Have you ever been so hungry that you literally start shaking….then when you finally get your hands on food like a juicy pork tenderloin you chomp it down like a deprived starving child?
If you know that feeling, then you know what the San Francisco Bay Area housing market feels like. Buying real estate in the Bay Area is all-out, hand to hand combat. It’s the Hunger Games, but for real estate.
House hunting took up great mental energy in March. More on that in a moment, though. First other quick highlights.
I started dipping my toes into part 2 of the side project I began last fall. Not all in yet, but starting to get my feet wet. I plotted out a full work schedule and things will spin up in force by mid-May and last through mid-August. Then – hopefully – I’ll be done for good with it (and later be able to talk about it here).
Meanwhile, I’ve been healthy busy cranking on HYW. First, March results….
In March, I booked revenue of $2,558. This was up +3% year over year. After a down month in February, it was good to see things at least relatively flat YoY.
Of course, positive growth is even better. $2,558 isn’t where I’d like to be. Spring through early summer are my light seasons. I think the key will be to continue holding up high Google search rankings and continue working on keeping email signups strong.
Let’s see what went down in March….
1. New “about” page
I spent a good chunk of time rethinking and rewriting the HYW “about” page. I think it now better articulates not just how the site got started – but fundamentally what the site is about, what it’s trying to accomplish, what makes it different, and what you can expect from following HYW.
Check it out and leave a comment to let me know what you think!
2. New case study on optimal retirement withdrawal strategy
Also just released a new case study. I technically released it in April, but I’m counting it as part of March work since I wrote the March income report afterward. ¯\_(ツ)_/¯
This new case study helps you analyze how long your retirement savings will last. It uses hard numbers to prove there is an objectively correct way to maximize your withdrawals during retirement. And it teaches how to spend down your retirement savings in the most tax-efficient, wealth-preserving way possible.
Check it out to see the full analysis and please leave a comment to let me know what you think!
3. The Hunger Games: Real Estate Edition
Inventory definitely heated up this month. We were VERY active in the market, but we still have not locked a house unfortunately.
We successfully got full credit underwriting approval from 2 different banks, and that’s allowed us now to write offers with no loan contingencies.
We wrote FOUR offers in March. Getting ready to write our fifth next week. We attended half a dozen open houses and a handful more private showings. We studied reams of disclosure documents. Ran around town like we were on a month-long scavenger hunt, scoping out properties and neighborhoods all over town.
Buyers right now are CRAY.
Comps from 6 months ago are no longer relevant. Even 3 months ago are getting stale. The most on point comps are within the last 6 weeks. The market is moving that fast. When a new house comes online, it’s like tossing a fresh, sweetened carcass to starving hordes that have been deprived to the point of psychosis. The hordes descend all at the same time, ready to kill each other to get the place. I can close my eyes and see President Snow of Panem smiling.
It seems like 6-10 weeks ago the market had slowed a bit even though inventory was also sparse. We saw some homes selling at list price or even a smidgen lower. But now, with interest rates temporarily stabilized, likely until late summer (still under 4% but not for long), while inventory is increasing, I think buyers who expect rates to rise again in the fall are desperately trying to lock down a home before then. Cap rates are routinely under 3% in almost all decent neighborhoods.
So, even though we’ve written four offers, each time we’ve been either so blown away on price – to the point where there’s no foreseeable way for the winning buyer to not lose money on their purchase eventually – OR the sellers were dissatisfied with all offers and rejected them all, trying to hold out for more. (In some cases literally delisting their house for a few weeks and then relisting again. Buyers don’t care. They’re like, “Ooooh, new house! Only 900 square feet? Unpermitted bedroom? No parking? Termites galore? No prob! Chomp chomp.)
We’ve seen a house that looks like it came out of a 1960s time warp, like it’ll fall over if you blow on it too hard, still list WELL over $1M.
We’ve seen a house with vast rainwater pooling underneath + electrical requiring complete rewiring to avoid fire + plumbing requiring complete regutting + rodents and termite infestations (yeah, that’s all ONE house) STILL sell for far over list price…and list price was already multi-millions.
We’ve seen completely “meh” homes get 12 offers and the winning one go 30% over.
$1,000+ per square foot prices are a shrug. That’s just where the market is.
