Interactive Investment Property Worksheet

San Francisco Bay Area Property Manager – Do It Yourself! 

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In the previous blog we talked about specific market indicators and how one goes about finding and understanding those indicators.  Now that you understand how to read the indicators its time to put all your numbers into the attached worksheet to compare oranges to oranges or apples to oranges as they say.

The two below spread sheets are examples of the process used to determine carrying costs.  Feel free to download the link below and plug in your own market numbers in the YELLOW cells to analyze how your properties are currently preforming.  The results may convince you to actually sell a property moving your investment dollars to a more secure cash flow positive property.  With the tax advantage of a 1031 exchange moving your tax dollars without the immediate tax penalty of a sale is a great way to stay nimble.   Both individuals and investment groups use the 1031 exchange tax rule to buy and sell properties maximizing returns without the penalty of taxes similar to an IRA with an investment banker where there is a final or partial sales to cash out the investment.

With the San Francisco Bay Area having some of the highest real estate prices and rental rates in the nation it is more crucial than most to manage your investment dollars.  Wrong decisions can lead to potentially thousands of dollars lost, while educated decisions lead to monthly gains when combining equity increases, rental income and the fees of carrying costs.  A good rule to follow is to determine the amount of leverage you need to withstand any down markets.  Making $$$$ in the short terms is always a potential but making it in the long term has consistently been a guarantee.

In the final part of this series we will discuss how to go about combining the indicators and investment property worksheet to develop a real estate portfolio that fits your goals!!!!!

1 purchase left $115,024 on the table

Investment Property Worksheet Download

A couple things we’re working on for our next FREE investment template release is a neighborhood grading scale directly impacting the algorithms in areas of rental growth rate and resale value along with interest rate and term adjustment features.  Please comment on any additional features you would like to see in future releases.

If property management is more than you want to take on don’t hesitate to ask us to do all or a portion of your property management.

San Francisco & San Jose rental management indicators continue to show strong growth in all sectors

We all remember the international crashing market a few years ago but how many are talking about the markets that have rebounded well past the previous highs in both rental rates and sales prices. Of the top 5 fastest growing markets, 2 are in Northern California; San Jose and San Francisco. Contributing to this is the fact that California ranks 1st with the most fortune 500 companies in the U.S. Companies like Chevron, Apple, HP, Wells Fargo, Google, Intel, Cisco, Oracle, Ebay, GAP, VISA, Facebook, Yahoo and Intuit are just a few firms headquartered in the San Francisco Bay Area. The executive staff of these companies lives in affluent towns outside of San Jose and San Francisco like Atherton, Menlo Park, Palo Alto, Hillsborough Los Altos, Mountain View & Burlingame along with a number of other small communities on the peninsula. So who is buying and selling these properties? The educated investor is! Every time the market goes through these ups and downs the educated investor follows 1 of 2 basic formulas. They either ensure they get in and out of the market maximizing both profits in rental return and equity gain or buy at a leveraged level to withstand the down markets. At Property Force we manage our San Francisco rental properties like a money manager manages a financial portfolio ensuring you’re one of those successful stories. Like a money manager watches certain market indicators we also focus on market indicators. Some of these indicators include rental rates, location, neighborhood trends, city’s master plan, lending programs (LTV limits) and interest rates, property types, foreclosure and late payment ratios, new real estate backed investment funds, mortgage backed security sales and REIT (real estate investment trusts). These indicators and others represent how the big money is trending allowing us to advise our clients individually as it relates to their own short and long term strategies. Ask yourself this question. If the big money is using these indicators to make buying and managing decisions why aren’t you!!! The simple answer is it’s just too hard for the smaller investor to stay on top of all the information on a monthly basis. In this series of blogs we will attempt to give you some real estate investment guidance along with an interactive Excel spreadsheet helping you (the investor) apply all the carrying costs associated with the management of investment property. Let’s now talk about these indicators in more detail.

