Take Advantage Of Unfair Situations: My Master Plan To Buy Another Property Due To IPO Delays

Take Advantage Of Unfair Situations

Life isn't fair, but the savvy learn how to take advantage of unfair situations. For example, I came up with a master plan to buy another property due to IPO delays.

A lot of things in life are out of our control. So it's important to turn lemons into lemonade. Stock market corrections remind us how meaningless money is if not enjoyed. We could constantly worry about the stock market and feel miserable about how much money we're losing. Or we can invest smarter, focus on the long game, and make better use of our money.

I've most of my investable assets in various index fund ETFs, and six figures invested in actively managed portfolios to hunt for home runs. So far, I've only found one home run in Netflix over the past several years. And ironically, the joy I get spending $10 a month for Netflix's streaming service FAR OUTWEIGHS the joy I'm feeling from making tens of thousands of dollars in Netflix returns!

In this post I wrote in 2018, I reflect and share how I planned on taking advantage of an unfair situation to potentially improve my financial well-being. Afterward, I'd like everybody to think about what type of messed up situations are happening in your area that can be exploited as well! 

My Master Plan To Buy A New Home

After buying my fourth property in early 2014, I swore I was done buying more. I found my dream home with panoramic ocean views on two levels. Any more property would put my real estate allocation as a percentage of net worth uncomfortably above 40%. I'd much rather focus on my online endeavors to grow wealth.

But despite my best efforts to encourage startup employees to ask for better compensation packages given they're taking outsized risk for their potential reward, there's currently no hotter industry where people want to go work. I've failed at my secret attempt to push people away from San Francisco to prevent my city from turning into Zoo York.

The great irony is that everybody blames techies for driving up rents and home prices. Yet, the vast majority of techies cannot afford to comfortably rent their own $3,600/month one bedroom apartment or own the median $1,100,000 home in San Francisco by the time they turn 30 because they're underpaid! It's just the shear number of new employees moving into the Bay Area that is causing upward pressure on prices.

Despite the high cost of living, the San Francisco Bay Area is still great due to the plethora of opportunity to make it big one day. Uber is valued at over $60B, AirBnB is valued at $24B, Pinterest is valued at $10B, and SoFi is valued at over $6B based on their last funding rounds as of 2018. This is nuts since none of them existed 10 years ago!

Thousands of startup employees will see six and seven figure windfalls when their companies eventually go public. Capital raised from outside of the Bay Area is making some Bay Area employees rich. As a result, you want to own San Francisco real estate. After all, the average pick and shovel merchant got much richer than the average gold digger.

Opportunity To Buy Another Property

The unfair situation: One of the biggest injustices startup employees face, besides being relatively underpaid, is that they have NO LIQUIDITY. Not only do they have no liquidity, they might have negative liquidity if they decide to leave and buy their options within 90 days of departure.

On the other hand, the founders and early investors have the option of selling a portion of their holdings during each round of fund raising. We saw the Secretly founders each cash out for $3M and then shut down their company within 12 months to the detriment of their employees.

Dropbox and Jawbone aren't public companies, yet their founders have multi-million dollar houses in Hawaii and Montana respectively. Why? Because they were able to cash out for millions during earlier funding rounds. Meanwhile, most of their employees are stuck.

The founders know that if they go public, they will see a massive devaluation in their company given late stage private market valuations are absurd. If they can sell their stakes regardless of being a public company, screw the employee's desire for an IPO!

Opportunity! Due to this asymmetric financial disparity between founders and employees, it may make sense for me to buy another property before these thousands of startup employees get liquid.

I've spoken to perhaps a couple hundred startup employees in their 20s and 30s and almost all want to buy a home, but can't until there's an IPO. Even though I don't want another home, the opportunist in me sees another chance to potentially make a huge return with relatively less risk. Let's take a look at the Facebook example below.

IPO Matters More Than Company Valuations

Just look at what San Francisco real estate prices did after Facebook IPOed in 2012. I even wrote a post called, Should I Sell My House Due To Facebook Going Public? Thank goodness I didn't! In retrospect, what I realize now is that it takes much longer for IPO money to work its way into the real estate market due to the IPO lockup period and the time it takes to find a home.

San Francisco Home Prices After Facebook IPO
SF median home price over the past 10 years.

I'm not saying that Facebook is the only reason why the median SF home price has rocketed 65% since 2012. There are obviously lots of positive economic factors involved. But there is NO DENYING that Facebook's thousands of new millionaires had an upward effect on home prices.

