Intent to Sell: Forcing Out of Apartment - Rent vs Buy (CA Metro)

[daylatedollarshort]

I don't know the best course, but our adult kids are in the same boat as you. One lives in a smaller community. The rent is still high but not as crazy high as the bigger cities here. They don't want to buy, as they don't intend to stay there forever, so they are toughing it out on the rent.

The other is waiting for real estate to crash to buy a condo, which shouldn't be too long now. I have cash set aside now in stable value funds or short term Treasuries to help them with a condo, and buy longer duration bonds for us, once rates level off.

Another option to consider: For sometime now mobile homes parks have been popular around San Jose among tech workers because the rents have been crazy high, even before this year Teslas in the Trailer Park: A California City Faces Its Housing Squeeze - The New York Times (nytimes.com)

[pc95]

Quote:

Originally Posted by cathy63 I am going through this now from the other side ... had planned to sell our rental condo in 2020, but the pandemic hit and we didn't want to oust a long-time tenant (26 yrs) when housing was so tight, then 2021 was more of the same. We're finally doing it this year and have notified the tenant. She made a purchase offer which was for about 1/3 of the appraisal we had done, so we declined her offer. "Notice of intent to sell" is not the same as "60 day notice to vacate". The notice of intent to sell means that the place will be going on the market in 120 days and showings can commence then. You do not have to move out. The landlord (or his POA) has to give you 24 hours notice before a showing. Notice of a showing does not have to be written. It can be by phone message, text, telling you when he sees you on the street, etc. You obviously don't have to let them show the place at 2:00 AM, but you have to be cooperative and let them show at reasonable times with reasonable notice. If you are not present during a showing, the landlord must leave a written notice in the unit stating that he was there. When the property is sold, you will get a 30-day notice to vacate if the new owner wants to live in the property. The new owner could also decide to keep you on as tenants and negotiate a new lease with you. I think if he intends to keep the property as a rental and just doesn't want to rent to you, then you would get a 60-day notice at that point. I'm not sure about that though. He may be able to use a 30-day notice while the place is in escrow even if he intends to keep renting it out after closing.

Thanks Cathy - this is good information- maybe our land-lord was thinking similarly to you. Are you sure about the 120 days? I thought the CA regulations said 60 days from notice to vacate when month-to-month lease. We could use the extra time if 120 days. I will ask his attorney also.

[pc95]

Quote:

Originally Posted by daylatedollarshort I don't know the best course, but our adult kids are in the same boat as you. One lives in a smaller community. The rent is still high but not as crazy high as the bigger cities here. They don't want to buy, as they don't intend to stay there forever, so they are toughing it out on the rent. The other is waiting for real estate to crash to buy a condo, which shouldn't be too long now. I have cash set aside now in stable value funds or short term Treasuries to help them with a condo, and buy longer duration bonds for us, once rates level off. Another option to consider: For sometime now mobile homes parks have been popular around San Jose among tech workers because the rents have been crazy high, even before this year Teslas in the Trailer Park: A California City Faces Its Housing Squeeze - The New York Times (nytimes.com)

Yeah I looked at mobile homes, but the site fees unfortunately brought them much closer to rental territory (on the order of 2/3rds rent plus the outlay for purchasing the structure - of course I wasn't looking at rents very closely until now - I was only eyeing condos and waiting.

[cathy63]

Quote:

Originally Posted by pc95 Thanks Cathy - this is good information- maybe our land-lord was thinking similarly to you. Are you sure about the 120 days? I thought the CA regulations said 60 days from notice to vacate when month-to-month lease. We could use the extra time if 120 days. I will ask his attorney also.

Here's the law. You should definitely ask the attorney what he sent you. If he did actually send a notice to vacate, then it is 60 days and the date by which you must leave is on that notice. It really sounds like he just notified you that it's for sale though, which means you'll either get a new landlord or will later on get a notice to vacate from the new owner, (which I think can be 30 days, even if you've lived there over a year, because of the sale); and in the meantime you'll have potential buyers coming through.

I misspoke earlier; the 120 days is not when it goes on the market. That's how long they can keep showing it using oral notices. After that they have to renotify you that it's still for sale or switch to written notices before showing it.
https://leginfo.legislature.ca.gov/f...54&lawCode=CIV

Quote:

(2) If the purpose of the entry is to exhibit the dwelling unit to prospective or actual purchasers, the notice may be given orally, in person or by telephone, if the landlord or his or her agent has notified the tenant in writing within 120 days of the oral notice that the property is for sale and that the landlord or agent may contact the tenant orally for the purpose described above. Twenty-four hours is presumed reasonable notice in the absence of evidence to the contrary. The notice shall include the date, approximate time, and purpose of the entry. At the time of entry, the landlord or agent shall leave written evidence of the entry inside the unit.