Rental Rates are increasing at an astounding rate once again with no end in sight. The trick is watching the rate at which rental rates raise. When the market begins to see rental rate increases slow or stabilize its time to sell or look for a long term tenant who is working in a stable sector (not a startup). A six month lease may be a better idea in a market beginning to see signs of rebounding. Having the right renter at the right time is a great way to manage part of the investment risk factor as it relates to the return on investment.

Location and neighborhood trends – As important as finding the right tenant it is also important to ensure your investment dollars are located in the right location with the best neighborhood trends. To put it simply, the better neighborhoods with the best amenities hold rental rates higher longer and are the first to rebound. The better neighborhoods take less time to rent keeping days off the market at a minimum.

Lending programs and interest rates – LTV (loan to value), DTI (debt to income ratio), interest rates, programs. When lenders increase LTV’s from 75% to 80% it’s due to the secondary market demanding more of that product as their customers, insurance funds, retirement pensions etc. are looking to move larger portions of their portfolio into real estate backed securities providing those increased rates of return to their shareholders. Requiring less money down or increasing the DTI from 44 to 47 are both ways to put more buyers in the market increasing the amount each buyer can borrow in turn supplying the secondary market. Remember the 80/20 100% purchase loans and the 125% refinance loans? They are both indicators to watch as that type of lending is not sustainable. For example, you may want to sell the property or put more money down decreasing your monthly carrying costs in anticipation of a tightening market.

Property Type – The best example of this is the San Francisco market with rent control. Single family residences are not subject to rent control rules so if the market rental rates increase 10-30% you can also raise your rent accordingly. Property type could also mean a 4 unit instead of a single unit allowing you to spread your risk and expenses over multiple properties. How about maintenance? What type of roof? How old is the home? If a home is built prior to 1978, there may be additional expenses when remodeling due to asbestos and lead based paint. Older homes are also harder to sell unless they are completely updated. When in a tight market savvy investors want to focus their investment dollars on simple, easy to rent, middle of the road properties. When the market is rebounding some of those “on the edge” or slightly risky products can provide huge rates of return. These types of properties are not something we would advise to a client living off their monthly owner draw.

Understanding a Cities Master Plan – is a good way to gain an understanding of what the city council plans on doing from an economic level over the short and long term. Each city, township, county etc… has its own set of fees and tax rates for both business and residences. In most cases it is clear what the city is focused on by understanding how it taxes its residents and businesses. If it is not a residential focused community you can expect less approved building permits for a Trader Joe's and more approvals for an office complex.

Bay Area Property Management Changes to come

The team at Property Force wants to extend our thoughts and prayers to the families of the 6 individuals who perished in the collapse of their San Francisco Bay Area apartment balcony last week.  We also wanted to take a minute to inform both renters and owners of a few questions you should be asking of your own properties to insure you, your tenants and their guests are safe and secure.

Niall McCarthy A Burlingame lawyer who has represented 5 Bay Area families with similar balcony collapse lawsuits says that this was 100% avoidable and that the San Francisco Bay Area is a ticking time bomb with these types of structural deficiencies. With Berkeley building codes for balcony’s increasing from 60 pounds per square foot to 100 in 2007 it makes you wonder if Berkeley has known about this problem since then?

Bay Area Property Management firms and independent property owners can expect to see additional ordinances for rental properties with any type of cantilevered wood deck.  A cantilevered wood decks supports extend directly off the side of the structure without any support from below, walls or poles.  The issue with these decks is specifically the dry rotting of the wooden structure and supports that can go unseen. Due to the harm occurring within the wood itself it’s hard to visually inspect and identify.   Having these decks structurally certified will add a big expense to investment owners and may even make these types of properties less desirable to lenders, buyers and renters in the future.

Hiring a structural engineering firm, building inspector or home inspector may be your next best step to ensure your investment and renters are structurally secure!

San Jose Property Management Poised to Grow

Why are the big commercial real estate buyers still in acquisition mode and what are they buying?

