***Official Real Estate Thread***

CutnSnip

Phil Edwards status
Sep 11, 2018
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Probably dropping in on you, California
Mom and pop landlords — especially when renting something that’s on their property — are much more likely to value a balance of revenue and having a good tenant/neighbor.

A corporate landlord is primarily (if not solely) focused on maximizing revenue.
true dat tho as the tenant, its a double edged sword. With corporate, nobody meddling in your buisness - take the money stay out my life kind of sh!t is sometimes worth the premium. not to mention 24 hour maintenance teams an a cheap security deposit.

Private, all up in your sh!t if they live close. Opinions on how you decorate, hang a picture - usually more of a security deposit. Things take longer, things can get more personal. I just moved and some private landlords wanted first,last and security deposit equal to one months. Who wants to drop 10k to move into a rental?

its nice to have the choice.
 

Bob Dobbalina

Miki Dora status
Feb 23, 2016
4,301
4,708
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I just moved and some private landlords wanted first,last and security deposit equal to one months. Who wants to drop 10k to move into a rental?

I'm not sure how much it varies by state/county/city, but I don't think that sh!t is legal anymore.

I seem to remember it's limited to 1.5% the monthly rent. But that might just be here.
 

Bob Dobbalina

Miki Dora status
Feb 23, 2016
4,301
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this, and I wouldn’t want it any other way. i think there are good and evil on both sides of the fence, you highlight some great points, and having both types of landlord is a win for the renter.

it’s nice to have the freedom to pick your poison.

Currently, it kinda sucks.
But I understand what you are saying.
 

PJ

Gerry Lopez status
Jan 27, 2002
1,025
734
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Shrub Oak,N.Y.,USA
Corporations buying single family homes - I don't see the long term success of that.
If you look at the annual income and expenses reports done by IREM (Institute Of Real Estate Management) which collects the data from apartment mangers and owners all over the country you'll see that when treating a property like you would treat a CD (what is my % return on investment if I do no work or management at all myself) about 45% of Gross Rental Income goes to expenses, some of which take 20 years to accrue, such as replacement of a boiler.

An appraiser uses these reports to do an income based appraisal like this: $3500 per month rent x 12 = $42,000 per year Gross Income – (42,000*.45=18,000) = $24,000 net income. Next question is how much cash would we be willing to invest to get a return of 24K? Apartments are riskier than long term treasuries (the “No Risk Rate”) so let’s say 6% for an apartment building. So 24,000/.06=400,000. So if we bought the building for $400,000 we would get a 6% return. I’m getting 5% on a CD right now.

The appraiser will also use two other methods, comparable sales value and replacement value. Replacement value is (land value + the cost to build new) less the depreciation due to the age of the building. The three methods will usually come out closer together than you would think then be averaged to come up with an appraisal value. And no – there’s no prospective appreciation in value in that math.

In my experience the more units in the building the more the above holds true. 100 unit buildings are bought by real investors. When you get under 8 or 10 units retail investors who don’t know the rules start buying. 3 Family houses and down are really retail and usually make no sense price wise according to the above. So I would say that historically retail investors and owner-occupiers have kept professionals out of one to three family houses just by being willing to pay more. Maybe these companies are forecasting never ending appreciation and pretending that the depreciation they are deducting from income is not real and that’s how they make it make sense financially. Or maybe they couldn’t find any apartment buildings to buy?
 

grapedrink

Duke status
May 21, 2011
26,118
14,903
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A Beach
this, and I wouldn’t want it any other way. i think there are good and evil on both sides of the fence, you highlight some great points, and having both types of landlord is a win for the renter.

it’s nice to have the freedom to pick your poison.
I had a landlord who took over ownership of the house by forcing the sale on his co-owner brother who he inherited the house with. It was understood that we would be out in the next few months because we never had a formal lease. Next 2 weekends he was over clearing vegetation with power tools in a part of the yard down by the creek for his new hang out spot.

When I approached him he said, "Hey, you mind if we come by on weekends and hang out by the creek and grill hot dogs?". I'm like yeah, "I do mind. I'm not okay with that" and watched his dumbass deflate and slink away. Something like that would never happen with a corporate landlord because they know the rules inside out and are afraid of getting sued. On the flip side, the handshake deal we had under the old landlord wouldn't have flown either.
 

grapedrink

Duke status
May 21, 2011
26,118
14,903
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A Beach
Corporations buying single family homes - I don't see the long term success of that.
The rule of thumb is that the monthly rent needs to be 1% of the purchase price in order for it to cash flow. This isn't a perfect rule because property taxes and insurance vary wildly by state but it's a starting point for evaluating if a place will work or not. 5-10 years ago this was much easier but it's pretty tough to find nowadays, especially with higher interest rates. Pretty much restricts you to parts of the country where you can still find houses for <$200K and yes, with multi-family the numbers start making more sense as you pointed out. If you buy on the coasts, you are banking on appreciation and rent increases to eventually have a profitable investment.
 
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sdsrfr

Phil Edwards status
Jul 13, 2020
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San Diego
I had a landlord who took over ownership of the house by forcing the sale on his co-owner brother who he inherited the house with. It was understood that we would be out in the next few months because we never had a formal lease. Next 2 weekends he was over clearing vegetation with power tools in a part of the yard down by the creek for his new hang out spot.

When I approached him he said, "Hey, you mind if we come by on weekends and hang out by the creek and grill hot dogs?". I'm like yeah, "I do mind. I'm not okay with that" and watched his dumbass deflate and slink away. Something like that would never happen with a corporate landlord because they know the rules inside out and are afraid of getting sued. On the flip side, the handshake deal we had under the old landlord wouldn't have flown either.
Always remember protections for SFH are in favor of the owner while condos, apartments and townhomes towards the tenant in places like California.

I don’t remember the federal law that applies but SFH are exempt from any local ordinances, iirc.
 

grapedrink

Duke status
May 21, 2011
26,118
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A Beach
Always remember protections for SFH are in favor of the owner while condos, apartments and townhomes towards the tenant in places like California.

I don’t remember the federal law that applies but SFH are exempt from any local ordinances, iirc.
Not sure what you mean? Are there actually separate landlord/tenant laws for multi vs SFH? I've always heard that getting a deadbeat tenant out is a nightmare in California no matter what kind of unit it is.
 

sdsrfr

Phil Edwards status
Jul 13, 2020
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San Diego
Not sure what you mean? Are there actually separate landlord/tenant laws for multi vs SFH? I've always heard that getting a deadbeat tenant out is a nightmare in California no matter what kind of unit it is.
Yep, iirc its something from the 70’s, passed federally. states and local municipalities cannot do chit bc the fed said so.

its specific to detached SFH, iirc, but basically rent control or paying the tenant‘s X months rent for no cause eviction do not apply.
 
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ringer

Tom Curren status
Aug 2, 2002
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npsp

Miki Dora status
Dec 30, 2003
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down the hill and to the right
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