup for Cupertino? I’d expect a bigger markup for purchase. Homes north of Fremont Avenue routinely sell for 10-20% less than those south of it, because south is CUSD and north is Sunnyvale SD.

Right now the brouhaha is over who pays for schools in the area and the school people are dwelling on the dense housing being created in the area because it is easy to claim they need more schools, but the apts being built are a tiny part of the development that was required to make the office bldgs work.

Anyway on the specific house rentals cambrian vs RR, I agree that 100% that a cupertino house will rent for more than a cambrian house. I don’t think THAT cupertino RR house will rent for more than the houses I typically buy because it was only 900sf with one bathroom, essentially no kitchen and it was basically a dump. But who knows, I don’t rent in cupertino so wdik about it? My guess would be a *quality* home in cupertino would go for about $800 more than Campbell.

since the payments on $375,000 if in a typical mortgage would be approximately $2,200 per month, not including taxes, repairs, insurance, or much of anything else.

Yes, mortgage payments are about $2200 not including taxes insurance or repairs. What ELSE do you think would need to be added here? Your statement “much of anything else” implies there is a ton of other stuff not included in this statement. What ARE all those other things I am “missing”?

I think your assumption of $3,000 per month is wishful thinking. Me and certainly nobody else that I know would pay that much. We can rent nicer homes for less than that, and even less than $2,500 for that matter. I only pay $1,800 now for a rather large home. Rent it for $3,000 first, then let’ re-check the math.

Of course you wouldn’t bob, because you live in ALAMEDA, in a house that you rented a few years ago. ALAMEDA has probably even gone up since you rented, but who cares, its farking ALAMEDA. The houses I buy are in San Jose either Willow Glen or Campbell, or certain areas of Sunnyvale or Santa Clara. Those locations are on fire regarding rentals. I suggest you look on Craigslist (Cambrian Willow Glen is a good one) and look at rentals- about half of them are over $3K if you manage to weed out the apts and townhomes for 3+ bedrooms. At any rate I don’t rent for that, I just rented my place for $2550 – it was $2500 but they wanted additional gardening services in the back yard, I only pay for cut grass in the back not plants. I had dozens of applicants for this.

Your entire assumption is based almost entirely on appreciation.

Yes thats true bob, because every investment is based on speculation.

I have said repeatedly I expect a return to a hyperinflationary climate and land is a good way to weather that. I don’t need apple or google to buy a new HQ to make money on these houses. But San Jose is planning a new north san jose (near Berryessa) development which would probably yield the next big SV company if I had to guess. New developments are where growing companies like to move to, since land is available.

Your entire assumption is based almost entirely on appreciation. I won’t argue that eventually, prices on even the crappiest foreclosure homes will eventually go up in value. But how long will that be is the question, and if you think its going to be within 6-7 years, then I think that you’re being a bit overly optimistic since the last 2 busts took at least that long to play out. So realistically, you’re looking at what will likely be a 10 year cycle and even so, what will the actual appreciation be? This is called speculation and there are no concrete guarantees.

Basically, My opinion ( remember this is my opinion) is that you’re merely speculating and hoping for a repeat of the 2003-2007 bubble with the full expectations of the return of crazy appreciation and insane asking prices even in crappy neighborhoods. For your sake I hope that you’re right.

But who knows? perhaps I’m wrong, Google will decide to build their new headquarters right over the top of your starter home, or perhaps Apple will invent a cure for cancer and everyone will gladly pay you $7,000 per month in rent.

All I’m saying here is that my parents have owned two rentals and have never used math that’s as totally reliant on speculation as yours is, and additionally made at least 50% over what the mortgage payments were per month. If I were to suggest a model such as yours, they’d think that was insane. Sorry, but I don’t agree with your financials.