Investment groups from all over the world are spending big to plant their flag in the highly lucrative San Francisco Bay Area commercial market. If you were there for the last Bay Area real estate boom you know what to expect and with the whole world joining in this buying spree confidence is at an all-time high. While the Bay Area commercial real estate market has definitely seen a turn around one still needs to understand the market to ensure you’re making the best buying decisions. An example of this would be the recent Shorenstein deal in North San Jose. The 1985-built Rose Orchard complex at 110-180 Rose Orchard Way is just 30% occupied, with 220,000 square feet of available space which happens to be just outside of Sunnyvale and Mountain View. The Rose Orchard complex is the perfect setup for all the support needed for the upcoming industry growth. While buying an almost vacant building to some might be scary the good part is not having a number of long term leases with options based on the markets rates set over the previous 3 year trend.   With the building currently at 30% occupancy and no doubt a 3 year trend as bad the acquisition cost at $230 per square foot will be looked back at as a steel. Shorenstein is poised to buy low, own a cash cow for a number of years then unload at a large gain in $ per sq/ft.

Our own property management industry will see a direct impact as this demand for commercial space goes hand and hand with the availability of residential rental space. Increased rental rates will drive an increase in tenant acquisition and full service property management for both new owners entering the market and owners who currently manage their own properties wanting to pass the daily management and stress over to a property management firm.

If you’re an investment property owner do yourself a favor and do the same research as the big buyers by finding out where the best neighborhoods are to buy investment properties.   Focusing on areas like price per square foot as they compare to rental rate in each market along with understanding each properties potential based on historical data is key. Understanding all the things that go into your monthly PITI payment + market rate of return + direction of the market = highest rate of return decision. Additional items to think about are any local ordinances that could affect your growth rate, crime rate, commute +/-, distance to public transportation, cities master development plan, etc.

Purchasing and owning is the easy part, managing an investment property is the hard part. Understanding your market competition, max market rental rates, lease terms, etc. can also impact your bottom line. One example of the wrong decision is to put a new roof on a property instead of a new kitchen and bath. We find owners doing things like new windows and new roofs which may make you feel good but are very costly resulting in zero potential for increased rent. People pay for what they see and use so fix the roof, have failed window seals fixed and spend your money where the return is the greatest in both rental amount and resale value.

Property Management it’s what we do!

Improved Property Management SF opportunities

When 2014 started, the San Francisco Chamber of Commerce specifically identified seven points to focus on to help support the employers in the area, improve the economic prosperity and maintain the best quality of life possible.

Working with the Board of Supervisors that encouraged City Hall to create the proper legislation that supported the employers of the area, the Chamber set out to create the best conditions possible for businesses and residents of the region. The result was a substantial improvement that demonstrated how the proper legislation can really help shape employment opportunities and business expansion in the region.

The property management SF division of our firm also benefitted as well with a surging economy helping to drive up home sales while still keeping most homes affordable for new residents.

Improved Affordability

Here, three measures passed that bolstered housing production and availability which included the following:

More Dwelling Units Constructed in the Castro Neighborhood.
Granting Legal Status to Existing Dwellings Without Permits
The City Committing to Producing 30,000 New Housing Units by 2030.

In addition, a new law designed to place a tougher burden on property owners was rejected which helped people to rent their properties more freely than before.

Improve Economic Stability

Here, a special use district was created in Hayes Valley in which the need for a grocery store was recognized. Otherwise, a ban might have been applied to this particular use of the property. In addition, there was a new ordinance which required large hospitality employers to retain their employees for 90 days when control of the establishment changed hands, a new revision to the Health Care Security Ordinance and an increase to the minimum wage to $15 by 2018.

Greater Mobility

Here, There was a new MTA Commuter Shuttle Pilot Program that was established which helped this environmentally friendly program to go forward and a General Obligation Bond of $500 million for investments into the City’s infrastructure in terms of transportation.

Economic Growth Issues

There were a number of issues passed which helped to spur economic growth. These issues include the following:

Restore Sharp Park Golf Course and Protect the Surrounding Area
Renovation for the Masonic Auditorium
Treasure Island Development
Transformation of the Schlage Lock Factory Site

All four of these measures are designed to bring in more people to the region thanks to the renovation and property development.

