Money Monday: Real Estate Bubble

Hey people, if you haven’t noticed, we are experiencing a housing bubble: skyrocketing rents, zero inventory, and astronomical offers in terms of both volume and price. This is not the time to buy. Back away, people. Back away! I’m completely flabbergasted at how many people have decided that THIS is the time to buy. Very odd. Don’t get me wrong, I’m in the hunt myself, but I’m not paying up for a shack. I’d rather stick to our 1-bedroom, thank you very much. I have zero pressure to buy.

A coworker said that NOW is the time to buy into a new condo development because the price just keeps going up and up. And I’m like, dude, that is not sustainable. Use your brain! I asked him what the monthly HOAs are and he said $450. What a joke. Seriously, these people deserve to go into foreclosure for making such dumb mistakes.

Let’s do the math with an example.

37 years old – because that’s how old I am

$700,000 purchase price for a nice 2-bedroom condo in San Francisco

25% down – because these days that’s how much you have to put down to compete

30 year loan at a 3.5% interest rate – which is generous for rates right now

Mortgage + 1.14% property taxes + $450 HOAs = $3,425 housing expense per month – that doesn’t even include electricity, water, garbage, cable

Imagine still paying $3,425 at 65 years old? Because I’d still have another 2 more years to go. I don’t want to be coughing up that much money in my twilight years. I want to be on the beach in Central America drinking raw coconut water and eating shrimp.

I have this ongoing debate with my mom because she is a firm believer in owning a home. She’s one of those old school types. I questioned why should we be shackled to such a high mortgage 30 years from now when we can easily rent a 2-bedroom in a podunk suburb for peanuts. She countered that once your home’s paid off, the only expenses left are utilities and property taxes (which I should add are insane if you live in San Francisco). I don’t know. I’m still not sold on this home ownership dream. But since my parents are, it’s good to know we can always move in with mom and dad!

Money Monday: Finding a Business Partner

Let’s make a deal! Anyone interested in becoming my business partner?

The more we rent places out and experience first-hand how owners bring in a a steady high rental income, the more I’m convinced that this is the path to early retirement. We are currently renting a super cute flat in Potrero Hill with an adorable sunny garden that makes me sing. The owners live above the flat and I’m pretty sure that this rental more than covers their mortgage.

I am now dead-set on finding the ultimate property with an in-law or separate unit to cash in on the rental income. There are always multi-unit properties available for sale. Here’s my question. How do you find investors who are interested in collaborating with you?

Please comment below for all to see.

I Found Your New Apartment

Is anyone looking for an apartment in the city? Because I while away a portion of my free time assessing apartment and home prices, I found this 2-bedroom, 2-bath in Potrero Flats for $2700 on Craigslist. What a deal, right?! Open house starts tomorrow.

If any of you readers pounces on this, I expect a finder’s fee!









Since we’re on the topic, I am totally torn on whether or not to sell my condo. I need to put together a decision matrix! There are pros and cons to both options. If I could extract the equity from our condo, the world is our oyster in terms of buying a new place. But with that money un-touchable, we are constrained in our choices. I need to win the lottery.

Home: This Was The One

I wanted this home in Bernal Heights. Open house was on a Tuesday in the afternoon. I asked if I could see it over the weekend; the agent said offers were due the next day and the owner would most likely take one of them. She was right because a sale is now pending.

A home in San Francisco with no HOA fees plus a $1,000 studio below the home to offset your mortgage. Are you kidding me?  I would have overbid the $700k asking price by $50k. If you put 20% down on $750,000 subtract the rental income of $1,000, your mortgage would be $1700!!!

This was THE property of properties to buy in the city.

Here’s the studio.

Future Home

I want this house, would die to live here. Coming home would be like stepping into a Palm Springs spa every day. I wouldn’t leave. No need to vacation. This would be bliss.

It just went on the market last month and is listed through a friend’s real estate firm. I refuse to say where it’s located except that it’s somewhere in the San Francisco Bay Area because I swear, I want to buy it.