1415 Shrader Living
The sale of the well designed ten foot wide home at 1415 Shrader Street closed escrow yesterday with a reported contract price of $849,000 ($824 per square foot) having been purchased for $749,000 in 2004 following its construction.
Inside The Ten Foot Wide Home At 1415 Shrader Street [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by M

    so someone paid 800K for 2 trailers stacked on top of each other, congratulations.

  2. Posted by hangemhi

    so who is going to do the calculation for how much the Seller earned? or is that only something commenters do when the sales price is lower?

  3. Posted by A.T.

    hangemhi, the calculation is not difficult. Came out ahead about $50,000 after selling costs, about $600/mo over the 7-year period. Paid about $4200/mo. out-of-pocket, less the 600/mo gain nets out to $3600/mo for this tiny place (assuming zero maintenance costs). So you tell me what the seller earned during that 7 years — maybe about $100,000 in the hole compared to renting? And that’s on a rare 2011 sale that is above the 2004 price! Note that I’m ignoring inflation, which ate up a big chunk of the $50,000 gain.

  4. Posted by gg

    AT- what about paying down principal and tax savings?

  5. Posted by A.T.

    “AT- what about paying down principal and tax savings?”
    Factored into the numbers above. The monthly numbers would otherwise be higher.

  6. Posted by [anon.ed]

    Your numbers are untrustworthy and selective in the first place, AT. You think you can skip stages and summarize on here?
    http://www.what.ever.com

  7. Posted by A.T.

    fluj, feel free to provide whatever numbers you think one should use. Or you can just stick with the characteristic “wrong, you’re an idiot” with nothing more.
    Run the numbers yourself and you’ll see that mine are just fine (takes about 2 minutes). If we hear nothing further from you, then I think it will be clear that you have nothing of substance on this.

  8. Posted by Brian

    Assuming the $4200 number above for the sake of argument:
    $4200 / mo
    $600 / mo profit
    $800 (ish) / mo principal paid – effectively savings
    $1000 / mo less paid in federal taxes (30%) due to interest deduction
    I see a net closer to $1800 / mo for this place after it’s all said and done, assuming no maintenance and the starting numbers from A.T.’s strawman…

  9. Posted by sparky-b

    If the 2004 purchase was an Option Arm that they put $100K down on, then they would have been paying about $2700/month.

  10. Posted by [anon.ed]

    feel free to provide whatever numbers you think one should use. Or you can just stick with the characteristic “wrong, you’re an idiot” with nothing more.

    Right. The nice thing these days is that others are calling you out on your polemic. Thanks, but I will always pass on spending time in your direction.

  11. Posted by A.T.

    Ah, flujie, good to see you’re remaining consistent, criticism with nothing more!
    Here are my numbers:
    assumptions: 0 down (makes little difference if you put something down as opportunity costs roughly cancel it out), 6% 30-yr, 0.5% pmi, 30% tax savings, 6% selling costs, 2% buying costs.
    4500/mo total mortgage
    1000/mo property tax
    +300/mo PMI
    -1000/mo tax deduction
    -800/mo principal payment
    -1200/mo resale gain
    +600/mo selling costs
    +200/mo buy costs
    = 3600/mo (assuming 0 maintenance — add about 200/mo to be realistically conservative)
    I’m guessing it would have rented for about 2500/mo in 2004.
    Bottom line is even with a rare $100,000 gain from 2004-2011 (well before peak to present), the 2004 buyer likely came out behind and at best broke even vs. renting. The high transaction costs of buying kill you unless you keep a place about 20 years.

  12. Posted by tipster

    A.T. you forgot to deduct some for taxes, and sparky your option arm, pay less than the interest example is really not applicable because there would have been a balance due on sale.
    Assuming 5% interest and 1.2% property tax and taking 22% off both mortgage and property tax for taxes, $200 per month for insurance and $200 per month for maintenance I get $3800 net on a 100% interest only loan. (This is all academic: the owner was a trust fund and no loan appears to have been taken out. My analysis is that of an ordinary human, not a trust fund kid).
    Rent on that place probably would have been no more than $3400 – on the positives are 1030 square feet is spacious for a 1 bedroom, and there would have been a premium paid for no neighbor noise, though 3400 would have been a stretch.
    So they lost about $32,000 over renting, spent about $50K selling it, paying the transfer taxes and financing it, so they probably made $18,000 over a 7 year hold, assuming they did nothing to the place, which is likely given that it was new. If they had refinanced once or twice, that probably got eaten up, but then maybe their monthly costs would have been lower.
    Each of the realtors made in a few weeks as much as they made in 7 years.
    Hmmm, 7 years vs a few weeks. No wonder it’s always a good time to buy.

  13. Posted by sparky-b

    But wait everyone got an option ARM in 2004, I know I have that 1,000,000 times. They would not have gotten a 6%. Plus why assume the put nothing down and paid PMI.
    Tipster, that cost if for full amortized. Not just interest only, and most certainly not for the minimum payment.