Increase Safety in Community

Here, there were four issues that passed which helped improve the overall safety concerns in the region which included the following:

Approval of the Hall of Justice Replacement of the Proposed New Jail
Makes Graffiti Vandals financially Responsible for their Actions
Earthquake Safety Bond of $400 million
Approval of Laura’s Law which provides for Recovery Services and Assistance

A Fair Hire Ordinance was passed that prevents using the criminal history information at the beginning of the application process which removes barriers to certain types of employment.

Overall, all the improvements that were made helps to spur economic growth, attract more interest in the area and create more property management SF opportunities for us through better real estate construction and sales.

Fun Places to Visit in San Jose

San Jose is the 10th largest city in the US and the 3rd largest city in California. Within the Silicon Valley, San Jose is the largest city and is a major section of the greater Bay Area.

Whether you have moved or are visiting this city, you will no doubt find a numbers of fun things to do in your spare time. San Jose has a number of attractions that don’t take too long to enjoy. Just spending an hour or maybe two in downtown will introduce you to all that San Jose has to offer.
Visit our site at to search the most up to date list of available properties for sale and rent in San Jose to ensure you find your perfect property. This website will help you get the best deals on houses or properties in San Jose.

Now let’s have a look at some of the exciting places to visit while you are in San Jose. First let’s see the great outdoors. It is a beautiful city and hold much sightseeing and outdoor activities for visitors and residents.

First there is the Heritage Rose Garden. It is apparently ranked as the 5th popular attraction in the city. This garden is beautiful and dedicated to all types of roses. Want to see Mother Nature at its best? Visit this garden!

Looking to enjoy a run while looking at the some beautiful places? Los Gatos Creek Trail is the place for you. Go for a run and enjoy the fresh air and smell, and witness some amazing ponds and cuts through parks. Other places to enjoy the outdoors are BrookTree Park, Flickinger Park, Alum Rock Park and many more.

If you are with your kids, the best place to go is ‘California’s great America’. It is a very famous theme park in San Jose, and once you get in, you wouldn’t want to come out.

Love Paint ball? Go check out Santa Clara Paintball located in the heart of San Jose. This place is a corporate and family favorite. Then there is the Rockin’ Jump- The ultimate trampoline park. This is a great place when you are looking for total fun, and even better for throwing a party. Other places to have endless fun are Camera 12 Cinema, Ragging waters, Cambrian bowl and a whole lot more.

If you are looking for someplace where you can sit and enjoy the show, go to the California Theatre. Another place is the San Jose Center for performing Arts. Over the years, it has become the artistic epicenter of the city. If one enjoys comedy, then he should visit the San Jose Improv for a fun night out. City lights theatre and Children’s Musical Theatre San Jose are some amazing and worthy places to visit.

When you move to a new place or if you are just visiting, the nightlife of a city should always be checked out. The nightlife in San Jose is tremendous, with places like Cielo, Club Miami, Club Max and South First Billiards being the best clubs to enjoy your night. Some well-known bars of this city are Singlebarrel, Tangerine Hookah bar, Mission Ale House and Wine Galleria. Of course, the list doesn’t end here. There are many other fun places to visit while in San Jose.

Properties in San Francisco are Going Over the Top

The Urban Land Institute, at the start of 2014 issued its Emerging Trends in Real Estate report for 2014. According to this report, San Francisco is the biggest and most popular commercial real estate markets for this year. The report read that even though San Francisco is the most expensive market to reside in and conduct business, the economy is going to do tremendously well in 2014. It is expected that this city will be adding jobs at 2% rate for the year.
The Market Watch reported in September 2014 that the economic growth in San Francisco is continuing to overtake the national economies and state. Access to financial capital and a highly-educated workforce continues to steer the business investment in the metro area. With property management SF, one can create or buy the perfect property to live in or conduct business.

John E. Silvia, the chief economist at Wells Fargo said that the housing market in San Francisco has made sizable improvements, with new Property management SF and residential construction coming on line, although affording it still seems like an issue.

If we look at office space, the rents are going up really fast. In the city, the average rent for an office space seems to be climbing towards a level that has not been since the dot-com boom of the 1990’s. This last line was mentioned in the San Francisco Business Times.

