<p>Do you want me to think about it? or you are thinking about it? lol…</p>
<p>Think about that 1.8Million bargain in Tibron, what will be the ebitda?</p>
<p>A home is different than an apartment. </p>
<p>The house would probably rent for $10,000 a month. The house isn’t selling for $1.8 million.</p>
<p>Back to the apartments, yeah the prices for apartments are based on speculation. Dangerous game when the income doesn’t support the price of an apartment building. </p>
<p>If you are paying all cash(equity), what is the down side?</p>
<p>Your risk is high if cap rates increase. You may be locking in crummy returns. The building may eventually need work. </p>
<p>You disagree?</p>
<p>you should walk if there is too much deferred maintenance or renegotiate the price. You need to check out everything, including below market rent, job condition and prospects, competition, quality of the tenants and so on so forth. You are in a Deep disadvantage if you buy out of state, you just cannot fly in and think you know all local conditions. The owner knows because he is local and you are not.</p>
<p>The rent increase should cover cap rate decrease, if not, its your call. Real Estate is not bond, you are in for the long term, you cannot switch around.</p>
<p>I will never get into a TIC, that is the real risk.</p>
<p>Being out of state bugs me. We are doing everything you suggested. </p>
<p>Yes. Not interested in a TIC.</p>
<p>You ARE in TIC!</p>
<p>We are? I thought we were in a llc. I guess there are similarities.</p>
<p>You don’t like partners? (I am not that thrilled myself). </p>
<p>LLC, TIC are the same. Once you are in, you are locked, unless some partner want to buy your shares. In a 4 share TIC your money is no longer liquid… You require unanimous agreement to sell.</p>
<p>Yes, either you own it lock stock or none. All my clients do not have partners in real estate other than their wife. That is different from REIT, where professional management makes decisions and you are only a stock holder.</p>
<p>Yeah… I was kind of looking at a tic as actually living in one of the units. You are right. There is a downside. </p>
<p>I figure once I am in, I am in until death. </p>
<p>So… I am only putting in what I can afford to lose. </p>
<p>I don’t need to invest as much with partners. The main guy I have known for over 20 years. He is much younger and he works hard. I don’t work hard enough to own a place by myself. I hate when a toaster breaks. Not a good sign for a landlord.</p>
<p>I would like to own a share of two buildings and that’s it.</p>
<p>Ok if you are in until death but others want to sell, what happens? It is the fastest way to turn friends to enemies. </p>
<p>Also, if you are in it until death, cap rate is not important, as long as the rent is good, you have to be ok with it.</p>
<p>Some times the sell decision is uncontrollable. Lets say you live to 90 and others die before you, their decedents want to sell, how can you handle that. Think about divorce, separation… in that line on the 4 “partnership”…</p>
<p>Yep. I think the numbers are ok. I don’t care if we sell or not. </p>
<p>I have been friends with the other guys for over 20 years. I have gone thru a lot with these guys. </p>
<p>I brought the guys together because I know we aren’t going to have personality problems. I am too old to work with people who have problems and I have had more than my share of those problematic people. </p>
<p>Everybody in the deal is a high quality person. That comes first. Everybody has experience losing. </p>
<p>I want to make between 8 to 11 percent a year. (We are using leverage ). I am not
counting on appreciation. I don’t think there will be a lot of appreciation. </p>
<p>Are your clients buying 3 and 4 cap buildings?</p>
<p>I have handled a large property that has over 20 “owners” all in the “family” and that deal was never put together, because there are lawyers, accountants, re agents etc in the “ownership” and I was dealing with the 25%… my word! One of the “owner” took my offer and went around town to all the potential buyers… what a nightmare…</p>
<p>Yeah…sounds like a nightmare. We aren’t doing this deal with lawyers, accountants, etc. I am not doing deals with lawyers. A friend of mine did one and although it is going to work out, everything is a fight.</p>
<p>If this deal has any major issues, I am walking. We are going to have 120 days and we are a long way from consummating the deal. </p>
<p>My wife says when I see the place, I will hate it because I am used to Marin. :)</p>
<p>no you miss the point, some of the owners are lawyers, accountants etc, by marriage! The property was owned by one person, but he allow to have kids and grand kids doesn’t he?</p>
<p>Yes some of the clients looked at low cap rate deals in Palo Alto, Menlo Park, Mountain View etc.</p>
<p>In your case you are buying headaches X 4… after 20 years…</p>
<p>Palo Alto, Menlo Park, etc…there isn’t any rent control in those areas, correct?</p>
<p>So…these investors are looking at the very long run?</p>
<p>Do you think there is a bubble in SF and Silicon Valley? Recently my future son in law told me he thinks there is a bubble. Kind of shocked me because he never said anything like that before. </p>
<p>no rent control on Peninsula. Besides we are not looking at residential… </p>
<p>Regarding bubble… its everyone’s guess.</p>