[pc95]

Quote:

Originally Posted by cathy63 Here's the law. You should definitely ask the attorney what he sent you. If he did actually send a notice to vacate, then it is 60 days and the date by which you must leave is on that notice. It really sounds like he just notified you that it's for sale though, which means you'll either get a new landlord or will later on get a notice to vacate from the new owner, (which I think can be 30 days, even if you've lived there over a year, because of the sale); and in the meantime you'll have potential buyers coming through. I misspoke earlier; the 120 days is not when it goes on the market. That's how long they can keep showing it using oral notices. After that they have to renotify you that it's still for sale or switch to written notices before showing it. https://leginfo.legislature.ca.gov/f...54&lawCode=CIV

Definitely intent to sell => "I hereby give notice of my decision to sell unit. This does not affect the terms of your lease and further information will be provided when available"

[RobbieB]

Yeah, if the new owner is an investor you may not have to move.

We were renting a townhouse and the owner decided to sell and sent (served) an eviction notice. So we bought a house. Just before the move the new owners agent called and asked if we were staying. I said no, the old owner evicted us. She says "well the new owner would really like you to stay"

Too bad. If the owners agent had done her homework she would have known the development was most investors and investors love good tenants.

[euro]

Quote:

Originally Posted by RobbieB Yeah, if the new owner is an investor you may not have to move. We were renting a townhouse and the owner decided to sell and sent (served) an eviction notice. So we bought a house. Just before the move the new owners agent called and asked if we were staying. I said no, the old owner evicted us. She says "well the new owner would really like you to stay" Too bad. If the owners agent had done her homework she would have known the development was most investors and investors love good tenants.

Well, if he really is paying only half of the going market rent for his apartment, then it is highly unlikely that they'll want him to stay - unless he is ok with doubling the rent.

[Bryan Barnfellow]

Quote:

Originally Posted by pc95 Thanks BB - yes we think so, and they're anchoring our thinking. Thanks for the confirmation. My coworkers seem to agree with predictions, but that is an unknown...who would've thought Russia invades Ukraine and resulting affects etc. Where in Switzerland do you live? ..... pictures of places there are outstanding.

My wife and I live in Lugano, in the Italian speaking canton of Ticino in southern Switzerland. We could walk to the Italian border, it's that close. Lugano is on a lake, which is beautiful and a draw for international tourists looking for a sunny, inviting, resort city which combines the best of Switzerland and Italy in some respects. We came here 13 years ago for my job and retired seven years ago. We are permanent residents and plan to live the rest of our lives here.

[RobbieB]

Quote:

Originally Posted by euro Well, if he really is paying only half of the going market rent for his apartment, then it is highly unlikely that they'll want him to stay - unless he is ok with doubling the rent.

I think that's a given. New owner is going to pay big bucks and going to charge same if renting.

And CA metro? That place is going to sell in a week.

[Teacher Terry]

When I bought my condo last year it was a rental. I wrote into the offer that it had to be empty before closing. Years ago I bought a house where the renters were supposed to be gone because we needed to live there and they didn’t leave. It was a mess and I didn’t want to be in that situation again. If I was in your position I would rent and keep a eye out for a affordable place to buy.

[Morgan22]

We went through this last year in San Diego. Our landlord sent a letter letting us know he was going to try to sell the place and let us know the name of the real estate agent. Once the place was sold the buyer sent a notice to vacate.

If there is no date to vacate in the letter you received then its just a notice to let you know they intend to sell. The real estate agent will get in touch with you to arrange showings when they have interested parties.

The law in San Diego is that if you've lived more than a year in your rental, then they have to give you 60 day notice to leave. That should be plenty of time to find a new rental, especially in San Diego.

There are always apartments available. And as long as you don't need brand new high end kitchen and bathroom, you can find affordable places too.
If you don't want to wait it out start looking now to get an idea of prices and what you can or can't live without.

[pc95]

Quote:

Originally Posted by Morgan22 We went through this last year in San Diego. Our landlord sent a letter letting us know he was going to try to sell the place and let us know the name of the real estate agent. Once the place was sold the buyer sent a notice to vacate. If there is no date to vacate in the letter you received then its just a notice to let you know they intend to sell. The real estate agent will get in touch with you to arrange showings when they have interested parties. The law in San Diego is that if you've lived more than a year in your rental, then they have to give you 60 day notice to leave. That should be plenty of time to find a new rental, especially in San Diego. There are always apartments available. And as long as you don't need brand new high end kitchen and bathroom, you can find affordable places too. If you don't want to wait it out start looking now to get an idea of prices and what you can or can't live without.

