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

[pc95]

Greetings, we've been in a West Coast (CA) Metro area for 20 years working (no kids). Have been renting for the duration - in hindsight, probably a bad idea now (given pandemic fallout and blastoff of housing), but that's in the past and hindsight is easy to scrutinize. We received a notice of intent to sell from our landlord this last week ( without dates) - he's 76 yro and we discovered more recently he has brain ailment unfortunately. I found out about it several months ago during a phone conversation, so the notice wasn't a complete surprise, but I had decided to ride it out as long as possible. He'd given power-of-attorney to a tax consultant/broker attorney in his notice. When I contacted my landlord, he replied "talk to my attorney" when asking for an extension. CA regulations seemed to state 60 days if on a month-to-month lease, but there was no date listed....anyway.

In our situation prior to this, buying housing clearly wasn't good with a way-below-market rent we have/had. I had planned on buying in 2021 years back, but that got deep-sixed by the pandemic and our financial circumstances I won't get into. We've been on a month-to-month lease for 13 years - our landlord has been good. I think its a simple case of old age, and he needing to liquidate his real-estate....unfortunately we are casualties of the situation and my lethargy.

Problem now is the market rents are double our current rent .....however, I'm thinking to eat the double rent for a year while keeping a closer eye on the real-estate market. Lower end (smaller) Condo Prices seemed to have plateau'd and even a bit decline after going upwards steeply for 6-8 months. We have savings to purchase cheaper end now (if I sell a chunk of our stock portfolio), but I don't like pressure-buying for housing when we need it. There's the other problem of stocks tanking more which would make selling stock at a loss for condo purchase undesirable. Our jobs are pretty good, but remote work isn't doable, so moving out of area/starting anew isn't a good option for us. I have no idea how the housing market will move, but how do you weigh waiting longer to buy against horrid rent surge? The more desirable units (houses) would be stretching for us. Is paying for excessive rent for 1 to 2 years worth the gamble that housing will cool for more affordability? -- I calculated it at ~$15,000+ a year (increase in rent) .....its kind of like asking where stocks will be in 12 months. The numbers seem to indicate renting given the price run-up - that's how I'm leaning, but thought I'd ask.....its an incarnation of the Rolling Stones song, "Rock and a Hard Place"....

 

[W2R]

Tough situation. I think you are approaching it correctly - - trying to find a temporary rental while you look for a house you can afford.

If you buy a home and there is significant inflation afterwards, you'll be paying it off with inflated dollars and that could be to your advantage (conventional mortgage payments would stay the same whereas rents would be increasing). But really, who knows what the rents and home prices will do?

If it was me, I'd do what you are doing, and then if/when I found a house that I could afford (and like), I'd jump on it. Prices could go up after you buy the house, and you'd be lucky. Or, prices could go down but at least you'd have your house.

 

[njhowie]

You've given no specifics of your own situation financially, age-wise, employment-wise.

It's important for the situation and the recommendation you're asking for.

If you say that you're 65 years old and have $10 million in savings, it's likely going to be different than if you say you're 45 and $1 million in savings.

 

[Aerides]

...however, I'm thinking to eat the double rent for a year while keeping a closer eye on the real-estate market.

I think that's the safest bet. RE might stabilize, might go up a bit more, unlikely (in CA) to go down much that fast.

Equities, however, in a year, hopefully better.

Of course, trying to time two markets together is even sillier than one, but spending a known amount to push that decision out, shop around and really think on your destination would be what I'd do.

 

[freedomatlast]

You're thinking of buying real estate and your landlord wants to sell real estate. If you like the house and location you are in now, why not throw an offer you think would be a bargain, at the attorney and see what happens?

 

[pc95]

You've given no specifics of your own situation financially, age-wise, employment-wise.

It's important for the situation and the recommendation you're asking for.

If you say that you're 65 years old and have $10 million in savings, it's likely going to be different than if you say you're 45 and $1 million in savings.

Yes mid 40s with average salaries and high hundreds thousands combined savings, largest revolving debts: taxes, rent, car maintenance ....working stiffs.
Thx.

 

[pc95]

You're thinking of buying real estate and your landlord wants to sell real estate. If you like the house and location you are in now, why not throw an offer you think would be a bargain, at the attorney and see what happens?

That's another story; short version - noisy/uncompromising upstairs neighbors.

 

[COcheesehead]

People debate rent vs buy on here from time to time. I hope folks remember posts like this one. My sister is in the same boat. You have little control over rent and housing is one of the big three costs in a persons life. Having a month to month lease for 13 years was a ticking time bomb.
I feel for the OP and post my comments for others considering long term rentals as housing.