If we look at the present, commercial Real Estate in San Francisco is going over the roof. Paramount group- a real estate investment group- just recently sold the 666,000 sq. foot the sky scraper at 50 Beale Street to Rockefeller Group. This deal was made for $395 million. Also, a deal for $309 million was closed by Columbia Property Trust of Atlanta for acquiring a 480,000 sq. foot, 33-story Hanford Building.

Nelson Mills, the CEO of Columbia Property, said in a statement that they have managed to establish an important presence in downtown San Francisco. The market in SF continues to be the best in the USA.

In the same week as the selling of the sky-scraper and the Hanford building, 100 California St. was purchased by Boston’s Pembroke Real Estate for $182 million.

The senior vice President of Pembroke, David Lucey said that for the past 18 months, they have been looking to make their first deal in San Francisco. He told an online trade publication, the Registry that they have been keeping a track of Bay Area commercial real estate.

With the correct property management SF tools, one can maximize their property investments and get the best out of it. Since the real estate in San Francisco is increasing so rapidly, property management SF is essential and important.

The CEO and chairman of San Francisco TMG Partners, Michael Covarrubias said that he has never seen space get filled up so fast, the rents keep going up rapidly and whole buildings getting pre-leased. This statement of his proves that the demand and price in San Francisco is going over the roof and if one wishes to purchase a property here, he/she needs property management SF to guide him, especially if he is new to the city and environment.

Higher Demand for San Francisco Properties

Over the past few years the demand for properties in San Francisco has risen sharply highlighted by numerous real estate deals that have showcased this particular desire. The recent purchases in the downtown area have madeproperty management San Francisco firms really take notice that the current boom in real estate shows no signs of slowing down.

The Rockefeller Group recently sold 50 Beale Street, a 660,000 square foot skyscraper that is sound of Market to the Paramount Group of New York for $395 million. At the same time the Hanford Building, a 33 story, 480,000 square foot office tower was purchased by the Columbia Property Trust of Atlanta. These two particular deals have really highlighted some of the recent purchases in the region which have only fortified San Francisco’s place in terms of demand for real estate.

Building Occupancy & Leasing Activity is Up

Over the past year, the number of office buildings with at least 50,000 square feet available has shrunk from 31 down to a single building. In addition, the rents for the upper floors of the office towers in San Francisco are now the highest in the world, surpassing New York and London. With an increase of 60 percent just in the past several months, the expectations are that office rents will continue to grow at a rapid rate over the next five years.

There is no singular reason for the rise in demand for office space in the city, but rather a combination of smaller reasons that have create a perfect storm of rental increases that reflect the high competition for building spaces. In addition, investors of all types are now taking advantage of the higher rents and are purchasing properties in the area as well.

The growth of the tech industry, lower unemployment and favorable conditions of living in San Francisco seems to have helped in pushing the demand for more rental space in the area. With large buildings having their rental space quickly diminish, the prospect of what will happen in the near future has been on the minds of many who are considering investing in real estate properties.

The Future of Rental Properties in San Francisco

With everything seemingly going so right, the natural tendency is to imagine what might go wrong that would end this powerful growth trend. For many in the community, there is nothing on the horizon that indicates this particular growth period will end anytime soon.

Of course, there are unforeseen events that may arise, such as a bearish stock market or economic collapse that could alter how investors see the San Francisco area. But right now there is nothing seen that will stop this rise in demand. The long term leasing combined with companies that are not overextending, but instead using the properties that they have rented has helped to strengthen the overall trend in growth as well.

Therefore, property management San Francisco firms will continue to have their properties rented at higher rates in the near future with the trend continuing to go up until it finally reaches that point where the demand will slacken for some unforeseen reason.

San Francisco Surpasses New York in Rental Pricing

San Francisco has just surpassed New York City when it comes to the highest rents in the country. This remarkable event caps what has been a spectacular rise in demand for rental properties in the San Francisco area. It’s little wonder that San Francisco property management firms have been busier than ever thanks to this impressive rise in demand and lack of new, large construction projects in the foreseeable future.