Some pundits say that because companies like Twitter, Lending Club, and Square aren't doing so hot in the public market, there will be a negative effect on SF Bay Area real estate. I agree! At the margin, I expect home prices in the region to flatline or fall over the next several years as prices far outpaced income growth.

But what these bearish pundits don't realize is that company liquidity is more important than company valuation. Even if Uber, Airbnb, and Pinterest all see their valuations cut by 50% in this next downturn, they are still worth $30B, $12Bn, and $1.75B, respectively. Again, none of them existed 5-10 years ago, so all this value creation is simply a bonus.

From an employee's perspective, a 50% decline in company valuation means that instead of a hoped for $200,000 – $3M windfall over a four year vesting period, as is the case for most startup employees, the windfall may be “only” $100K – $1.5M. $100K – $1.5M plus any base salary savings during the vesting period should be more than enough to buy a $700,000 – $3M property.

Less than 1% of the entire housing inventory is for sale at any given point in time. In San Francisco, there were roughly 480 listings in the month of December 2015. Imagine if just 1,000 of Uber's 5,000+ employees decide to buy homes after their IPO lockup period is over? There will be tremendous upward pressure on Bay Area real estate prices.

Palo Alto, CA Median Home Prices
Palo Alto, CA Median Home Price

Visualize Various Scenarios

I don't know the future, but I always enjoy planning for the future. Writing this post is a great way to hash out scenarios to make sure I'm as prepared as possible.

Ideal Likely Scenario : The real estate market softens between 2016 – 2017 due to a slowing global economy. There are specific property listings that can be had for at least 10% lower than 2015 peak prices. One of the private giants goes public in 4Q2017 as the stock market regains its legs. The IPO lockup period ends 6 months after listing date. As a result, thousands of people will be looking to sell stock and buy property in the summer of 2018.

Action: Buy property a $250,000 – $400,000 income earning couple would like to buy during the winter of 2017-2018. Target price: $1.2 – $2M. Winter is the best time to buy property anyway because anybody listing is a desperate seller. Look to then sell the property during the summer of 2019, 1.5 years after purchase for hopefully a $150,000 – $300,000 gain.

Unlikely Scenario: The real estate market becomes the most coveted asset class and rises another 20% over the next two years because the stock market is melting down. People pull their money out of the stock market and into real estate, a situation similar to the 2000 stock market crash. Companies like Uber and Airbnb delay going public until 2018 or later, leaving thousands of employees in the cold.

Action: Don't buy anything. Consider selling my rental condo or rental single family home to simplify life. A stock market crash means there will be more tenant turnover and hassle.

Terrible Scenario: The stock market and private market get slaughtered so much so that any interest in buying property fades. People just want to keep cash and deleverage. As a result, the property market corrects by 20%-30%, and defaults rise once again.

Action: Don't buy property due to increased debt and illiquidity. Instead, continue following my investing game plan in the stock market to potentially benefit from a rebound.

One consistent solution: Save, save, save in order to have the OPTIONALITY to take advantage of buying opportunities. An Uber IPO could potentially boost property prices by an additional 20%, resulting in a 100% cash on cash return on a 20% downpayment. I know it's coming. What I don't know is the market environment during the time of its IPO. Related: Invest Or Save For A House Downpayment?

Take Advantage Of Market Disconnects

The world is messed up. Your key as a Financial Samurai is to BE AWARE of and TAKE ADVANTAGE of all the unfair things in the world. If you know thousands of people in your area will see huge inflows of cash due to upcoming IPOs, then you should get ahead of the curve by buying what they plan on buying before prices rise.

You know the federal government punishes individuals who make over $250,000 a year by phasing out deductions, adding extra investment income taxes, charging a higher marginal income tax rate up to 39.6%, and forcing you to pay outrageous healthcare costs. As a result, you don't bother killing yourself trying to make more money.

You know your female boss feels pressure to vote for Hilary Clinton. Therefore, you wisely display your support for Hilary next time you talk to her, even though you think Hilary is a little disingenuous and robotic. Getting paid and promoted or surviving a mass layoff is highly dependent on whether your boss likes you.

You know rich parents buy their kids' way into the best private universities. As an average person with no special privilege or massive inheritance waiting, you work harder than everybody else and try to make your own fortune through entrepreneurial activities so that you too, can one day give your kids a massive head start.

The financial world is yours for the taking. I've highlighted an opportunity I discern here in San Francisco. Whether I go through with my plan is a different matter. But what I do know is that I will be saving a lot of money over the next two years just in case!