 

[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.

 

[bizlady]

Are you sure you cannot relocate? The job market is hot, and maybe this is the time to take that leap, perhaps settling into an area you might consider retiring too. Seems the real estate market in CA was pretty strong and expensive before the last couple years of events.

 

[captain3d]

If you have been below market rent for more than a decade then you have done well and presumably saved a lot of that into other investments.

We rent in an area where $3k/month rent gets you a $1 mill home

We invest in rental properties in areas where $1 mill gets $10k rent

Something to consider

 

[pc95]

I think that's the safest bet. RE might stabilize, might go up a bit more, unlikely (in CA) to go down much that fast.

Equities, however, in a year, hopefully better.

Of course, trying to time two markets together is even sillier than one, but spending a known amount to push that decision out, shop around and really think on your destination would be what I'd do.

Yes, thanks for confirmation. Loathe shopping around but no choice.

 

[RetiredAndLovingIt]

That's another story; short version - noisy/uncompromising upstairs neighbors.

Is it possible that the landlord also owns the annoying neighbors home and they will be getting booted as well?

 

[pc95]

If you have been below market rent for more than a decade then you have done well and presumably saved a lot of that into other investments.

We rent in an area where $3k/month rent gets you a $1 mill home

We invest in rental properties in areas where $1 mill gets $10k rent

Something to consider

Yes, we've done ok considering - kept costs down, so able to travel, visiting family, enjoyed hobbies, and of course work and more work. We're not looking to be land-lords, and I see this mostly as financial fallout from the pandemic - ripple affects moving outward coupled with land-lord hanging it up - an unlikely intersection of events. From a wider perspective, we've had alot of good luck no doubt. I cant complain (too much). Thanks.

 

[Bryan Barnfellow]

Looking forward a bit there is a reasonable risk of recession. Are your jobs safe in that situation? If so, it might be better to wait as you proposed and rent for a year. The up side could be lower housing prices--there are even predictions now of a decline.

-BB

 

[pc95]

Is it possible that the landlord also owns the annoying neighbors home and they will be getting booted as well?

No, but I know and talked to their land-lord as well (in Alaska - we have his number actually - we met and had him in for tea while he was updating his unit himself before the current upstairs neighbors moved in )....we decided to suffer the noise rather than escalate though we did attempt to ask them twice to quiet down (toddler). Our closer 2-ft next-door neighbors moved out about 5 years back. They had an ordeal with noise similarly which I sympathized with at the time, but now experience first hand. Actually the old neighbors noise problem was likely worse than ours - a rabbi moved in above them and had dances every Friday night. The old neighbors came by one night suggesting that we call the police with them, but we didn't want to get mixed up and politely declined. I do miss the old neighbors - a time when we were enjoying our living here more.

 

[COcheesehead]

Others have posted about noise issues in condos/apartments. Being on the top floor has its advantages, at least from a noise standpoint.

 

[pc95]

Are you sure you cannot relocate? The job market is hot, and maybe this is the time to take that leap, perhaps settling into an area you might consider retiring too. Seems the real estate market in CA was pretty strong and expensive before the last couple years of events.

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.

 

[calmloki]

That's another story; short version - noisy/uncompromising upstairs neighbors.

Our house down in La Quinta is right next door to an AirBnB. Normally uneventful with minor issues - guests parking in front of the mailboxes sort of thing. Rarely we get an irritating tenant/neighbor - maybe their Coachella visit reset their hearing and they have to crank the tunes to 11. My gal gets kind of cranky about that but I remind her that those tenants are very temporary unlike a bad neighbor who owns his property.

Renters move. Buy a house next to bad neighbors - now that is far more likely to be bad news loooong term.

I'm expecting some softening in the real estate market and maybe the rental market. Think in your shoes I'd be hunting a replacement rental but clinging to the existing one as long as possible in hopes of the market improving in your favor. Maybe an ADU?

Re: Housing Supply Action Plan

 

[pc95]

Looking forward a bit there is a reasonable risk of recession. Are your jobs safe in that situation? If so, it might be better to wait as you proposed and rent for a year. The up side could be lower housing prices--there are even predictions now of a decline.

-BB

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.

 

[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]

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]

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]

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/faces/codes_displaySection.xhtml?sectionNum=1954&lawCode=CIV

(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]

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/faces/codes_displaySection.xhtml?sectionNum=1954&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"