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  1. #1
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    California real estate--when the mortgage far exceeds the potential rent

    Was just down in Santa Monica on business and was driving back through Venice Beach. I was thinking how it might be fun to rent a beach shack through Airbnb for a week or two and when I looked they seemed pretty affordable--like $80-120 per night. Then I looked at the price of these Venice houses on Zillow--$3-4 million each. So in other words I could easily rent my $1 million Seattle house for $3.5k per month and cover the rent of one of these $3 million dollar Venice Beach shacks. I don't get it. Is this just crazy real estate speculation? Am I missing something? I already saw this in SF but this seems more extreme.

  2. #2
    pmf
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    People renting these houses have probably owned them outright for a long time. At one time, Venice Beach wasn't considered a great place to live. And California has some law that freezes your tax assessment until a house changes hands (probably why the state is always broke). I doubt anyone is buying a house for $3M and renting it for $120 a night.

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    Quote Originally Posted by pmf View Post
    People renting these houses have probably owned them outright for a long time. At one time, Venice Beach wasn't considered a great place to live. And California has some law that freezes your tax assessment until a house changes hands (probably why the state is always broke). I doubt anyone is buying a house for $3M and renting it for $120 a night.
    Yes, I agree with this assessment. It's just an odd situation. My folks bought their house in the Bay Area in the mid 70s before Prop 13 so it would cost them more to sell it and buy smaller and less expensive.

    Still, anyone buying one of these houses is either got the cash, can cover a $13,000 mortgage payment (not including property tax--probably another $20-30k per year?) or is expecting to somehow cover the mortgage in some other way.
    Last edited by Henry Chinaski; 02-08-2018 at 09:52 AM.

  4. #4
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    We're in our own little world down here.

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    Quote Originally Posted by mackgoo View Post
    We're in our own little world down here.
    How's the bike riding from Venice?

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    I actually live in San Clemente. It's great 340 days a year.

  7. #7
    pmf
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    Quote Originally Posted by mackgoo View Post
    I actually live in San Clemente. It's great 340 days a year.
    So the 25 days when it sucks -- is that the number of rainy days there?

    It was 19 here in DC this morning. I'm getting seriously sick of winter.

  8. #8
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    Quote Originally Posted by Henry Chinaski View Post
    How's the bike riding from Venice?
    Pretty good. Path along the beach (busy other than odd hours), easy access to canyon riding to the north, paths and good road routes inland. I used to live about 6 miles inland from there, and Venice was part of quite a few rides I did. There was a path pretty close to my apt that was a straight shot to Marina Del Rey. Which is just south of Venice Beach.

    Quote Originally Posted by pmf View Post
    People renting these houses have probably owned them outright for a long time. At one time, Venice Beach wasn't considered a great place to live. And California has some law that freezes your tax assessment until a house changes hands (probably why the state is always broke). I doubt anyone is buying a house for $3M and renting it for $120 a night.
    Very true. But most people are likely using such rentals to make a bit of spare cash they otherwise would not have, not to pay the mortgage.
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  9. #9
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    Quote Originally Posted by QuiQuaeQuod View Post
    Very true. But most people are likely using such rentals to make a bit of spare cash they otherwise would not have, not to pay the mortgage.
    This is second hand info but apparently the guy who owns the house with attached apartment across the street from me, and who is kicking out his long-term renter in favor of running an Air B&B, makes about $10k more each year off his Air B&Bs than he would if renting to actual members of our community.

    It's a big issue here, and even bigger in smaller "vacation destinations". Talk about service industry workers not being able to afford to live where they work - there's no way they can spend the $100+ per day for a crappy apartment.

    I'm not sure how I feel about it. Everyone should be able to maximize their income, and I save tons staying at Air B&Bs when I travel, but there is an impact on communities.

  10. #10
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    Quote Originally Posted by dir-t View Post
    This is second hand info but apparently the guy who owns the house with attached apartment across the street from me, and who is kicking out his long-term renter in favor of running an Air B&B, makes about $10k more each year off his Air B&Bs than he would if renting to actual members of our community.

    It's a big issue here, and even bigger in smaller "vacation destinations". Talk about service industry workers not being able to afford to live where they work - there's no way they can spend the $100+ per day for a crappy apartment.

