Scene across the street

I have to say in the last few weeks I have learned more about California Mobile Home Residency Law, Turn-coat city politicians, and how “he who has the gold makes the rules” than I ever wanted to know at this close range.

I have learned that when it comes to the laws to protect mobile home owners, the agency who made the laws has nothing to do with enforcing them. You can have a slum landlord for a mobile home park as well as you can an apartment building. Who do you go to to report violations of the law? You sue him in court.

Then there are the rent control ordinances of cities and municipalities. Not every city has rent control laws, but the ones that have put them in place to protect their senior citizens and their low income people from becoming homeless, put them there originally for a reason. In the General Plan there is usually a certain “allotment” for senior and low income housing. Cities will bribe new developers or take advantage of already existing housing to fulfill those numbers. Not everyone has good intentions though when it comes to this kind of housing.

There are mobile home owners all over the state of California suing

$19000.00

cities over rent control ordinances pertaining to their properties that were originally designed to be rent controlled mobile home park spaces. Years later, kids have inherited the properties, conglomerations have bought the properties thinking they are going to get rich from the land even though they bought them under rent control, and suing the cities until they can’t bleed anymore money, and cave in. I have a mobile home in such a park.

Capitola is a beautiful ‘City-By-The-Sea’ as it says under it’s ‘Welcome to Capitola’ signs. Capitola Village is small and quaint and full of out-of- towners when ever the weather permits. The man who originally owned this mobile home park that sits up on the hill at one of the entrances to the city, originally had this land and invited his friends to bring their trailers there for vacations and holidays. It soon turned into a trailer park for ‘Seniors’. Many years later it became a ‘family’ or all age park, but it is still pretty populated with our seniors who have come here to retire and live in one of the most beautiful spots in the world. Some aren’t in so good a shape. Others have put their whole life savings into their homes here. Many are on low fixed incomes that couldn’t afford to be anywhere else.

Now the man has long since died, and his son and grandson see this property as a goldmine. The owner has been suing the City until now, when there is a light at the end of the tunnel, it looks like an end to the fighting, the City has decided not to fight him any more and has totally rewritten their own rent control ordinance to benefit this one man. Well, I shouldn’t say to benefit only one man when it turns out the city itself owns one of these mobile home parks and wants to turn it into a parking structure. This change in the ordinance will help the city raise rents on that park and force people out the same way the owner of this park will do here. There are a total of 3 other mobile home parks that will suffer the same fate as we shall as soon as this ordinance is passed.

The equity in our homes will be completely gone as the rent for our spaces go up, left to the discretion of the park owner. It’s already happened in Santa Cruz. That city council did away with the rent control and now you can buy a beautiful mobile home there for $19000.00 that no doubt cost the seller $100,000.00. Did I forget to mention the space rent is only about $2100.00 to $3000.00 per month? It’s one thing to lose your equity over an over all economic condition like we are all going through, but to have a small public entity that you voted into council just rip it out from under you seems to hurt even more. I wonder how some of these people will afford the new rent on their monthly social security?

I went to one of my first city council meetings last week when they did the ‘first reading’ of the new ordinance. The politicians don’t tell the truth anymore in a small town then they do when their running for President. They exaggerate how much the city has spent to defend us. They don’t tell the truth about how much the mobile home parks have paid of those fees. They actually planted people in the audience to get up and speak in favor of the new ordinance because they new real citizens wouldn’t do it.

If it wasn’t so appawling I would be laughing. One city councilman actually had his campaign manager stand up. They called in an old city councilman that had lost in the last election. There were 3 others that “acted” like concerned citizens. How ridiculous is that? LOL.

Unlike San Jose with such a vast area and so many people, Santa Clara has been able to maintain that “small town” feel. Since moving here last October I have received “quarterly reports” on how the City is doing. Guides on City services available, activities, etc.  I love the fact that the city of Santa Clara has it’s own electricity vs. going through PG& E. Thank goodness the people saw through that proposition on the ballot last June!

Santa Clara is a great place for Seniors. They have a beautiful new center and if you are over 50 yrs. old it costs nothing to join. Due to budget cuts they have had to cut back on some of the hours that it used to be open, which is really a shame. I think they could probably charge a small yearly membership fee and they would still have plenty of people wanting to join.

The city of Santa Clara also seems intent on reminding people to support their local businesses. Obviously there is a method to their madness, more revenue to the City, but it’s still great for the small business owners in the area.

Santa Clara feels “clean” and safe to us since we’ve been here. We live in a rental neighborhood and we all know how bad some of those can be. I’m sure Santa Clara has some parts of it that are worse than others, but I have to say that I very much enjoy the beauty and the feeling I get living in our area. We have my mother with us also, so naturally I have to be concerned about her safety as well. Around here it doesn’t seem to be a problem.