Explore real estate crowdsourcing opportunities: If you don't have the downpayment to buy a property, don't want to deal with the hassle of managing real estate, or don't want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.

Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible.

For example, cap rates are around 3% in San Francisco and New York City, but over 10% in the Midwest if you're looking for strictly investing income returns.

Sign up and take a look at all the residential and commercial investment opportunities around the country Fundrise has to offer. It's free to look.

Fundrise Due Diligence Funnel
Less than 5% of the real estate deals shown gets through the Fundrise funnel

Shop around for a mortgage: Check the latest mortgage rates online through Credible. They’ve got one of the largest networks of lenders that compete for your business. Your goal should be to get as many written offers as possible and then use the offers as leverage to get the lowest interest rate possible.

Updated for 2019 and beyond. I actually ended up selling one of my rental properties in 2017 because someone offered my 30X annual gross rent ($2,740,000). I tried to sell the property for $1,700,000 in 2012 and NOBODY wanted to buy it.

I reinvested $550,000 of the $1,800,000 proceeds in real estate crowdfunding for 100% passive investing. So far it's been fantastic. The real estate market in SF, NYC, Seattle, Honolulu, Vancouver, London, and Toronto are slowing due to high valuations and increasing supply. Airbnb and Uber are finally set to go public in 2019.

About The Author

46 thoughts on “Take Advantage Of Unfair Situations: My Master Plan To Buy Another Property Due To IPO Delays”

  1. Jeremiah Pomerleau

    Excellent article and I sincerely appreciate you sharing your Bay Area RE outlook. Regarding your net worth asset allocation, why are you concerned with a 40% stake in RE? Presently, my wife and I feel very comfortable and confident at 60% and would like to increase to 75%. We feel that if one/couple has sufficient cash on hand (e.g. min $150K), then why not purchase as much RE as possible. RE only requires 20% upfront and the renter pays the rest, and when its paid in full then the profits pay forever. In the stock market, its ‘your’ money whereas RE allows you to leverage.

    We acquired two properties in CO in 2008 and 2012 which are supported by strong renters and sizable equity. We considered paying them in full this year, but we cannot decide if we want to buy in the Bay where we live/work. Burlingame is our favorite area, but its truly ridiculous right now. Cupertino and Santa Clara seem to be safest bet given Apple’s spaceship.

  2. You mentioned that you would look at houses between $1.2-2m for people with incomes of $250-400k. That is basically 5x income. With 20% down, the mortgage is 4x the income. Isn’t that a large amount of leverage to take? What do you recommend in terms of the proper mortgage to income ratio? I think it should be closer to 2-2.5:1 or so. Although maybe you are not suggesting to buy a house with that income but simply that the average person may make that decision…thoughts?

    1. 4x-5x income is normal here nowadays with mortgage rates at 2.5% – 3.5%. A $1M mortgage at 2.5% costs $3,940/month, $1,850 of which goes to principal.

      A $150,000-$200,000 income earner could afford that bc that is $8k – $13k a month in income after tax.

      1. In NYC, I am paying effective tax rate of 43% (not marginal). That and when I run number on a $1m apt, it comes out to a mortgage of about $4,500 + taxes and fees which comes out to about $6k per month per $1m.

        In my case, a $1m house for $200k income would look like this:

        $200k = $9.5k per month after taxes
        $6k per month in housing costs

        I would think that is really tight, despite what the banks are telling me.

        A lot of close friends seem to be sticking to your numbers though so it may just be that I am a wimp when it comes to leveraging on property.

        Thanks for the quick response!

        1. Ouch, a 42% effective is high. That makes sense if you don’t have a mortgage interest deduction.

          Out of your $6k payment, you will get roughly 30%-35% back. So your effective payment is more like $4,100, which is less than half your $9.5k after tax. Doable; but not ideal.

          Forces you to save before getting your refund if you do it that way. After housing, I think I can live comfortably off $1,500 in NYC. You?

  3. As someone looking to buy a home in SF, but nervous that I’d be buying into a bubble, I’m curious how you would disambiguate your ideal from the “terrible scenario.” Let’s say housing prices fall 10% over the next year. At that point, do you buy? What if there’s another 10% downside awaiting?

    The trouble is that at any given time you can never tell if you’re at a bottom or catching a falling knife.

    1. Nobody knows for sure what prices do. But looking at history, SF tends to rise, then plateau, then decline by 10-20%. 20% was the worst case scenarios during the housing meltdown.