    I'm not sure how I feel about it. Everyone should be able to maximize their income, and I save tons staying at Air B&Bs when I travel, but there is an impact on communities.
    Income, if he maintains enough occupancy, sure.

    But cleaning after each guest, repairs from people being drunk and such on vacation, and other associated costs (including time costs) could be significant.

    Affordable housing is an issue in many places, and this will make it worse in any attractive place (which tends to go with high housing costs), agree on that for sure.
    .
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  11. #11
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    Quote Originally Posted by QuiQuaeQuod View Post
    Pretty good. Path along the beach (busy other than odd hours), easy access to canyon riding to the north, paths and good road routes inland. I used to live about 6 miles inland from there, and Venice was part of quite a few rides I did. There was a path pretty close to my apt that was a straight shot to Marina Del Rey. Which is just south of Venice Beach.
    I was just reading Phil Gaimon's latest book, which made the riding in LA sound pretty good. How about dirt? I'm seriously considering moving to So Cal in a few years once my kid is done with high school.

  12. #12
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    Quote Originally Posted by Henry Chinaski View Post
    I was just reading Phil Gaimon's latest book, which made the riding in LA sound pretty good. How about dirt? I'm seriously considering moving to So Cal in a few years once my kid is done with high school.
    You might not like the climate here. It's always hot, even in wnter. I miss the 4 seasons.
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    I live in the SF Bay area. I've heard that up here young couples are looking at real estate prices not in dollars but in shares of Google, Facebook, or Tesla. As in, "Do we have enough shares for that?" Be an IPO millionaire or forget about buying.

    I grew up in Michigan, moved here 35 years ago, and I still miss the 4 seasons. In my part of CA, winter is a week or two of rain, and spring begins on December 27.

  14. #14
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    Anaheim Disneyland has a big problem with Airbnb , communities we’re fighting back after their complexes were being overrun .


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    Quote Originally Posted by Henry Chinaski View Post
    I was just reading Phil Gaimon's latest book, which made the riding in LA sound pretty good. How about dirt? I'm seriously considering moving to So Cal in a few years once my kid is done with high school.
    Lots of dirt, though my specific trail knowledge is way out of date. For example, from Venice it is a quick shot to Santa Monica and Brentwood, and then you can start riding dirt for a very long way. Santa Monica, Malibu, and Point Mugu... good stuff all through there. Backbone trail was generally good, Dirt Mulholland has a lot connected to it. And of course lots to drive to further away. Even alpine riding in the Angeles National Forest as a day trip from the seaside.

    Basic rule for SoCal: if you don't have to drive it's great. If you don't have to drive the freeways, it's good. If you have to drive the freeways, expect life to suck and be happy if it doesn't. Keep that in mind when considering specific location. SoCal is a HUGE place. And while you can hook up rides without crazy busy streets for the most part, 4 miles of pavement to get to dirt is a lot better than 12 miles.
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    Quote Originally Posted by pmf View Post
    So the 25 days when it sucks -- is that the number of rainy days there?

    It was 19 here in DC this morning. I'm getting seriously sick of winter.
    Yesterday was low 60's and breezy. That's a bad day here.
    I've come to realize a bad day here is a good day anywhere else.

  17. #17
    hfc
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    A few summers ago, we did a family trip to San Diego and stayed in La Jolla, rented a small house a couple of blocks from the beach. the beach front is of course lined with gorgeous homes (one of the largest I understood to belong to Mitt Romney) and they, for the most part, looked un-lived-in, i.e. doors shut, curtains drawn, no lights in the evening.I suspect, like Mitt's, they are one of several homes in nice places by their fabulously wealthy owners.

    Shacks are different from mansions, but I wonder if the rental mentioned by the OP is to meet some local code requiring a minimum occupancy time.

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    Quote Originally Posted by QuiQuaeQuod View Post
    Lots of dirt, though my specific trail knowledge is way out of date. For example, from Venice it is a quick shot to Santa Monica and Brentwood, and then you can start riding dirt for a very long way. Santa Monica, Malibu, and Point Mugu... good stuff all through there. Backbone trail was generally good, Dirt Mulholland has a lot connected to it. And of course lots to drive to further away. Even alpine riding in the Angeles National Forest as a day trip from the seaside.

