Lease for $4800 a month, or buy $1.2 million Burlingame house
1438 Laguna Ave, Burlingame, CA 94010 MLS# 80810375 - Property Details
$1,198,888
* Status: Active
* Bedroom: 4
* Bathroom: 2
* Year Built: 1923
* Lot Size: 4450
* Square Footage: 1730
* List Date: 5/21/2008
* Garage Spaces: 1BUY or LEASE($4800) with an OPTION to PURCHASE. —————- Call Agent for Details. ———————————————–Elegantly, Completely Remodeled Home. Almost Everything is NEW. ————
——Hey professional renters,——–
——-This owner ———- has a dramatic———– deal ———- for you.
You can —— lease ———– or ———— buy this ——– fine ——- home!
Just—— $4800! —— or ———- you ————- can get a full amortizing ARM for ———– $5792.30. ————
Again—— it——– may——— seem like you will ———– lose money up—– front. But—— in the——-long run——— this will make you—— so rich——-you can——- afford——— as many dashes ———– as you can possibly ——- want.
———What ———— are ———- you———- waiting——— for?
September 4th, 2008 at 7:04 am
Talk about poor design. Couldn’t they have at least removed the roof before adding the second floor?
September 4th, 2008 at 10:29 am
that POS is worth 1.2 mil? no wonder USD is worthless.
September 4th, 2008 at 10:33 am
I work on the other side of the train tracks from there.. when I look up the address in Google Maps, it points to a tennis court?
September 4th, 2008 at 12:07 pm
Owners must have been leased instead or gave up — it is off the market.
http://www.redfin.com/CA/Burlingame/1438-Laguna-Ave-94010/home/2057065
September 4th, 2008 at 12:51 pm
A 90k salary is needed to support this lease alone. But hey this is RBA and people don’t need a car, vacation, food, or other stuff. 250k couples are overbidding like crazy.
What’s up with the pavement pointing to another (nicer) house at the back? Is that included?
September 4th, 2008 at 12:55 pm
They would probably sell it easier if they didn’t mention the lease. $4,800 is totally ridiculous for renting anything- and especially this turd. How could you not read this and think its a joke?
September 4th, 2008 at 1:47 pm
Desperate sellers, bob. They bought it for $1.015 just last year - how’s that for EIGHTEEN PERCENT appreciation during one year of a housing crisis? This isn’t even RBA! Man, Palo Alto ought to be up at least 30% from last year!
Anyway, $4800 is probably what they “need” to cover their mortgage. It’s the old need-based pricing instead of using a market reality. I don’t know why I find it so irritating when people ignore and/or deny reality.
September 4th, 2008 at 1:58 pm
Sorry.. Burlingame not RBA? Really? Have you ever been there? I think it belongs in the same class with Palo Alto, and just a notch below Hillsborough or Atherton.
September 4th, 2008 at 2:16 pm
Off subject: The DOW tanked big time,and a report on jobs is expected to be bad tomorrow. Sour economies= slow sales and price declines. People who own homes like these who need to dump em’ quick are screwed.
September 4th, 2008 at 2:24 pm
And they deserve it. Why? Because they signed their name on a piece of paper stating they would pay over a million dollars for a piece of trash. No bells went off when they looked at its price tag.
If they can’t afford to take the hit, they should be in jail.
September 4th, 2008 at 2:53 pm
Yeah, let’s bring back debtor’s prisons! That will be a great use for all those empty developments sitting out in Stockton and Las Vegas. The Debtors have to mow the lawn and keep the house looking nice, but they are being punished by living in Stockton.
Today’s house: Seriously, $1.2 million, on a half-size lot? $4800 a month? sonarrat, this is not the RBA part of Burlingame. Only the “practically Hillsboro” part gets to play. King of like the “Real Cupertino Schools” part of Sunnyvale.
True story: My older kid’s best friend came over last week and BEGGED me to let my kid transfer to Fremont HS next year so they can stay together. AS IF!
