Last month I wrote about the new breed of buyer entering the real estate market. Since then, I had a new listing come on the market in Pacific Heights. This was a large remodeled studio with a deeded deck (with partial bay view), a common roof deck with a full view of the Golden Gate Bridge, and one deeded parking spot.
Pied-à-terre? Yes. Investment? Maybe.
Within minutes of putting out my sign and opening the door, a woman appeared who immediately loved the condo. Who was this buyer?
- She lived and worked in the East Bay.
- She just sold a home on the East Coast and had cash.
- She had a financial background and experience managing residential property.
- She had two large dogs, so wanted to be near the water to walk them.
- She would like to combine a pied-à-terre with a short-term rental (a week or so at a time).
- She wanted to spend under $500,000.
- She knew absolutely nothing about real estate in San Francisco, but had a dream.
In no time it was clear she would not be the buyer for this condo. I explained to her that she had three major obstacles to overcome in fulfilling her dream in San Francisco:
Two large dogs: Many buildings have pet restriction concerning number and size of dogs. It is easier to find a condo when you have one small dog under 30 pounds or a cat.
HOA rules: Most buildings do not allow rentals of less than 30 days, sometimes not less than three to six months.
Price: It would be a challenge to find a home under $500,000 within walking distance of the water. Inventory is very low.
This was day one of her search, and she was excited about living in the promised land. I feel that once this buyer gets to know the market and adjusts her priorities, she will find an investment property in San Francisco. Remember: Interest rates are at historic lows, and cash is earning very little interest in the bank.
A few days later, I received a text message to contact a buyer interested in a condo in the Inner Mission. At McGuire Real Estate, I am a member of the “E-team” and respond to internet and telephone inquiries – I think of this as online dating for buyers, sellers, and agents. I called and we set up an appointment for that afternoon to view the condo, which was a few blocks from her residence in the Mission. Who
was this buyer?
- She was retired and now ran an expanding small business out of her home.
- She wanted to stay in the Mission.
- She was interested in buying a second condo and planned on renting the condo where she currently lived.
- She wanted a two-bedroom unit with parking and an elevator.
- The top price she wanted to pay was $650,000; she thought a short sale would be perfect.
- She had lived and worked in San Francisco all of her adult life.
This buyer also had obstacles:
Price: When I told her $800,000 would be more realistic for a two-bedroom two-bath, she frowned. I could tell she thought I was trying to “up sell” her.
Elevator: This limits the choices, but if this is a deal breaker, it must be near the top of a buyer’s list.
This buyer graciously told me it was day one of her search and before she took up my time, she wanted to do a bit of research on her own. The next day she called to tell me what I had expected to hear: she was shocked to find out how the market had changed. We agreed she had a good idea, but was a year or so late. I suggested she might want to stay put and buy another one-bedroom, one-bath condo as an investment. She is thinking this over.
If I asked these investors what they were doing with their money five years ago, or even just a year or two back, I would not be surprised to hear they were buying stocks and bonds. Now they are focused on one thing: real estate.
My mantra: Low mortgage rates, low bank interest, buy real estate, ohmmm …