Saratoga, California is located at base of majestic redwood forest forming the locally known Saratoga Gap on the northeastern and eastern slopes of the Santa Cruz Mountains. Ohlone Indians occupied this territory during their heyday as evidenced by artifacts and tools found in these foothills. Ordered by the Spanish government in 1776 Juan Bautista de Anza also travelled through Saratoga on his way to the Monterey Bay. Half a century later a large land grant to Jose Noriega and Jose Fernandez of the land area which today is known as Cupertino, Campbell, and Saratoga was consummated. Later Manuel Alviso bought this parcel and renamed the “ranch” Rancho Quito. The early beginnings of this little town gave no clue what it would someday become. Who knew this sleepy little village would someday become the home of some of Silicon Valley’s most famous business people?
When you’re thinking about advantages and disadvantages of owning a rental property, it’s easy to narrow the thinking down to the equation of rental income minus expenses equals your profit. This is a basic formula to start with, but there are so many different factors and variables that go into making it more complex than it seems. Many rental property owners don’t realize how much of their own time and effort is required for upkeep, taking tenant calls, collecting rent, enforcing leases and more. This brings us to the point of whether it’s worth the investment of your own time to handle these duties, or if paying a property management company to handle them for you is the way to go. Everyone views these perspectives differently but getting an overall understanding of both sides will help you make the decision that fits your lifestyle best. Finally, most people I meet don’t realize there are actually four (4) different ways to make money in rental properties – spending your time managing the property might not always be in your best interests.
For some people, owning a rental property can seem like a dream scenario. For others, it may seem like a nightmare they’ll never wake up from. It’s only natural to have mixed feelings about owning a rental property, since there are so many different pros and cons to think about. Even when you take the time to weigh them all out, it can still seem like there are just as many risks as there are rewards. Most of the time, a person’s experience owning a rental property won’t be a complete dream scenario where there aren’t any issues and the rent checks just keep flowing in. But the experience won’t be a complete nightmare either. It will be somewhere in between. There will be plenty of ups and downs, things you can plan for and things you get blindsided by. Everyone has a different risk tolerance, so making a list of the pros and cons of owning a rental property can help you decide whether the risks are worth the rewards for you.
I rarely use the “M” word because I’m not an industrial hygienist or a laboratory. However, mold is commonly talked about in the real estate world and is everywhere – that simple fact doesn’t take away from the seriousness of it. A mold infestation or contamination can be extremely damaging to a property and to investment property managers. Not only does mold put your tenants/residents at risk, but you and the property owner may have to spend a significant amount of time and money to properly mitigate the environmental condition and make the rental unit a safe and comfortable place to live. Moreover, mold creates a significant stigma on a property which most certainly attaches and affects value and desirability. In addition to educating yourself about mold, one of the best things you can do is focus on the common areas (bathrooms, kitchens, laundry rooms) where mold grows and do your best to prevent it by keeping these rooms, walls, ceilings as dry as possible. However, if mold/mildew growth is already there, it’s time to take care of it before the issue becomes more serious. Remember, a property manager and/or landlord’s primary duty is to provide a habitable rental unit – a unit with mold is not habitable.
AIRBNB, VRBO, and Other Short-Term Rentals (STRs) Uses Continue to Escalate Causing Cities, Counties and HOAs to Make Regulations or Outright Restrictions Before We Lose Our Neighborhoods
Transitory residencies, also known as STRs are expanding and growing everywhere we look. Internet based services like AIRBNB, VRBO, help owners rent out their properties on a short-term basis for a small percentage fee. Many owners, especially those on fixed income budgets see this as an opportunity to have an additional income stream save for the personal privacy issue they must grapple with. Moreover, with the current housing shortage in the San Francisco Bay Area most local jurisdictions welcome any additional avenue of increased housing including STRs and accessory dwelling units ADUs, notwithstanding the potential frictions caused by them within the neighborhood they reside in.
After performing a comprehensive and exhaustive analysis and identifying realty as your next investment, one of the most important tasks real property investors can do before pursuing an investment strategy is to determine the risks associated with it. It’s virtually impossible to completely avoid risks so the more you can understand about your investment by conducting due diligence, the more you learn about your risk strategy and mitigation options, the better your chances will be of making a successful and profitable investment. Doing homework, asking many questions, and performing comprehensive investigations are just some of the things that needs to be done before you pull the trigger. Just winging it is not a strategy.
With Google’s announcement of a planned new campus in San Jose, California, investment property managers are cautiously optimistic about the opportunities that may soon become available. The plan is for Google to build an impressive eight-million square foot campus, which is about eight times as much as the office space currently available in San Jose. The transaction is not yet finalized because there are many details to be ironed out due to the sheer magnitude of the project. The entire downtown core of San Jose will be revitalized and expanded to reach levels that were never previously imagined. Small investors should be proactive and start to search out deal and be ready to make a move if you truly want to benefit from this large-scale development project. If nothing else, start with investigation and due diligence of any and all properties surrounding the proposed project – your real estate education IQ could be improved just by this step alone.
The combination of rising home prices, a shortage of available homes and a new California state ordinance for “Accessory Dwelling Units – ADUs” may lead to the resurrection of a robust inventory of granny units, also known as ADUs. ADUs are nothing new; they have been built for centuries but are not all that well known – most people call them granny units. However, due to strict local regulations like parking restrictions, cost prohibitive permitting costs, feasibility of connecting to municipal services, i.e., sewer, water, electricity, residents have historically had significant challenges implementing these buildings onto their properties. However, there is now a move afoot to simplify and streamline the process of getting ADUs or granny units installed to reduce the chronic housing shortage in certain geographical locations, especially Silicon Valley.
There are many amazing reasons to live in the Silicon Valley and the surrounding areas. A seamless, traffic-free commute is not one of them, though. That’s one huge benefit of investing in Willowgate real estate right in the heart of Mountain View – home to Google. This charming community is located minutes from Central Expressway and Highway 85, Stanford University, as well as near a Caltrain stop which can take you to San Francisco or San Jose along the Peninsula route. Its outstanding location allows residents to spend less time commuting and more time enjoying the outstanding quality of life in Willowgate.
Due to external factors such as significant capital gains tax exposure many people are choosing to rent out their homes versus selling. The more forwarding-thinking people are employing a strategy where they rent their property for two years or so, then sell their property (maintaining their IRC 121 & 1031 benefits) and exchange into another more potent cash cow. After all, in California a real property sale can trigger a 38% tax hit the following April due to capital gains issues – assuming one’s gains are greater than the IRC 121 exemption of $250,000 for a single person or $500,000 for married couples. Thus, many people are renting by themselves or through a property management company to preserve their tax efficient options. Below is a quick hit list of easy and inexpensive design ideas which may help you separate yourself from your competitors who have also listed their homes on the rental market. Importantly these improvements and/or expenses are either tax deductible against rental income or depreciable.