September 4th, 2008 at 3:01 pm
>True story: My older kid’s best friend came over last week and BEGGED me to let my kid transfer to Fremont HS next year so they can stay together. AS IF!
i don’t get it. more context please?
September 4th, 2008 at 3:44 pm
It continues with this listing: How amazing and astonishing that so many people (except for a few free thinkers on this blog) continue to ignore the reality around them: FANTASY DAYS OF UNBRIDLED DEBT AND UNMERITED HOUSE APPRECIATION ARE OVER! THE DEBT PARTY IS OVER! IT’S TIME TO RETURN TO PLANET EARTH. THE PURSUIT OF DEBT DISGUISED AS WEALTH HAS FAILED. THE SHIP IS SELF-DESTRUCTING (and man, is it fun to watch the crash of “rich” people who do not understand basic economics). And yes, a trashed dollar buys TRASH, whether it be this POS or all those wonderful, long lasting goods from China that cost Americans real, good paying jobs and ruin our economy, but if that’s what we want, then apparently we are getting it in the patootie.
September 4th, 2008 at 4:11 pm
MADHAUS: You must be joking about debtors prison. Next you’ll be saying that unemployed people should be beaten weekly as an incentive to get them back to work.
But maybe that’s what you intended by moving people to Stockton.
-zanon
September 4th, 2008 at 5:26 pm
crossroads, I’ve posted often about the difference between Homestead and Fremont high schools. Sunnyvale CUSD kids (actually every Sunnyvale kid) goes to one or the other (if they go to public HS). Since Fremont scores significantly lower, the CUSD/Homestead part of Sunnyvale is the “real Cupertino schools” portion of Sunnyvale. (The high school district is seperate from the elementary/middle districts but all 99% of CUSD boundaries are within FUHSD boundaries.)
zanon, if you can’t tell whether or not I’m serious I would love to sell you today’s house for $1.5 million.
September 4th, 2008 at 5:29 pm
All this really indicates is that we are back to where we were in the early 90s when it was impossible to rent but easy to buy. I’ll bet you anything somebody rented this and said no thanks to the rent-to-own angle.
September 4th, 2008 at 5:32 pm
Its actually a teeny weenie house because even with a second story its all of 1730 square feet, smaller than my one story home. Still, they rented it, I know they did.
September 4th, 2008 at 5:39 pm
WG, we made a lowball rent offer in 1990 and got it because a neighbor helpfully told us the house had been empty for 4 months.
September 4th, 2008 at 5:47 pm
sonarrat, I just looked at the map, saw it was 1/2 block from railroad tracks and between 101 & El Camino. Says “not RBA” to me. I wasn’t casting aspersions on all of Burlingame. Just this “Lego-looking” house.
September 4th, 2008 at 5:52 pm
RR tracks are fine in burlingame. The Caltrain goes right through downtown burlingame there, which is just another reason to reject Rod Diridon’t ridiculous bullet train idea along the caltrain tracks (I am not against bullet trains I just think they need to be underground like everywhere else that has them, for gods sake caltrain goes through every town on the peninsula).
September 4th, 2008 at 5:55 pm
madhaus not sure what you are trying to say, was it easy to rent where you were? I was in Belmont/San Mateo at the time and we literally had to CAMP at this house where we knew somebody was leaving to rent it for $1600/mo. This was in San Carlos. That house at the time would have sold for maybe 400K, but interest rates were higher so almost double to buy, which is why we didn’t buy. Same house today maybe one million. Not sure if that was the same situation in the south bay. Also this was more like 93- I think the internet was actually just starting then but we didn’t know it yet.
September 4th, 2008 at 7:03 pm
Oh really WG. You just KNOW that some shmuck decided to shell out 5k a month for a POS? Why- that would indicate that you must be right, and that housing is about to make a HUGE comeback, big time. That lil’ REO you bought is gonna’ be worth a million bucks in three years, and you’ll be rich!