Thanks for the information and related experience. With most everything close to double or more our current rent, affordability is subjective. If not for our jobs, we would likely move out of the area. The doubling of rent is most annoying, but being forced to move is a close second. The bidding processes for property buying is exceptionally discouraging. People up-bidding - throwing around higher 10s of thousands or low 100s of dollars like bird-feed - always a bigtime put-off. We are well-off, but not wealthy. When I think of those amounts of money, I think in terms of time - how long would it take us to work and save those new figures.

Take a look at the San Diego Case-Schiller Index:
https://fred.stlouisfed.org/series/SDXRSA

If you draw an imaginary trendline out from ~Jul-2020 to recent-2022, you get around about a ~300 index point at the right end of the graph; however in actuality its ~400 - so about a 33% increase above the prior trendline. That's what buyers are staring at these days. Rates cant rise fast enough.

[aja8888]

pc95, I understand your pain here. I have been around a long time and lived in California for 12 years (1981 - 1993). The real estate bubble now will pass as it always has in the past. As mortgage rates rise, there are less buyers and prices will fall over time. This process historically takes a couple of years.

We live in Texas now and left Ca in the 1990's. During the GFC bubble of 2009, when the smoke was clearing, in 2010 we picked up a nice three year old 2,000 sq. ft. brick ranch house in Spring, Texas for 64/sq.ft. That was about 1/3 of the value it sold for new.

We are heading into a recession and this thing will come apart as the FED raises rates and the stock market tanks. There will be a lot of homes "under water", and the buyers will run for the exits.

My recommendation is to get a new rental (painful, of course) and sit tight until things ease up. They will.

Good luck!

[pc95]

Quote:

Originally Posted by aja8888 pc95, I understand your pain here. I have been around a long time and lived in California for 12 years (1981 - 1993). The real estate bubble now will pass as it always has in the past. As mortgage rates rise, there are less buyers and prices will fall over time. This process historically takes a couple of years. We live in Texas now and left Ca in the 1990's. During the GFC bubble of 2009, when the smoke was clearing, in 2010 we picked up a nice three year old 2,000 sq. ft. brick ranch house in Spring, Texas for 64/sq.ft. That was about 1/3 of the value it sold for new. We are heading into a recession and this thing will come apart as the FED raises rates and the stock market tanks. There will be a lot of homes "under water", and the buyers will run for the exits. My recommendation is to get a new rental (painful, of course) and sit tight until things ease up. They will. Good luck!

Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

[Brat]

Quote:

Originally Posted by pc95 I still like my job here well enough, and have a longtime network of coworkers while leading some younger folks now - if I was miserable at work, then certainly an option.

Start looking for rentals now if for no other reason than to become familiar with the market. Also, you and your wife should share the fact that you may need to move and if they have any apartment leads let you know... network, network, network. Consider housing with a commute.

Visit with a lender to explore mortgage options should you find something you want to buy. Don't overlook the impact of property taxes and HOA fees. Talk to a realtor. No harm in asking a realtor what they think your current building will sell for.

[Morgan22]

Quote:

Originally Posted by pc95 Thanks for the information and related experience. With most everything close to double or more our current rent, affordability is subjective.

What neighborhood(s) are you looking in? I can find some 1 bedroom apartments on craigslist for under $1,800 in Hillcrest/University Heights/North Park areas. Of course these are in older buildings. If you don't need to live near the fun areas, you could move a little further out and find more available affordable apartments.

Or is $1,800 for a working couple too expensive for you? Or is it that you are used to amenities like a gym and door man? Those type of amenities would raise the price also.

Not trying to be confrontational, just curious what your meaning of expensive is and what that includes. Because I think I could easily find an "affordable" place to live again once we get back to SD. (We are full time RVing right now since we moved out of our rented granny flat back in Feb).

[aja8888]

Quote:

Originally Posted by pc95 Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

Yeah, we got a good deal in 2010, but they were everywhere. I should have bought three more!

The 2008 - 2009 GFC was banking issues and many people owning homes with subprime mortgages. This time it is a bit different, but the housing bubble will pop. I went through that when I moved to Ca in 1980 and I picked up a nice three bedroom house in Thousand Oaks for $205 K at that time.

During the GFC, I recall that California houses were deeply discounted also. You can check that history.