We already write our offers with ZERO conditions (meaning we lose our deposit if we don’t go through). We never offer below list price. We write heartfelt cover letters (real tearjerkers). We script and record personalized videos to sellers on YouTube. We meticulously show proof of liquid cash funds in amounts that would silence any seller concerns. We attach our fully underwritten loan commitment letters. We even write offers sometimes WITH THE LISTING AGENT so they can get both commissions – despite their conflict of interest – just to incent them to nudge our offer a little bit harder. (A strategy we will consider for ANY house we’re super serious about.)
And we’re STILL 0 for 4.
….WHO ARE THESE PEOPLE.
Last week, for example, we saw a terrific property in an ideal location – our dream home – and of course competition was ferocious as ever. It was the most expensive property I’ve ever offered on, at several million bucks, and we pulled out ALL the stops to assemble as strong of an offer as possible. Just about the only thing we DIDN’T do was personally deliver a freakin’ care package. Still, no dice. Seller took an all-cash offer 13% over list, no conditions, 7 day close.
People drop multiple millions cash like it’s pocket change.
Plus, sellers are pricing their properties based on pro forma numbers even when their houses currently look and rent like shit. They want YOU to pay them based on post-renovation projections, even though YOU have to actually spend the cash and do the work to do those renovations in the first place. They want the harvest without doing the farming.
Like I said, this market is CRAY.
Anything on the MLS is cray. Anything in Palo Alto is cray. Sellers have the upper hand…still after so many years!
If there’s any hope for sanity left, it’s in off-market homes….
So….speaking of which, you looking to unload your house and don’t want the hassle of staging, marketing, dealing with nosy neighbors parading all over your nice rugs? Click below and let’s talk. I’d love to buy your place. For serious. I can close fast and pay all cash. 🙂
4. Twitter followers: ~806
HYW on Twitter is currently at ~806 followers – we lost a couple last month. Didn’t work on this in March, but will spend some time in April figuring out how to build smarter follower automation tool to ramp up growth again.
1. Continue house hunting
I expect April and May to be even busier in terms of house hunting. Like I said, all-out, hand to hand combat. This is prime time for sellers to list their homes. Right now, the MLS is still the biggest source of real estate inventory, but we’re also still looking through other sources for listing info – local government websites, craigslist, etc.
It takes steely nerves to remain supremely disciplined on your criteria when bidding, while everything around is so frothy. But I fundamentally believe that investing discipline is the one thing that matters for creating wealth in real estate. You make your money when you buy. While it’s hard to feel it when inventory is so tight, there’s always another deal. Always.
2. New Twitter bot
Like I said above, I’m gonna start working on a new smarter Twitter bot. It’ll take a lot more effort to set this one up, but it should be much better at generating actual good followers without having to use Twitter’s API.
3. New case study (waaaaay stretch goal)
I want to create a new case study, but it’s almost certainly not gonna happen in April. It’ll likely end up being a case study series. The topic I’m thinking of this time is an ultimate step by step guide on how to:
- Strategically find real estate leads – all the resources out there and how to use / maximize them
- Evaluate macro factors – demographics, geography, job / income / rent / pricing trends
- Analyze metrics and numbers in both quick and dirty fashion and surgical detail – with spreadsheet tools for both
- Analyze and interpret disclosures – with screenshot by screenshot examples
- Evaluate lenders, speak their language, and get money from them
I want to write an ultimate, “only guide you’ll ever need” case study series on these topics, but pumping out each installment will almost certainly stretch over many months, which means spilling into late summer and fall, after part 2 of my side project winds down.
Realistically, this will start in May. But I’ll make April a super stretch goal.
4. Grow traffic
Email signups have grown a little bit. But overall growth and signups could be stronger (always). I want to dedicate time in April reviewing all the videos I have from the internet / email marketing summit conference I mentioned in the last report on growing your email list. It’s time to roll up the sleeves and get my learn on for that.
Goal is to identify strategies relevant to HYW’s current stage of growth, then develop a work plan to execute those strategies on the site.
Current subs: 360
April target: 400
So, that’s how March went down. Onto April!
PS – Tax day is right around the corner. Don’t forget to file (or extend)!
QUESTION: Have you recently bought a house in a competitive market? What was your strategy? What would you do differently if you had a do-over? Share a comment below and let me know!