Your words of wisdom are such an inspiration to people like me who seem to be too stupid to get off the fence and do my duty to the BA and pay myself into eternal debt on small, substandard houses. I think I might just have to go bid on one right this very minute.
September 4th, 2008 at 7:14 pm
Well I don’t know it Bob, but I know the rental market in the bay area is WHITE HOT, and I have seen houses go for some extraordinary amts in the south bay so I would expect 4800 to go in Burlingame. But just to check out the mkt there, lets look on Craigslist, where there are exactly 4 houses in Burlingame that are 4br that are renting for less than 4800.
Heres one for $4600 which I think looks a little WORSE than this one on burbed, of course it is $200 less.
http://sfbay.craigslist.org/pen/apa/825585369.html
September 4th, 2008 at 7:40 pm
wg this was in San Jose, near Williams/San Tomas, east of San Tomas. I think this is Campbell School District because my younger kid took a class near there this summer. We had no trouble renting this place, I cannot speak to where you were, but this was past the peak of the buying market and prices were starting to come down.
It was a very nice, big house and I thought we got a great deal on it renting an 1800 sf house for $1250 a month. All renting I did after then was with people who already had the house and I just moved in to share the lease, so I can’t speak to the rental market in 1993. By then we were looking to buy.
September 4th, 2008 at 9:14 pm
A friend of mine rents a better looking four bedroom in Burlingame for 2500 a month. Granted, he hasnt had a rent increase in a while.
Willow Glen, you have been pitching this “the rental market is hot” story for a while. I know the house rental market VERY well in the san carlos / belmont ares from experience, its not changed over the last 12 months. Sorry.
September 4th, 2008 at 9:36 pm
sonarrat, I just looked at the map, saw it was 1/2 block from railroad tracks and between 101 & El Camino. Says “not RBA” to me.
In Burlingame it matters less what side of the tracks you’re on, the only difference east of El Camino is that there will be commercial and, in this case, industrial buildings nearby. The only street in Burlingame that’s not so great is Rollins Road, which is the frontage road for 101, and even that is hardly dangerous.. it’s not even like the border area between PA and EPA. It’s just older duplexes and triplexes.
September 4th, 2008 at 10:44 pm
I’ll take your word for it.
Do you also disagree that 18% appreciation over the past year is a bit, shall we say, optimistic?
September 4th, 2008 at 10:44 pm
$4800/mo for this place sounds high. When looking at rentals a month ago, we didn’t look at too many in Burlingame (too far north), but from the listings I recall a few that looked nicer than this that listed for under $4K/mo. They may only have been 3 bedrooms but likely were at least 1730 sq ft.
September 4th, 2008 at 11:27 pm
notwithit,
I know the house rental market VERY well in the san carlos / belmont ares from experience, its not changed over the last 12 months. Sorry.
Care to provide any data to back that up? We have a 3% vacancy rate in the south bay (which is too low) and last year rents went up over 10.4%. Thats one of the largest rental increases I have ever seen, because that applies to cumulative rental properties and most renters who have been there a while don’t pay market rates. A 10.4% year over year increase in rentals means the new people saw a 20% increase.
I know this on fire rental market is a fact, because I am a landlord.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/18/BUEGUGEIB.DTL
September 4th, 2008 at 11:29 pm
Tight market boosts rents
Rental prices rose year-over-year in every Bay Area city surveyed by RealFacts. The chart below shows average rents, occupancy and year-over-year changes in cities that have more than 20 apartment complexes with at least 50 units.