  14. Posted by gg

    Tipster is akways good for laugh. 0 down ARM and paid to refi also.

  15. Posted by Modernqueen

    @ M: you and many others seem to forget that buying real estate has a huge amount to do with DESIRE; the desire to want a particular piece of property and the acceptance to pay the asking, or over.
    It’s not “just” about numbers, and taxes, and return on investment, etc. If they want it badly, they will buy it, and I assume really enjoy living there.
    This narrow, little house is really very well crafted and open, in a desirable neighborhood.
    And the buyer wanted it. End of story.

  16. Posted by hangemhi

    “each of the Realtors made….” what a moronic statement. Did any of the Realtors benefit by living there or did they have to pay their own living expenses? And what do you do for a living tipster? Do you earn money, or just work for free?
    Either way, this is a unique property that would have gotten a high rent….. I’ll use tipster’s $3,400.
    Not sure how you missed the loans on public tax records, but they got a $599,000 loan (80% LTV) and recently re-fied for $65k less so AT’s $800 per month in principal payments is about right and that means it was a 30yr fixed. That also means we can kill AT’s PMI payment.
    And we know from you all on rent-controlled posts that $800 would have been wasted on wine and woman, or drugs, and income lost due to laziness…. so that’s a gain via forced savings.
    Monthly mortgage = $3,591.31 (at 6% 30 yr fixed)
    Tax deduction and prop tax payment cancel each other out
    We’ll assume the forced savings equals the total transaction costs – $65,000 each
    So the place rents for $3,400, this guys effectively pays $3,591.31 for 7 years or $16k more to own over the entire period, and he sells for $100,000 profit and therefore MADE $84,000 or $1,000 per month to live there. Tax free btw, so you’d have to earn $1,350 per month in your job…. so if you could have given yourself a $16k annual pay raise to live in this place…. would you have?

  17. Posted by A.T.

    hangemhi, you are right that with these new assumptions (20% down) there is no PMI. But don’t forget the opportunity costs on the $150k down payment – at a 5% return that’s about $50,000. You can’t ignore that. Also, add in property insurance. My 6% rate assumption on a jumbo in mid-2004 is actually a bit low by a few 10ths, but I’ll leave it. With all that, and assuming a 3400/mo comparable rent (too high in 2004, but let’s go with it), you’re at about breakeven, maybe very slightly ahead over renting. And that’s buying before the mid-00s boom really took off and receiving an extremely good result on the 2011 sale. Anyone running the numbers on a 2011 buy would be reckless to assume the same future result, but have at it.

  18. Posted by tc_sf

    “And we know from you all on rent-controlled posts that $800 would have been wasted on wine and woman, or drugs, and income lost due to laziness…. so that’s a gain via forced savings.”
    If you assume that then you could also assume that the seller spent the sale proceeds on the above as well! (Or in general that owners cash-out reified out any equity)
    Accounting for the $65k transaction costs and putting in the DP opportunity costs gives you a more realistic number

  19. Posted by shza

    And we know from you all on rent-controlled posts that $800 would have been wasted on wine and woman, or drugs, and income lost due to laziness…. so that’s a gain via forced savings.
    We’ll assume the forced savings equals the total transaction costs – $65,000 each

    This is a ridiculous sleight of hand to wipe out the transaction costs. How about ditch the absurd assumption about $800 on drugs and women in the alternative rent scenario and just subtract the $65k from your $84k profit number.
    Why can’t anyone even try to be honest about these things?

  20. Posted by shza

    I see tc_sf beat me to it.

  21. Posted by A.T.

    $800/mo on wine & women? Man, I wish I could keep my monthly wine & women budget to double that. And I’m married with two kids!

  22. Posted by sparky-b

    I’m with you there, I spent that this weekend on my women (little women, but no less spendy).

  23. Posted by Sausalito_Res

    Agree with Modernqueen @ 10:52.
    A lot of hating on this thread, considering it’s a really nice smaller home. Yeah…it’s expensive compared to renting a similar-sized apartment. If you can afford the down payment and the monthly, its about having a living space that you like.
    Congratulations to the buyer for having great taste and bucking the trend towards bloated houses. And congratulations to the seller who got to live there for seven years and about broke-even. It’s been said many times in comments on this blog that a home is not an “investment”.
    And anyone who calls this house “2 trailers stacked on top of each other” doesn’t deserve as much attention as I’ve already given him/her.

  24. Posted by wc1

    Glad this sold. Love it.
    Grats to the buyer/s and may they have many happy years there.