      I think SF is one of the cheapest international cities in the world. I see a lot of upside over a 20 year period. The amount of wealth and innovation created here is faster than anywhere else.


  4. I think the Bay Area is in for a significant downturn of up to 30% in some areas. There are far too many unprofitable start-ups and we have reached the point where an 800 square foot one bedroom asking a million dollars downtown SF has buyers questioning the overall value proposition of home ownership. It’s feeling a lot like mid 2000, however there is the added real estate risk/opportunity of literally thousands of new condos/apartments coming online. Be patient and watch things unravel then swoop in.

    Burlingame is nice but already extremely expensive. I’m looking at Oakland. It’s ground zero for gentrification and I think has become Brooklyn 2.0. Rents have also skyrocketed over the past two years. You can still buy a small home on a large lot in Rockridge for under 1 million. If you’re able to deal with more transitional neighborhoods look at West & North Oakland. You are correct Sam…the deals are coming in about 24 months.

  5. It’s interesting, b/c I just spoke to a guy at TechCrunch yesterday and asked why don’t more journalists just leave and start their own company online. They have the writing skills. He said, “They don’t have the access. Without the TechCrunch brand, they won’t be able to survive.” Ouch!

    It’s all about owning the entire vertical. If you can write, create, market, brand, build business relationships, interview, and have a strong grasp of important topics, you can earn FAR MORE than any journalist ever could. But alas, growing your own website takes work and sacrifice.

    1. In other words, they can write, but that’s it.

      They can’t market, run tech, build relationships, etc.

      In addition I’d say many of them know their subject only from an education point of view, not from a practical point of view. This may be different in tech, but it’s certainly true about personal finance where many mainstream media types seem to write about things “in theory” — they don’t really know the practicalities of managing money.

      You can tell this by the terms they use (misuse) as well as their depth of analysis and thinking when it comes to practical financial issues.

      1. It’s definitely a different or limited skill-set, running your own site versus just writing content. It’s much easier to be a freelance writer or journalist versus building up a large enough site to earn a living.

        I do appreciate a journalist’s ability to write succinctly, hustle, and interview pertinent people (perhaps largely thanks to their organization’s reputation). And, you have to admit that a great shortcut to building an immediate audience is getting a job at a large organization like Yahoo finance, WSJ, etc versus slogging it out like I’m doing.

        The only thing that will get to me about a journalist is an arrogant journalist and one who abuses their power.

        1. I do agree that working for a name-brand organization is a resume builder. And I don’t dispute that many are good writers, but having dealt with the media both on the inside (I was a freelance writer for some decent-sized organizations) and outside (I’ve worked in marketing and PR for 25 years), I can say:

          1. Most journalists/writes do not know much about their subject matter. They are assigned a topic, research it for a day or so, then write on it. Then they move on.

          2. Even ones that stick with the same subject matter (like money) for a long time are writing from other people’s knowledge, not their own. You can tell by the content (this is for many, not all, of course).

          3. Most journalists/media people do not let the facts stand in the way of a good story. They have a POV or spin they want to get across and they either twist or ignore facts to make a good story. Even ones who want to get the facts straight often mess them up because they are not familiar with their subject matter.

          4. Most pieces are heavily edited, so what you ultimately see is not just the work of one writer. Believe me. I wrote for top-notch magazines and had my wife as an editor and the magazines still always heavily edited my stuff.

          I could list many examples on why I believe each of these, but I’m trying not to write a post here. :)

          I was responding more to the original comment more than anything:

          “It’s unfair that journalists who worked their way up the corporate ladder are being downsized, while “unqualified” bloggers and enterprising journalists are earning more than ever by growing their following and building assets.”

          I don’t know if he was joking or not, but I’d much rather read a piece by someone with decent writing skills who actually knew something on a subject than a piece by someone with great writing skills who knows little about their subject.

          1. I think his quotes around unqualified is signifying that bloggers are qualified and have done a tremendous amount to upend traditional media.

            I remember sitting on some Stanford J school grad classes to see if this was something I could pursue. The teacher was instructing the students how to use WordPress….

  6. I am a newbie to the world of investment. My father has made serious money over the years and I think I am a complete disappointment to him in this department ;) This year I have decided to change my trajectory and really get involved. Thanks for the great site and articles.

  7. I am looking at an unfair advantage in Calgary Alberta with oil prices so depressed. The city has historically been a boom bust city, with long boom cycles tied to oil prices.