City Complexes Occupancy{+1} Change{+2} Rent{+1} Change
Alameda 22 90.3% 9.6% $1,443 5.4%
Campbell 28 96.5 -0.9 1,428 10.8
Concord 37 96.0 -0.5 1,146 3.4
Fremont 69 95.3 -1.1 1,439 7.5
Hayward 57 96.1 -0.9 1,196 6.6
Mountain View 59 95.6 -1.1 1,774 11.6
Oakland 21 95.5 -0.6 1,420 3.7
San Francisco 44 95.2 -0.6 2,285 14.5
San Jose 150 96.0 -0.6 1,541 10.5
San Mateo 29 96.9 2.8 1,809 9.8
Santa Clara 45 96.3 1.8 1,794 13.3
Santa Rosa 44 95.5 -0.7 1,170 6.1
Sunnyvale 82 97.1 -0.5 1,593 9.5
Walnut Creek 35 94.3 -2.1 1,452 12.4
Bay Area 1,241{+3} 95.8 -0.1% $1,562 9.4%
September 5th, 2008 at 12:38 am
What notwithit is saying corresponds to what I’ve been seeing on Craigslist.
Every week or so I go on the website, tell it to list rentals in Belmont. Since I first look for rentals here in May ‘07 I have seen the following:
1.) Low end rental places have increased rents close to 18%, studios went up the most. But since May they have been languishing, along with 1br rents.
2.) Since March I have seen rents on 2br and 3br go up a lot, in some cases close to 8%, apartments only, whereas, earlier they were languishing, and incentives were being given out.
3.) Rents on houses and townhouses have remain unchanged.
Despite Belmont being not RBA, it doesn’t really have entry level houses, 2/3bds small houses, small lots, maybe east of El Camino, have not seen them on craigslist. Most houses for rent here would cost 900k+ to purchase.
I’m not sure what it all means, I can see 1 leading to 2, for example, but other trends would have to be analyzed more carefully. I also don’t see why Foster City rents are outpacing Belmont for example. I can sort of understand why rents in cheaper parts of RWC are going up fast.
The particular complex I’m in is lagging too, in the relative mix it has fallen as to asking rent rank, and now they dropped their asking rents unexpectedly by $25/month. From last year this time it is now about $40/$60 more expensive, either relative value here is better, or I’m ignorant to the deterioriating conditions here? I’ll grant this though, there are really only 2 major employers around here, EA and Oracle. If short commutes are in, perhaps this place is not that high up the ladder. Certainly not an easy commute to PA, or MV, (by my standards). Anyway, food for thought.
BTW, Burbed the spam protection keeps blocking me!
September 5th, 2008 at 12:39 am
Both Firefox 3 and Chrome, it was blocking me.
September 5th, 2008 at 1:35 am
Sorry, every time I turn it off, bad things happen.
September 5th, 2008 at 2:08 am
Oh, I completely forgot, there is also a smoking ban for apartments and condos here. Maybe that explains the rents possibly lagging, yeah. Smoking after all is really popular in the Bay Area.
September 5th, 2008 at 7:52 am
WG,
If you’re going to pretend to be an RE investor and try and scare all of us bitter renters into buying ( thus boosting your REO home value somehow) then you might think about posting something at least remotely accurate.
Is the rental market WHITE HOT? Well, let’s do a quicky little search on craigslist, which is where I do all my rental searches and have found all the rentals I’ve ever lived in including the four bedroom house I rent for $1,800.
Search results South Bay:
all rentals priced from $0-$2,500/month: 2,423
all Rentals priced from $3,000-$4,500/month: 201
3 bedroom houses, South Bay:
houses priced from $0-2,500: 447
houses priced from $3,000-4,500: 180
In fact, the majority of the results were below $2,500, which is a number you claim can be had for even a crappy little house ” in your sleep”.But just from a simple search alone, its easy to see that there has been very little movement up or down from last year.
I can also just about guarantee that a big chunk of those heavenly priced rentals are from FB’s who can;t sell their house and are doing some wishful thinking, just like the owners of the house in this post.
Nice try though…
September 5th, 2008 at 8:53 am
Cardinal, when did Belmont fell off RBA list? I always thought it is much better than Mountain View, Foster City is comparable and better than Mountain View. Older and better off folks live in Belmont, while young professionals live in Foster City, that is why rent is in demand in Foster City.
