Saturday, March 26, 2005

The NYT published an article yesterday, Trading Places: Real Estate instead of Dot-Coms, that affirms what my wife and I, and also my brother and father, have been talking about for a while now. But I'll take it a step further than the measured tones of the author: this baby's gonna burst!

For about a year and a half, we were involved in a situation where we felt like the people buying the house we're renting were speculating. They kept sending messages, along with the broker who sealed the deal, that the owners were going to move in. But somehow we had gotten wind that it was a 1031, exchange of property, so we read the rules and knew the owners weren't going to sell their house in Hercules to move into Oakland. So we stayed put and then they tried all kinds of other loopholes to try and circumvent the Rent Control rules. Long story short, we stayed, fought them in the Rent board, won, of sorts. At least, their exorbitant rent increase did not go through...though the rent board met them halfway. Meanwhile, the lady upstairs moved out in November and they had not found a renter for the place until now.

The loophole they claimed in the beginning was "debt service costs." We also found out they'd had a bankruptcy. Now, I don't know about you, but buying a home in Northern California and then claiming debt service cost after a bankruptcy sounds like speculation to me. As the article states, in San Jose, the cost of a home is 25 percent more than what it would cost to rent it in a year.If I'm reading right...

So...we shall see.

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