This is the first time that San Francisco has passed the Big Apple in terms of having the highest median rent in the US. There have been a number of reasons cited for the considerable rise in rental rates that range from the current tech boom, the relatively slow pace of new construction and the favorable business atmosphere.

All of this creates a very low vacancy rate which has generated the spike in rents for both office and residential properties. Consider that a recent study showed that one and two bedroom apartments in NYC average about $200 to $500 less respectively than those found in San Francisco. However, it must be noted that certain sections of the Big Apple continue to outpace San Fran in terms of rental prices.

The famed Tribeca section of NYC offers one bedroom apartments at an average of $4,250 compared to the $4,000 in the Russian Hill neighborhood. For a two bedroom, the distance between Tribeca and Russian Hill is even larger at $1,900. But the overall average across each city still puts San Francisco in the lead by roughly $200.

Compare this to Los Angeles and their prestigious Downtown Santa Monica area which has a median rent of under $3,000 while the famed Chinatown/Leather District of Boston offers single bedroom apartments for $3,225. These differences point out how each area of the country lags behind San Francisco and NYC in terms of overall rent.

However, when comparing rents in terms of per bedroom, New York City just edges out San Francisco at $2,500 to $2,493, a difference of just $7. Given the recent boom in real estate rental properties, San Fran is expected to catch up and surpass NYC unless something unexpected happens over the next year.
In fact, most real estate forecasters are predicting that rental rates for the city will continue to grow for both residential and office areas. The lack of new construction means that unless unexpectedly strong economic forces intercede, the rents will continue to rise due to the lack of space which will take a long time to slow because new construction projects take years before they are fully ready.

With two locations in the San Francisco and SF Peninsula area, we are the San Francisco property managementfirm that more people go to for their needs. This is one more reason why you should be working with us to ensure that you are getting the top market value for your rents. Please visit our website and let our friendly, courteous staff explain what we can do for you while answering all of your questions.

Realtors Expect More Homeowners to Choosing to Rent

In the Silicon Valley and surrounding areas, the forecast from realtors about the near future points to more people renting rather than trying to purchase properties. This particular trend is based on local, state and national issues that affect real estate purchases. The National Association of Realtors recently gave the State Capitol in California a report that indicated rental rates should continue to rise based on current economic conditions.

For the San Jose property management firms, it means that more people will be seeking rental properties in the area. While such forecasts are subject to change, recent events certainly indicate that property management firms should gear their services more towards rental than sales if the trends continue on their current path.

The fact is that the US Congress does not appear to be in a position to do anything to affect the current market which means that people who are potential homeowners may find themselves renting instead if the tax credit is not present. While such a possibility may seem rather farfetched in some respects, the truth is that odder things have happened in the real estate market before.

January 2015 will see a new playing field for real estate across the country and in the San Fran area as well. This is because the Mortgage Interest Deduction (MID) is under scrutiny and may be changed or even eliminated when the next US Congress is sworn in. The proposed interest deduction may go from $1 million down to $500,000 which will have a major impact on home and property purchases.

For many, this change in the code will move people away from ownership and more towards renting properties which in the short run would be a cheaper proposition. This is especially true for places like San Francisco where the overall income is higher, but so too are the property values which will take a big hit in terms of purchases if the proposed changes go through.

In addition, the Capital Gains Tax may be altered as well. Currently, individual homeowners can exclude up to $250,000 in gains while couples can exclude up to $500,000 for the sale of their principle residence for two of the previous five years and each five years afterwards. There is currently a proposal to change this from five to eight years which will also affect the amount that can be excluded.

The proposed changes of this type will certainly affect homeowners in a negative way which may push them more towards rental properties instead. In addition, there could be changes to loan limits, local and state tax deductions or special deferrals of gains on investment property that could be altered as well. As with any part of the economy, making a change in one section could alter other areas as well. This is why caution is advised by the National Realtor Group so that the certainty of the current laws will stay in place.

The San Jose property management firm designed to meet your needs offers two locations, one in the SF peninsula and the other in the Greater San Francisco area. Please visit our website and let us show you what we can do for your needs.