I think WG is right about rent increases. But just as 90% income paid to mortgage is insane, now are we arguing about 70% paid to rent is reasonable? Some people are so quick to call it a trend reversal others are still denying there is a down trend at all. So what do we have to justify high rent now? That 250k couples are paying them? I love these 250k couples, they are doing everything for RBA aren’t they? Maybe someone should write a story about these Rockefellers.
September 5th, 2008 at 9:31 am
Additionally, rent and home appreciation tend to come in sound financial times. Today marked the first time during this recession that unemployment breached 6%. Anything under 6% is deemed generally ok by traditional US economic indicators. Anything over that is a sign of serious trouble. Additionally, Apple, RIM, and a number of other tech stocks are lagging downwards. Not super-good indicators of national or regional housing market health.
September 5th, 2008 at 9:48 am
ANd… just hot off the wires: Foreclosures still hitting the market at record highs, which further adds to my theory that foreclosures will actually fall further in price rather than go up before this is all over.
UPDATE: Foreclosures, Mortgage Delinquencies Hit Record High Again
By Amy Hoak
CHICAGO (Dow Jones) — The rate of mortgages entering foreclosure hit another record high in the second quarter, as did the percentage of loans somewhere in the foreclosure process, the Mortgage Bankers Association reported on Friday.
The delinquency rate, which measures mortgages that aren’t in foreclosure but have at least one overdue payment, also was the highest ever recorded in the MBA’s quarterly survey.
States hit hard by the foreclosure crisis continue to drive the national numbers, said Jay Brinkmann, MBA’s chief economist and senior vice president for research and economics. Increases in foreclosures seen in California and Florida overshadow improvements seen in states including Texas, Massachusetts and Maryland, he said.
In fact, only eight states — Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio — had rates of foreclosure starts that were above the national average, he said in a telephone interview. That “is an indicator that this is not equally distributed across the country,” he said.
California and Florida alone accounted for 39% of all of the foreclosures started nationally during the second quarter. The two states made up 73% of the increase in foreclosures between the first and second quarters, he said in a news release.
“The worst states are getting worse,” Brinkmann said. Overbuilding occurred in both states, he pointed out, and their numbers will continue to drive the national ones.
September 5th, 2008 at 1:27 pm
In my neighborhood, rent for $4900:
http://sfbay.craigslist.org/pen/apa/818815713.html
or buy for $1,545,000.00:
http://www.redfin.com/CA/Los-Altos/1211-SAINT-JOSEPH-Ave-94024/home/1382776
And that place gets a lot of traffic because it is kitty corner to an elementary school.
We wanted to rent in Los Altos or Sunnyvale (CUSD) while our home is having some work done on it, but there is no way at those prices.
September 5th, 2008 at 1:59 pm
Meanwhile, you can rent a house on an acre for $2500 in my area, and it’s not even in the middle of nowhere..
http://sfbay.craigslist.org/pen/apa/818371557.html
September 5th, 2008 at 2:11 pm
You could rent in Sunnyvale/CUSD for the low $3000s for a house. I couldn’t find anything in CUSD/Homestead, though, most of it was east of Hollenbeck or DeAnza (which is where the Homestead/Fremont High School attendance boundary moves along). There really isn’t that much to choose from, but some keep getting listed over and over, so I figure it’s a FB rental.
September 5th, 2008 at 2:24 pm
Thanks Madhaus. Yeah, we wanted to be west of Hollenbeck near Homestead or Mary.
Luckily, we had a couple of different options available to us, so we went with one of those.
September 5th, 2008 at 2:45 pm
Glad it worked out, Rocket. I would not say that SW Sunnyvale is white-hot for sales, but things priced to market (which is down very slightly) sell within a week or two. Homes with wishing prices stay on the vine and rot. Rentals are pretty thin and I haven’t seen a For Rent sign in at least a year.
Remember this place (comment #185) that I said was overpriced (in comment #188 following)? Here’s proof I was right. It’s been on the market 53 days. (Sorry about comment numbers but the link seems to go to the top of the article, not the comment I want.)