It's sad that the FED has let this thing get so far out of control with the QE situation (essentially money printing). And the FED has a history of poor timing. Now they will be raising the fed funds rate and killing lending to start a recession. And in June they will start unloading the FED's balance sheet (QT, Quantitative Tightening) and clearing out $5 + trillion in bonds and mortgage backed securities over a few year period. That will take a lot of liquidity out of the economy that will cause more pain.

The real question is how far the FED will go before they get cold feet and reinflate everything like they did in late 2018.

Anyway, please don't panic and sit tight. Take this one step at a time and watch the action. San Diago is a beautiful place to live and even if you have to cough up more for rent for a while, it's not all bad.

If you want to follow what's going on in the economy, here's a site I subscribe to (free) and is California based with a big following:

https://wolfstreet.com/

Latest article on real estate:

https://wolfstreet.com/2022/05/24/ho...se-below-400k/

He publishes articles on the economy frequently and has a lot of California based commentors who are generally pretty knowledgeable folks. This is a no BS site. It's worth a read as he also focuses on real estate trends.

[RetiredAndLovingIt]

Quote:

Originally Posted by pc95 Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

Just be ready to strike if we go into a recession and have all your financial ducks in a row if you plan to buy a home.
Back in 2009 investors who were cash buyers got a lot of these short sale deals. I bought a house that sold for $300,000 in 2006 for $103,000. I made the offer in late 2008 and the bank just stalled and stalled and finally I e-mailed the banks agent myself much against my agents wishes and told them i was walking if they had not accepted or declined my offer by a certain date. I think they waited till pretty close to the date to accept and upped the price a couple of thousand from my original offer which I was fine with. I think they were hoping for a better offer and luckily they did not get one and we finally closed in April 2009. Today it's worth $378,000 according to Zillow. I bought the home for my daughter and had her name as a joint owner and once she paid me back my down payment I quit claimed it to her and she and her husband refinanced the loan at 2.75% I think at the time and still live there today.
Also in 2009, My son bought his bank owned home at the same time for $120K and then the house next door for $140K a couple of years later. He moved into that one and rented out the original one. He sold them both within the past 2 years in the middle of Covid for about 3 times what he paid for them, bought a mountain cabin to use as an AirBnB on a 1031 exchange to ease the tax burden and a 3000+ sq foot home on the lake for him and his wife. Now he's in the process of selling the cabin and getting out of the rental business for now. It's also time to pay the piper tax wise but he has made a ton of money overall so he shouldn't complain but of course he's still complaining bitterly.
I hope it works out for you, just be aware the whole short sale process is not for the faint of heart and cash is king if you can swing it.

[SnowballCamper]

Quote:

Originally Posted by pc95 Take a look at the San Diego Case-Schiller Index: https://fred.stlouisfed.org/series/SDXRSA

I was a renter for over a decade because the job required moves every few years. It sounds like you are pretty set with the job and location. I think home mortgage rates are a factor to consider, and that they will be going up, along with inflation, for a couple years (some more time to get inflation back down). Locking in a fixed rate thirty year mortgage is a lot of price protection for housing with current rates. The housing bubble in the chart peaked in 2006, but caught back up by 2018, less than half the length of the 30yr mortgage, then was off to the races.

I agree that there will be a leveling off of housing prices, but I think any decline will be slow. Good Luck!

[Starsky]

Timing can be a real dilemma in a place like San Diego where prices just seem to keep going up. It is a very different property market than most of the rest of the US. I'm not sure there is a bad time to buy, especially if you plan to stay for awhile. In my lifetime, every dip has been succeeded by a strong rise above previous price levels. I honestly don't feel like a real estate crash is imminent in San Diego because replacement costs are way, way up, and so is the cost per square foot of new construction [and land to build it on], thanks to inflation and supply and labor shortages. There may be a small correction in some lower-tier markets, but I doubt San Diego will feel much of an impact. At worst, it may flatten out for awhile.
A few things to consider:

• Interest rates now are probably lower than they will be later.
• Wages and prices will rise long-term to match inflation, keeping housing price levels high. In other words, tomorrow you will wish for today's prices.
• Banks seem to be lending again. Not sure how long that will last. If your credit is great, use it! If you can borrow at 5% when inflation is 8%, you're making 3% on the deal.
• No matter how expensive it seems now, owning a home gets cheaper over time as your housing costs are locked in and future-proofed - taxes too.
• Housing supply is definitely not growing as fast as demand in San Diego in the foreseeable future.

It may be good to begin your search now to become familiar with the entire local market and if you find something you love, you can consider a purchase. You might discover some neighborhoods you hadn't considered [like Tierrasanta] that offer something a little different and might be more accessible price/value-wise. Happy house-hunting!