    What is happening with oil as depressed as it has been this long is companies trading at 1/10th or less of their 52 week high and 1/50th of where they were 2+ years ago. At the same time, people are losing their jobs at these companies and pretty soon, we will start to see (1) Prices of vacation properties in the BC Interior dropping (Calgary oil people love to buy vacation properties in BC) and (2) Prices of homes in Alberta dropping as people default.

    While it’s unfair to these people, I look at that as an opportunity. How can I have sufficient capital / bankroll to buy their homes, buy into their companies, as oil rebounds in the next few years. Do I think oil will rebound? Yes. Do I know when it will rebound? No. However, if I can rent out the home or bear the holding costs of the stocks, I seem massive long-term upside and am not into my capital appreciation for the short-term.

  8. It’s hard to say, but I think the opportunities are going to be in the North Bay. Prices in SF are ridiculous; and as you said housing prices may drop or stay stagnant due to a disconnect in income earnings. If I’m not mistaken, most of SF’s commuters come from the pretty saturated East Bay areas. With the new Marin-Sonoma SMART train coming online within a year the North Bay will start looking pretty attractive for those techies who can’t afford to live in SF.

    1. It’s interesting to see how Uber and a Wholefoods is moving into Oakland and causing an uproar. One has to either protest, or figure out areas to profit now that the news is out there. It doesn’t have to just be buying real estate. It can include starting a business catering to the new demographic as well. People have at least a year to figure something out.

  9. I know it’s not (just) real estate, but how does your diversification look in relation to US vs rest of the world assets? Being in Australia other countries (US specifically) always come up when people talk about diversification (both real estate and shares). Do you consider international much being in the US/largest country/economy?

  10. Nice article. The flip side of this is if all these SF startups start massively laying off people all at the same time, SF real estate market tanks (ie – Twitter layoffs as an example)

    1. Indeed. This scenario is encompassed in the article:

      Terrible Scenario: The stock market and private market get slaughtered so much so that any interest in buying property fades. People just want to keep cash and deleverage. As a result, the property market corrects by 20%-30%, and defaults rise once again.

      Action: Don’t buy property due to increased debt and illiquidity. Instead, continue following my investing game plan in the stock market to potentially benefit from a rebound.

      The thing about this scenario is that those being laid off are already in the system. They either bought, couldn’t buy, or don’t want to buy. What I’m looking for are new people in the system who plan to buy due to an IPO. It’s a herd mentality. Everybody wants to do the same thing with their money.

  11. You make a great argument for purchasing properties in San Fran right now. So many owners/employees with so much cash tied up in equity. They absolutely will be looking to buy once they IPO and can cash out some stocks!

  12. Tracy@financial nirvana mama

    The markets are just a business of transferring money from the impatient to the patient – warren buffet

    With the Canadian economy dropping to a lull and the market flattening or slowing in many parts of the country, I’m hoarding cash too waiting for another opportunity whether it be another rental property and/or stocks. I have a bearish outlook too.

    If you plan to buy outside of SF, my advice is find an A team that you can trust to manage your property:)

  13. I think the Saudi’s manipulation of oil prices to drive North American shale producers out of business qualifies as unfair happenings. A price reduction from $100+ to $30 per barrel has my attention.

      1. From low to high level of risk:
        1) Buy big oil companies like XOM and CVX
        2) Buy an oil price tracking ETF like USO/DBO for a long hold
        3) Buy Canadian and Australian index funds (commodity based economies that currently have poor exchange rates because oil is priced in USD)
        4) Short energy focused junk bond funds/buy them once they tank
        5) Short REITs focused in the Houston or North Dakota areas/buy them once they tank
        6) Build huge apartment buildings in Alberta and North Dakota for when the workers rush back in 10 years time (just kidding…)
        7) Start an oil finance company to buy up distressed wells in bankruptcy

  14. Interesting idea, but I wouldn’t be buying property assuming tech IPOs are going to bump the property values. SF is even crazier than usual at the moment, but a new equilibrium will be reached eventually, as these companies find they are losing candidates to companies in lower cost of living areas (lower being very relative in the bay area).

    Most of those employees at preIPO companies will not see a significant payday, and even the ones who do will likely not be looking to buy property in the city. City is where you bust your hump when you’re young, and then you move somewhere more affordable and family friendly when you’re ready to buy a home and have a family. Palo Alto is spectacular, and why the property values were impacted so heavily by Facebook being in their neighborhood.

    SF property is too rich, it’s going to crash, hard, it’s just a question of when. Glad to see you’re thinking outside the city.