To see if you also would love living in Santa Clara, feel free to contact me by phone or email any time.

Investing in Foreclosures

Investing in real estate in Silicon Valley is a real possibility right now but there is not much of a margin for error. As prices have fallen and rates are low, it is possible to buy a “rental” property for specifically that reason, to rent it out. This is an opportunity for investors we haven’t seen for many years and they are coming out of the woodwork like crazy. I must get at least 5 e-mails a week from somebody with a new “system” for buying up property. Unfortunately, they’re not “new” and most of them are totally illegal for a licensed real estate professional here in California.

I’m sure most of you have heard that the FDIC is going broke. That FHA is in trouble. Fannie Mae and Freddie Mac have been in trouble. Besides what’s on the market (the MLS) these institutions are dumping properties as well.  It’s amazing some of the bargains you can pick up, although you do have to be careful and do your own due diligence. Make sure you crunch all the numbers. A condo that looks attractive numbers-wise when you figure the mortgage payment, may not be so attractive if you add in a hefty Homeowner’s Association Fee, along with insurance on the unit itself. Remember, the Homeowner’s Association only insures the outside of the unit, nothing inside the 4 walls.

What is amazing to me is that for as much as everyone is saying credit has dried up, etc. many of the same loans that got us where we are today are still out there. Oh sure, for now your credit score has to be a little higher than it used to be, but I’m not sure how long that’s going to last since now even people with A+ credit are going into foreclosure. FHA has laxed a lot of their standards so that their loans are more usable. Not only that but they have a loan program that will help you buy the property and give you “fix up” costs. It’s almost as if they will pay you to fix up your new property. VA still has a no money down adjustable rate mortgage. Some of the conventional lenders are willing to bend criteria a bit to get properties off their books.

The one thing FHA has tightened up on is “flipping”. They have a “no flipping rule” that says if you buy a property using an FHA loan, you may not sell it for at least 90 days. Now to me, if you move into a property you’ve bought, fix it up while you live in it, which is not at all unusual for investors, and you’re flipping houses every 91 days, you can still do quite well. You have to pay to live somewhere anyway. Why not the property you’re buying to fix up and sell? Not only that, but the lenders look much more kindly on properties that are going to be owner occupied.

I realize it’s pretty much a feeding frenzy out there, but if you’re going to invest, invest smart. The “gurus” of real estate don’t talk about the properties they get stuck with, or the holding costs, or the bad tenants. They talk about the upside without the downside. I’m all for investing in real estate to build your wealth, but be prepared. It’s not all the bed of money it’s cracked up to be. And if you think you can go negative cash flow on a house because it’s only $50 or so, think about how much that turns into per month if you do 10 of them, or 100.

If I can help you with any of your real estate needs, whether looking for a bargain on your first home, looking to invest in a rental property, or selling your home for the best price in a down market, feel free to contact me or leave a comment below.

It never ceases to amaze me how uncommon common sense is and concerning real estate, it doesn’t get any better.

Over the last few months we have looked at about a billion ads on Craig’s list and in the local papers (obvious slight exaggeration. LOL). We have made hundreds of phone calls and probably been told during at least half of those calls either pets, smoking or both were not acceptable. We put an offer in on a mobilehome that has been on the market for almost 2 years, sitting vacant while the owner pays the space rent at $400 per month. I have tracked the houses I have called on or we have driven by. Obviously I didn’t want to keep calling the same places or driving by places we had already seen and weren’t interested in.

Most of the places we looked at to rent want first month’s rent and then at least 1 month’s rent as security deposit. Some are asking first, last and deposit. Say the house is renting for $2200.00 per month and it sits empty for just 2 months. That is $4400.00 in lost rent that could have gone in the landlord’s pocket. Do they really think it will cost them that plus the deposit to clean up after a smoker, or someone who has a couple of cats? Mathematically it just doesn’t make sense to me. Some of these homes have been on the market since we started looking a few months ago and the owners are paying for ads at least every weekend (Fri-Sun). Many of them have lost much more in rent than it would ever cost them to clean up after renters, unless the renters were just enormously bad, which does happen I know. They also stubbornly hold onto some figure they want for rent because they’ve seen that number in the paper or somewhere, and don’t get that it is obviously higher than the market will bare right now or they’d be able to rent it out.

The lady’s son who was helping her sell her mobile would rather pay almost $400 per month for over 2 years than take a little less down. How does it make more sense to pay out almost $400 per month than to take in $1600? I honestly don’t know what some people are thinking. When you play “What is the worst thing that could happen?” I don’t forsee it costing as much as it does to just flush that money down the toilet every month.

If you own a rental does this make sense to you? Maybe even though I’ve had a couple of rentals and had to do extensive repairs, I just am not looking at it correctly. I know the worst renter I had I collected two and a half years of rent from him plus his deposit before I had to fix it.