Two people made a prediction about a house 6 weeks ago, and one of them was correct. I leave it as an exercise to burbed’s readership to decide whether to give any heed to anything the other says.
September 5th, 2008 at 2:55 pm
Bob, where to even begin with you. I know you are in a stupified state of denial but really, your ignorance is astounding to all.
I posted an absolute FACT that the rental market is white hot. I have never seen rents increase 10% in a year, because a 10% increase in MEDIAN rents basically means a 20%+ increase to new renters in one year- astronomical. It might have happened in the 90s when I wasn’t paying attention- but even so, this is rare and there are the numbers right there in black and white. What I don’t have is the *cause* of this and I would love to hear some theories because I honestly don’t know.
Of course lets not forget that your area, ALAMEDA, only saw a 5% increase (even though according to you, Alameda is one of the top destinations in the bay area)- so maybe you just don’t know which of what you speak. It wouldn’t be the first time.
As for me, I don’t advise paying rent at anything above $3K, its a waste of money. I know there are some extraneous circumstances where people feel like for them, a high priced rental makes sense. But this dump in the picture definitely doesn’t seem worth it, to me.
September 5th, 2008 at 3:17 pm
Rocket, amazing the difference in the pictures of the same place on craigslist for rental vs MLS. Craigslist has pictures of the less than magnificent kitchen, for one thing, and the family room looks like a completely different house!
Anyway, this house on Joseph in Los Altos at 1.5mm vs. $4500 to rent reminds me a bit of the equation I had to deal with in the early 90s trying to rent in the San Mateo area. Its almost like the rent to buy equation never really changes around here. Buying that place if you had the 20% 300K to put down, and IF you could get the financing would mean about a $7.5K mortgage. Its slightly more than double the rent, but the rent seems outrageous also. Its almost like there is no right answer.
The people who decided to suck it up and buy in the early 90s were the winners here. It will be interesting to see what the outcome is this time.
September 5th, 2008 at 3:18 pm
sorry typo, I meant slightly LESS than double the rent
September 5th, 2008 at 3:41 pm
WG,
I’ve met a number of people chasing after last year’s trick pony, trying to make a quick buck , making guesses and using those guesses as facts, and denying even the most basic of economic fundamentals.To me, investing in RE right this minute after the largest bubble in world history is like buying pets.com stock right after the dot-com burst.
I’ve studied, read, and listened to quite a few of the country’s leading economists and not one of them lists RE as a wise all for a primary or even major investment. Most don’t even agree that RE is a good hedge for that matter. Perhaps Robert T Kiyosaki does, but that guy is a total moron to start with, except that he was a genius for writing a book that gullible people bought in droves and became a millionaire as a result.I bet you probably read it too and think its the closest thing to the Bible. If you haven’t, then you should buy it because he sounds just like you. Its called ” Rich Dad, Poor Dad”. You’ll love it.
Are rents rising? Maybe, but that in no way indicates moves towards a rebounding real estate market. In fact, as pointed out even on this blog, quite a few people had to sell their homes, were foreclosed upon, or due to tightening credit requirements couldn’t afford to buy a home even though banks would’ve gladly given them the means to do so as recently as last year.
I know exactly what you’re thinking: Higher rents= more pressure to buy which= rising home prices. But in addition to the information I just mentioned along with the latest in economic data: job losses and economic performance alone is a clear indicator that more downward pressure still exists for home prices than upward. Additionally, rents for the most part are still grossly cheaper than buying even the crappiest of starter homes. So if people cannot afford to buy but can rent, then where’s the argument that home prices will rise a result?
September 5th, 2008 at 4:05 pm
Bob, you don’t know what I am thinking, and in contrast to the actual news articles I submit to substantiate my positions, you make up “facts” in your head.
September 5th, 2008 at 4:35 pm
WG, you have pretty bad memory. In 99 the rental market was white hot, 30% increase in some apartment complexes were not uncommon.