  25. Posted by hangemhi

    my attempts at sarcasm mostly seem to have been understood – but the difference btwn the rent controlled renter is he realizes his savings each month. The owner PAYS that money out of pocket into a forced savings via his mortgage and doesn’t get it back until the end. So no “wine and women” for him until he sells which he only just did.
    My sarcasm about the renter is that on other threads it is purported that rent controlled people don’t bother to advance in life, don’t learn how to invest, don’t save, and don’t invest elsewhere. And that isn’t the only reason “opportunity costs” are a HUGE assumption. If he had it in the stock market he is just as likely to have panic sold at the bottom and bought back in after the bulk of the run up.
    Lastly, the idea that the forced savings paid his transaction costs is just math – he grossed $100k btwn the $749k and $849k sales prices, and he had $65k that came out as well from his forced savings account. So no “sleight of hand” either.

  26. Posted by tipster

    Um, no. Forced savings money is his money he used to pay down the principal and it doesn’t make the transaction costs disappear. Taking $100 out of one pocket and putting it into another doesn’t reduce your costs at all.
    This is why I use interest only. It’s not as though I assume everyone takes out an I/O loan, it’s that I only look at the costs, not any “forced savings”. When I did, there wasn’t much left over.
    This certainly was a lucky outcome for the seller. Others haven’t been so lucky. 229 Brannan 2d was bought for 1,400,000 in 2005 and is now for sale for $842K. 40% off. The bank ate the loss here. They won’t make the same mistake again.
    http://www.redfin.com/CA/San-Francisco/229-Brannan-St-94107/unit-2D/home/855111

  27. Posted by shza

    Lastly, the idea that the forced savings paid his transaction costs is just math – he grossed $100k btwn the $749k and $849k sales prices, and he had $65k that came out as well from his forced savings account. So no “sleight of hand” either.
    Come on. Recall that you did this in the context of a buy/rent comparison.
    The sleight of hand is pretending that the “forced savings” represents a net credit in the owner situation versus the renter situation (because you posit that the renter would have spent it all).
    Quit with the sophistry.

  28. Posted by hangemhi

    shza – i’m using the tricks used by the most prolific commenters here. but my “tricks” are plainly spoken and not meant to deceive. I explain how I came up with it….. do I need to go find the thread about the old guy who got evicted for subletting part of his apartment?
    Either way, the forced savings is undeniable. We can see from tax records that he did a recent refit for $65k less than his original loan, and that is exactly in line with a 6% 30 yr fixed loan.
    what’s more, per my math the mortgage and the rent were almost exactly even. So not only is it forced savings – IT COMES OUT OF THE MONEY THAT WOULD HAVE GONE TO THE LANDLORD.

  29. Posted by tc_sf

    “It’s been said many times in comments on this blog that a home is not an “investment”.”
    Funny that for something that’s not an investment, the industry types above seem to spend so much effort trying to deceive people about the investment aspect.

  30. Posted by Modernqueen

    Agree with Sausres: good comments. most of the other commenters here continually throw out numbers, metrics, stats, REI, blah, blah, blah.
    Souless thinking. Bankers thinking.
    I tend to think that location, location, location is second place to:
    desire, desire, desire.

  31. Posted by Modernqueen

    well, shoulda been ROI..
    I was thinking about new hiking boots. sorry.

  32. Posted by bbbeeseesdf

    a. This place wouldn’t rent for 3400 in this neighborhood. Not when you can can get 2br with parking for less close by. Not in 2004. Not in 2007. Not now. Work your calculations assuming a more likely $2500 for rent and see where you come out.
    b. No one has actually lived there full time in the 4 years I’ve lived nearby. Probably a second home so I suppose no worries about rent vs. buy for the owner.
    c. Its still a lousy value for a 1br at $850k with no parking no matter how you slice it. Its not a “family” home by any means. I assume it was probably purchased by empty nesters who aren’t terribly worried about the place as an investment, but we’ll see if and when the moving vans roll up.

  33. Posted by hangemhi

    i wish i was rich enough to treat real estate with no consideration for numbers. but i guess you have to be rich to have “soul”.
    i’m here arguing numbers and not the place because i think it sucks because of it’s size and that it is stuck in btwn two much larger buildings. do you know what 500 SqFt per level feels like after a few months? I mean look at that living room photo – what is that, 5 feet, maybe 6 feet wide? It’s brilliant staging giving you a feeling of depth that isn’t actually there.
    i give them props for doing as much as they could with the space – but 1,000 SqFt on one level feels great, but when split in 2 levels IT IS FRIGGIN tiny.
    Music has soul. This place is like a tin whistle played by a 5 year old

  34. Posted by Modernqueen

    Living room is 9′-0″ wide. Take the 10′ lot width and subtract 6″ each side for prop line walls.
    Many Japanese and Europeans, even well to do, live in small places similar to this and live very well.
    The American way is simply “bigger is best”. Just not true.
    It’s how you live, not how much crap you accumulate.

  35. Posted by lol

    Small spaces can be ok, as long as you have access to fresh air and light. This property seems to have both. Plus it’s not really small, it’s just very narrow.
    BTW, many such urban “Japanese and Europeans” would be fairly content with 1030sf of living space.

  36. Posted by jean_genetic

    Beautiful house!

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