    Basic rule for SoCal: if you don't have to drive it's great. If you don't have to drive the freeways, it's good. If you have to drive the freeways, expect life to suck and be happy if it doesn't. Keep that in mind when considering specific location. SoCal is a HUGE place. And while you can hook up rides without crazy busy streets for the most part, 4 miles of pavement to get to dirt is a lot better than 12 miles.
    and to add to that. the mountains less than an hour to the east of most major SoCal Metros are higher than most of the highest peaks east of the Mississippi. I can be on a Conifer forest single track @ 5K feet in under an hour and surfing that afternoon.
    I also have MTB trails riding distance from my home
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  19. #19
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    Quote Originally Posted by pmf View Post
    So the 25 days when it sucks -- is that the number of rainy days there?

    .
    I assume that's when everything is on fire.
    Dr. Cox: Lady, people aren't chocolates. Do you know what they are mostly? Bastards. Bastard-coated bastards with bastard fillings. But I don't find them half as annoying as I find naive bubble-headed optimists who walk around vomiting sunshine.

  20. #20
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    Quote Originally Posted by Coolhand View Post
    I assume that's when everything is on fire.
    Or (mud)sliding...
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  21. #21
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    Quote Originally Posted by paredown View Post
    Or (mud)sliding...
    LA seasons:

    Green
    Brown
    Fire
    Mud
    .
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  22. #22
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    Quote Originally Posted by dir-t View Post
    This is second hand info but apparently the guy who owns the house with attached apartment across the street from me, and who is kicking out his long-term renter in favor of running an Air B&B, makes about $10k more each year off his Air B&Bs than he would if renting to actual members of our community.

    It's a big issue here, and even bigger in smaller "vacation destinations". Talk about service industry workers not being able to afford to live where they work - there's no way they can spend the $100+ per day for a crappy apartment.

    I'm not sure how I feel about it. Everyone should be able to maximize their income, and I save tons staying at Air B&Bs when I travel, but there is an impact on communities.
    Southern Utah is considered a Retirement and Vacation destination. The cities here have decided that in order to have a nightly rental it needs to be properly zoned. They won't let you do nightly rental anywhere you would like. It has upset a lot of people who were getting great returns on their property, but the deal breaker was that no one really wants to live next to a nightly rental.
    I know one guy who has a 7000sq. ft. Million+ home and two doors up the owner started using his massive home as an AirBnB to tour groups. He woke up to a Tour Bus parked in front of his house with a bunch of Asian tourists sitting on the sidewalk smoking.

    I just built out a nightly rental community of 135 homes where every home is available for rent, there are no permanent residents. They range in size from 1700 to 6500 sq. ft. and are averaging an occupancy of 18 days a month. It's a ghost town Tuesday and Wednesday but on the weekends it's a pretty cool vibe, everybody in the joint is there to party.

    The two reasons for proper zoning are to save the permanent residents potential heartache and to make sure the principalities get their transient room tax. Before the switch 90% of the nightly rentals were skipping out on paying the tax.

    The project.

    California real estate--when the mortgage far exceeds the potential rent-unnamed-20-.jpg

    California real estate--when the mortgage far exceeds the potential rent-unnamed-16-.jpg

  23. #23
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    Quote Originally Posted by Henry Chinaski View Post
    Then I looked at the price of these Venice houses on Zillow--$3-4 million each. So in other words I could easily rent my $1 million Seattle house for $3.5k per month and cover the rent of one of these $3 million dollar Venice Beach shacks.
    As a Seattle area (Issaquah) resident who used to live in California - I could never move back and face the crowds. A winter vacation to break the PNW grey = YES, but that's the extent of it. Skiing, kayak, riding and backpacking are all too close here in WA. May go to Spokane for a 'final retirement' location.

    With climate change, western WA is becoming like coastal CA - at least in the summer & fall.

  24. #24
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    It's total bullshit for it to be that cold with no snow.

    But it's in the upper 60s today, so I'll reserve further complaint until it snows on Saturday. If it's going to snow, I need it to be on a weekday.
    Man never made any material as resilient as the human spirit. -Bernard Williams

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