September 5th, 2008 at 4:53 pm
I remember that, we had some friends from India who were debated whether to stay or go back and the rent hikes convinced them to leave.
September 5th, 2008 at 5:25 pm
I remember reading somewhere that during the peak rents for 1bds in my complex were about 1700/month or at least asking that much, that is a lot more than I pay today. They were around 1000/month a few years ago.
September 5th, 2008 at 6:01 pm
bob #35, counting listings on craigslist does not give a complete picture. A lot of apartment complexes spam craigslist every few days with multiple listings. Meanwhile, good quality, reasonably priced SFH’s tend to get rented very quickly and the posts get removed quickly, so on average there will be fewer posts representing that type of property. Also I’m not sure why you omit the popular $2500-$3000 range.
September 5th, 2008 at 7:55 pm
WG - “data”? What data do you suggest for rental houses? Oh, but you are landlord, then you **must** know what you are talkign about. What a pathetic line of reasoning
Why are you wasting time posting data about large apartment complex rents. Its not proof that 3K and up rental homes have increased in price. Have you noticed that that homes in slums have fallen in value a lot, but home prices in RBA are still holding firm. DO YOU SEE A RELATIONSHIP to your data about apartment rentals vs home rentals in community like Burlingame?
Jesus, I don’t know why I bother.
September 5th, 2008 at 7:58 pm
WG
Just to spell it out to you, the movement has been at the low end. House prices down,rents up.
But, house prices in RBA arent changed, and neither are rents.
I realized that you might not be able to make the leap of logic.
September 5th, 2008 at 9:44 pm
what I suggest for rental houses is exactly what I posted, median rents year over year or whatever period you choose.
I find it simply amazing that you and a few others just can’t accept reality. Its not like I am making this up, I showed you data. I own a few rental properties myself, and I know that $3K rentals a year or so ago were perceived as fairly high end and rare and now they are commonplace. There have been a number of threads on craigslist about it. But according you you, rents are flat. OK whatever.
September 5th, 2008 at 10:47 pm
WG, do you report income on rentals at all? I am curious about your cash flow positive properties. How much rent as a percentage of your purchase price do you need to charge to cover your mortgage, expenses (I guess it is negligible for you :)), and taxes?
September 5th, 2008 at 11:17 pm
madhaus - the house on Flicker is “pending without release.” Guess that means escrow is pending?
I’d be surprised if the sale price was over $1M. It’s pretty small for that price point, even in 94087.
September 6th, 2008 at 7:48 am
WG
Did you even read the article you linked? Your “data” is irrelevent to rentals of single family homes . ITS NOT THE SAME MARKET!
“The report incorporates only data from housing complexes with 50 or more units”
blog comments are the lowest area of discourse there is, so why am i surprised.
September 6th, 2008 at 8:44 am
rick most of my properties are cash flow positive but I only talk about the new houses I buy here on burbed because stuff I bought in 97 isn’t really relevant- on almost all of those old places I refinanced and in some cases I took money out to buy new places , etc. So it is difficult to determine how much cash is coming in vs what I paid for a specific place. At this point I am overall cash flow positive in all my rentals combined. My new places are just barely cash flow positive by maybe $50 per month which means if something really goes wrong like plumbing I am out. Also when I buy a place I might put $20K into it initially while it is empty to paint, sometimes new flooring etc. to clean it up before renting. So you have the 10% down that I put down and this this $20K improve that is dead money getting into the house. At that point, for the recent purchases the rent fairly closely matches mortgage + escrow, since I buy under $450K. It is rare to be able to buy an investment property and immediately be able to rent it for close to mortgage, in the past, the benchmark was to buy an investment property and try to rent it for 66% of the mortgage + escrow (assuming the 33% was a writeoff- which never really made sense anyway since rentals are not taxed in the same way as SFHs). But anyway this is one of those rare times where buying for investment makes sense in the bay area.
Not all houses you buy for $450K and below can rent for close to mortgage by the way. You must be very selective about area. You have to buy in a good area even if the house itself is a dump.
