The Best Area To Buy Property In San Francisco (Or Any Major City) Today

Golden Gate Heights View

View From Grand View Park, San Francisco

I realize not everybody lives in San Francisco, but there are insights into this article that can help you find the best area to buy property in your respective city as well. I’m just going to use San Francisco as an example since I live here.

If you want to buy real estate as an investment, it’s important the area not only has a strong domestic demand curve due to a robust labor market, but also a strong international demand curve as well. It’s the international demand curve that really lifts prices higher during good times.

Less than 0.5% of the housing stock is for sale at any given moment. It doesn’t take much to create a property bidding frenzy if you add international buyers to the mix of domestic buyers. Prices in London are being driven by Russian and Middle Eastern tycoons. Prices in Hong Kong are being driven by the wealthy Mainland Chinese. Prices in Singapore are being driven by wealthy Indonesians and expats. While prices in San Francisco are being driven by the tech boom, low interest rates, restrictive building codes, limited land and foreign buyers from China and Russia.

To sell property now is like selling Apple Inc. at $390 a while ago. Your property may have appreciated a lot since purchase, but there’s still a long ways to go if you can hold on. Thankfully for buyers, couples will always get divorced, homeowners will always want to upgrade or downgrade, and companies will always lay off or relocate their employees. There just isn’t enough supply to meet demand in San Francisco, and it’s unlikely there ever will be enough supply with the rise of tech powerhouses such as Facebook, Twitter, Google, and Apple.

Apple alone has gained more than $100 billion in market capitalization in 2014 and employs over 20,000 people in the San Francisco Bay Area. Now imagine what will happen to housing demand when Pinterest, Airbnb, Dropbox, and Uber go public in the next several years? They are hiring like crazy at $70,000 – $200,000 a pop and already have valuations in the $5 – $17 billion dollar range, each.

Different Investment Strategies For Different Life Stages

Different investment strategiesA number of people have asked me to share some different investment strategies for different life stages. What I’ll do is highlight the various investment strategies I think make sense for most people, discuss a couple more alternative investment strategies, and round up what strategy I think is most appropriate by life stage.

We all know that step one to building financial wealth starts with saving. What really widens the wealth gap over the years is HOW one invests. Before investing in anything, I encourage everyone to tell themselves five things out loud.

1) I will lose money.

2) I will feel like a complete idiot when I lose money.

3) Nothing goes up forever.

4) There are plenty of exogenous variables outside of my control.

5) No risk, no reward.

Now that you’re mentally set to invest your hard-earned savings in the stock market where one change in government law, a corrupt CEO, a terrorist attack, a natural disaster, or a declaration of war could instantly wipe out half your gains, let’s begin!

The Best Way To Gain Financial Security Is To Develop Financial Buffers For Your Financial Buffers

Financial Buffer Moat around Osaka CastleLeaving my job in the spring of 2012 was not an easy decision. Even if you have all your ducks in order, it’s still a leap of faith where you hope fluffy pillows await instead of jagged rocks. One of the main reasons why I wrote my book, “How To Engineer Your Layoff” was because negotiating a severance was the key financial buffer that gave me the courage to break free.

Before figuring out how to get laid off in order to gain a severance, my only real financial buffer was my various passive income streams which equaled about $78,000 a year at the time. I did input a Blue Sky scenario of $118,000 a year gross if things worked well on the rental property front after a couple years. But Blue Sky scenarios are never to be used in important life altering decisions.

$78,000 a year in passive income might seem like a healthy figure, but I live in San Francisco where the median condo price is around $800,000 and the median single family home costs around $1 million. Food and gas are also expensive and entertainment costs can quickly spiral out of control if you let them. We’ve had a terrific 100+ comment discussion on my post wondering how people in expensive cities live a comfortable life making less than six figures a year. It’s definitely possible as the comments have suggested, but it’s not easy, especially if you’re over 30, have a family, and no longer want to live like a college student.

I didn’t want to compromise my lifestyle in early retirement by eating dog food and living in the boondocks just to have all the time in the world. Otherwise, retirement is counterproductive. When I started writing this post, I could only recall two financial buffers. But as I kept on writing, I realized there were many more.

I’m confident you’ll find more of your own financial buffers than you first realized as well. Many people I’ve professionally consulted with have asked about building alternative income streams while working so that one day they don’t have to work. This post is for all of you and a revelation that the world isn’t as scary of a place after all. 

Why It’s So Hard To Get A Mortgage According To A Loan Officer

Dream KitchenI shared with you my most recent painful journey in qualifying for a mortgage. It’s not over yet as the underwriter now wants a signed copy from my CPA on his company letterhead of all my company’s financials. My CPA said he charges $3,800 for a thorough audit, so I told him to go jump in a lake. Instead, I sent off my company’s financials with my signature and told my bank to take it or leave it. I think they’ll take it because I’ve fulfilled every single item on their 21 point check list. We shall see.

My mortgage pain post was shared around the web and I ended up having a good dialogue with a loan officer. He shared with me some frank insights as to why it’s so hard to get a mortgage nowadays.

If you are easily offended, I suggest skipping this post. But if you can handle the truth, and if you want to gain some perspective from someone who controls millions of dollars in loans to satisfy property buyer’s wishes, then read on. 

Interview With Sarah Wood, Co-Founder Of Unruly Media On Advertising, Entrepreneurship, London

Sarah Wood Unruly Media Co-FounderAs I’m off to London this summer for business and Wimbledon, I thought it would be a good idea to interview Sarah Wood, Co-Founder of Unruly Media, a social video advertising platform based in London. Sarah has been voted UK Female Entrepreneur of the Year by the Growing Business Awards, one of 15 Women to Watch in Tech by Inc., one of 10 London-Based Entrepreneurs to Watch by Forbes, Digital Woman of the Year by RED Magazine, and a Rising Star in Computer Weekly’s Most Influential Women in UK IT. Rock star!

Sarah is kind enough to take us out to dinner and host us at their corporate apartment somewhere north of Canary Wharf while we are there. If you happen to be in London from June 20 to June 30th, I’m happy to get a drink at your local pub.

I first worked with Unruly Media a couple years ago on a couple car campaigns for BMW and Jeep (video for Veteran’s Day). I was introduced by Courtnay, who used to work at another advertising platform in San Francisco and who now works at Unruly. The world is small, so it’s always good to maintain good relationships over time. Everybody will eventually know everybody.

London is truly one of the world’s great international cities. The last time I was there was in 2011 and I chronicled how much I spent on food, transportation, and shelter. London makes Manhattan look cheap, and San Francisco feel like a developing nation in terms of costs.

Without further ado, here’s my interview with Sarah on entrepreneurship, advertising, video, and London!