      1. I also think SF and NYC will not experience a decline greater than 20% in the next 30 to 40 years even during any severe downturns. There’s just too much desire for people with money to buy a property in these locations, combined with very restrictive building policies to add much significant new supplies. The most likely scenario is price will decline around 5 to 10% and just plateau for several years if the economy heads south.

  15. Sam, you are a bad influence! After reading this article I emailed my realtor about a property I’ve had my eye on, all after promising I wouldn’t look again until we paid off one of our other properties. Of course real estate in SW Colorado is vastly different than in SF, but my thought is that if you don’t overpay or get emotional over the property, real estate is almost always a good investment.

  16. Very wise planning! Even if things don’t pan out in terms of timing, and a softening of real estate prices before a ramp higher post IPOs, you’ve got other contingencies in place.

    It’s all about planning. It’s amazing how tech founders have been able to lure so many people away from well paying jobs to work for so much less. It’s great to take advantage of!

  17. If you do this, I’d consider “diversifying” by:

    1. Buying homes that are of a different value/class than what you own now. For instance, if you already own $1 million homes, buy $500k homes now.

    2. Buy in different (but still good) parts of the city from where you own now.

    Other than that, the risk is up to you. 40% of NW does sound like it’s getting high to me…

    1. Excellent suggestion. I own in San Francisco, but I’m looking at cities south of San Francisco like Burlingame, San Mateo, San Carlos, and Hillsboro.I’m also looking at two-unit or multi-unit properties besides SFHs.

      The decision is to try and take advantage of rising rents (local economic growth) for long term cash flow, or buy prized properties desired by newly liquid techies or foreign buyers want to buy.

      1. Are you sure you want another long distance property beside your Hawaii and Lake Tahoe? Isn’t that Joe at retire by 40. Had to fled his 4-plex because of the distance. I understand if there is a problem in Hawaii and you “had” to go to Hawaii for “work” … Poor you. When :P, but really, driving through the horrendous San Francisco traffic to resolve a problem in the surburb might not be a great idea.

        Sam, your cash flow is so great, just stick to your area, walk to your rental to show your property or to monitor that sloppy contractor to get your Fitbit steps in is more ideal than getting stuck in a car for 1-3 hour of San Fran traffic getting fat in your retirement while you could have use that extra hour on the tennis court battling the guys you’ve trying to beat?

        Just saying… :)

        1. All I’m sure about is that there’s a huge disconnect and potential opportunity to buy property before the next uptick. I don’t want to buy another property, but this potential opportunity could be too hard to refuse.

          I plan to buy in Burlingame, which is only 20 minutes south of where I live.

          It’s all about planning! Any disconnects where you are?

  18. Great read as always – thanks FS.

    I am curious to hear if you think that tech markets across the nation will follow suit – specifically Austin, TX? For the last 18 months I have been hoping housing prices here to level off or even dip as you have described for SF. While there are very different circumstances between the two cities, I think there are also a lot of similarities. It is difficult for me to feel confident in this market considering the rapid growth and expansion – I am not quick to jump in while everyone else is.

    1. As a real estate investor based in SF, I can tell you that most of us are looking to expand our portfolios in places like Austin, Portland, Seattle, and Las Vegas. As a result, I think Austin will continue to see inflated prices pushed along by outside demand, in addition to local demand growth.

      It’s the same thing with locals in SF feeling that real estate prices are so expensive, but compared to so many major international cities, SF is pretty INEXPENSIVE! The percentage of international buyers continue to rise, and I suspect the percentage of out of state buyers will continue to buy in Austin.

  19. Great article, Sam! Things are heating up in Playa Vista, California, now that Google and Yahoo and Facebook and some other heavyweights have moved into the area. Housing prices are sure to see a nice bump up due to the entry of those players into the local market.

    I’m buying a fourplex now, and briefly considered buying one near Playa Vista to try to take advantage of the all-but-certain property value bump, but it just isn’t quite right for me right now. First, I think it’s less likely that highly compensated employees will be living in an average fourplex in that area. More likely that they will go out and buy houses, especially after being here for a year or so. SFRs don’t really make sense for me numbers-wise, because the cap rates are quite a bit lower on average and I have a mortgage payment to make. Second, I’m concerned about buying rental property in L.A. County. Many parts of the county are under rent control, and I want to steer clear of that nightmare for as long as possible.

    But if any investors are out there looking to buy SFRs for investment, I would strongly consider the Playa Vista area.

  20. You sir, are a genius! Who would have thought to coordinate their housing purchases in SF right before a large tech company goes public and their employees cash out?

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