September 6th, 2008 at 8:52 am
WG, thanks for the information. However, I am still curious, I think legally you need to report rental income but probably people seldom do. If you feel uncomfortable then I will ask a realtor buddy who has rentals.
September 6th, 2008 at 8:54 am
notworthit, that chart shows that Santa Clara, San Mateo, San Francisco and Mountain View have a MEDIAN RENT of effectively $2K.
When you have a MEDIAN RENT of $2K, that is for all rentals - long time renters and new, it means the median for new renters is approx 20% more than median (because most landlords myself included don’t raise rents, and there are some rent control measures in place in various types of dwellings in some cities).
Effectively we are in a situation where a new rental is approx $2400 to rent. Thats too high to argue that rents are flat and only the low end is going up which is what you are trying to argue- the “low end” is now ABOVE where houses were renting for just 3 years ago. If a MEDIAN apartment is $2K it means a median HOUSE is $2800-$3K.
I don’t rent places for these high rents though because I agree with DreamT, whatever is causing this (and I don’t know what it is) is not sustainable. If you rent a decent house for $2500 that renter will feel like they have a deal and stay. Since it covers my mortgage I have no issues with that level rent either. I think a lot of these landlords are using leasing companies that are trying to drive high rents (because they are paid commission based on rent). Leasing companies also never allow pets of any kind, even if the place is completely hard surfaces (no carpet), which is also a mistake imho. People who want to make houses into homes tend to want a pet. And with no carpets what is the issue with that?
September 6th, 2008 at 9:05 am
no my sense is everybody reports rental income, because the tax equation on rentals makes it desirable to do so. With a rental you depreciate the property on a schedule E, and if you use a schedule E, you obviously have rental income. But the depreciation way outweighs the offset of the rental income. The only people I know that don’t use a schedule E are those that had a SFH that they once lived in that they turned into a rental, those people have a different decision to make because they have a lot of equity in the home, and a schedule E is less favorable on capital gains when you sell than a SFH. Those people might call that second home a “vacation home” instead of a rental just to keep the asset as an investment. I believe the new mortgage bailout might have cut some of these loopholes - there is also a 1039 exchange that I have never done that turns high equity homes into rentals. But for real RE investors you want to buy and immediately start with a schedule E and get the depreciation, you can’t lose with that.
September 6th, 2008 at 11:50 am
Quick question for you WG - you can use all of the mortgage interest on a rental to offset the rental income, yes? A friend told me her accountant said no, but that doesn’t make sense to me and the casual research I did on the IRS website seemed to support my view.
September 6th, 2008 at 2:48 pm
wow- well its a very complicated subject, and I have a tax person anyway so this might not be up to date. But basically, you deduct all expenses, including taxes and mortgage, repairs etc against the RENT. This will likely mean you have a net rental income of 0. Then, you depreciate the entire cost of the house (using I believe double declining balance depr but not entirely sure) which is a different line item “expense”, and that carries forward to your return. I try to buy cash flow positive and with a lot of rentals over time I am cash flow positive so offhand I don’t know what happens when the mortgage exceeds the rental income, because it is offset against the rental income. It probably is not deductable against regular income as a single family home mortgage is- thats probably what she meant. But the depreciation is just as much anyway. I’m not current and may need a touch up.
September 6th, 2008 at 7:58 pm
Thanks - that answers my question. As I thought, you can deduct the mortgage interest against the rental (passive) income. Last I heard (years ago) you can only offset expenses against passive income, plus about $3k or $5k maximum against earned income. I don’t need more detail than that.
September 8th, 2008 at 2:29 pm
nomadic, yes it is Pending w/o Release, but my point was the houses priced correctly went Pending within 10 days. The comment I linked to was 6 weeks old. This one has been on the shelf a while, so I am sure it was overpriced, it will not sell for seven digits. There are several under $1m homes in CUSD now, the people selling this place missed the price drop.