Where in LA? I’ve contemplated a move to LA for a couple of years. Maybe I rake these bastards over the coal for a sick deal for another year, then I hire chupacabre to make you a very reasonable offer on your home next year… :)
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Big picture, it depends how you look at it. Like, 4 miles in from the beach might be 3 miles in from the beach in 10-20 years if you catch my drift.
Not quite that bad, but eventually!
Not in Fishtown, PM sent. Where are you now? Feel free to respond via PM if you don’t want to broadcast it to the world haha.
Typically I’d give advice like 80% S&P etf (I like VOO personally, slightly lower expense ratio than SPY) and 20% treasuries. In March I would have told you 100% S&P, rebalance in 6-12 months.
Given the current situation, though, if you must be invested, I like the 25/25/25/25 method. I’d also consider QQQ (the NASDAQ 100 minus finance companies, so tech heavy) instead of VOO/SPY. The big cap tech companies are just holding everything up right now, and they appear to have less downside although I think they’re overvalued just like everything else.
Oh, and if this money is in cash right now and not tax-advantaged, you should start working it into an IRA immediately. I’m 99% sure it’s not too late to put in a contribution under last year since they extended it to July 15, although if you already filed your taxes I don’t know.
So put the max contribution into an IRA (I like a Roth at your age) for 2019 and 2020 right away. If you’re self-employed you could also do a SEP-IRA in addition. I have my SEP-IRA with Schwab, and I plan on moving my Roth there too. I like them a lot so far, at least compared to Ally which I do not recommend.
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Redondo Beach - it’s a pretty roomy one-bedroom condo with vaulted ceilings (which for some reason makes a huge difference to how I feel when I’m in it).
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It’s easily the best fit for a job I’ve ever had. Then again it’s basically just operating a business day to day, which it turns out is what I was put on this earth to do lol.
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I actually know a guy who’s been kicking the tires on buying a place in that area for a year or so (Manhattan Beach, Hermosa Beach, Redondo Beach). He’s been saving up. If/when you decide to sell, let me know and I’ll check with him and/or see if I’m ready to pull the trigger on the move to the Left Coast and to a safe, blue state. Didn’t know you were right there or I would have tried to hit you up when I met up with micro out there, I was in El Segundo for like 10 days in 2019.
I think I was out of town that weekend. I remember micro telling me about it.
Question: when working via e-mail, how do I go about eliciting and utilizing “That’s right,” responses with my labels and calibrated questions? Do I just ask the question in like a one line e-mail and wait, or do I just let it be implied as they are reading and continue on? I know you said you use e-mail a lot @chupacabre.
I did some research on the people I’ll be dealing with, but I’m not really sure how to make the most of it.
Alright, I have a game plan based on the Voss book, which I’ve now finished. A Negotiation One Sheet, if you will. Draft e-mail is at the end if you don’t want to read the whole plan.
- Goals
- Pay $2,300/mo including parking (My actual max is probably $2,600. But let’s work toward the goal.)
- Get an extra pool wristband (preferably unlimited guests)
- Get a guest parking pass for when I have visitors
First offer: $1,400
Counter: $1,925
Counter: $2,175
“Final” Offer: $2,289
(BATNA of the 1br with a den + moving cost pro-rated + one week’s lost wages pro rated + 100/mo value of convenience)
- Summary
- We’re in a pandemic and a recession, with the unemployment rate in Philadelphia at 16%
- 36% of renters missed their July payments nationwide, worse among young people
- CARES Act is about to run out
- Philly Inquirer reports that high-end apartments are particularly hard hit, also reports this neighborhood is particularly hard hit, notes one building nearby that is 93% vacant.
- Lots of people moving to suburbs
- New building going up across the street is going to be adding a lot of competition
- Cheaper deals at competitors in the neighborhood
- I’m a reliable tenant - never late, good credit
- They want to keep tenants and grow the community via word of mouth, I want to pay an amount that I can afford that represents fair market value.
- Labels/Accusation Audit (What might they accuse me of?)
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You’re not valuing the unit fairly with the pool open. Response: It seems like you’ve worked really hard on the pool to add value to the complex. (That’s right.) It’s a really nice pool, but I feel like my previous lease already reflected that value since I was told it would be open in early December, and that was priced into my lease. It felt like I paid more than fair market value last year, how am I supposed to pay more? Also, places where people gather may not be places I can take advantage of for a while.
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You’re claiming COVID is a big issue, but the pandemic is almost over. Response: It seems like you are optimistic about the future and excited to get this community back to normal. (That’s right.) I’m right there with you on wanting that, but unfortunately with what’s going on right now nationwide, how can we expect normalcy until we have a vaccine? As someone who is also losing income as a result of this, I can sympathize, which is why I’m tightening my belt to make sure I can weather this and continue to be reliable with all of my bills.
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You’re trying to take advantage of a crisis. Response: It seems like you may feel like I’m being pushy. (That’s right.) I’m sorry, that’s not my intent. But how can either of us ignore market forces? If things are back to normal next year, I’m sure that rents will bounce back up and the market will dictate higher prices. When competitors have similar units available for $2,100, how am I supposed to pay more than that?
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You had drama with your roommate moving out. (As an aside, we had him taken off the lease, I took over, they received every payment on time - they just had to do an inspection of his bedroom and print out some documents for us to sign.) Response: It seems like you place a lot of value on maintaining a stable, classy community. (That’s right.) I appreciate that, it’s important to me too. That’s why I did my best to work that out with my roommate, come to an agreement, and minimize your hassle while making sure to never be late on a payment. I also took over the full amount without attempting to renegotiate in the face of tough circumstances. Also, going forward as a single renter in this unit you have no concerns about roommate issues.
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You’re making an unreasonable offer! Response: It seems like you place a premium on getting a fair value for your units. (That’s right.) I feel the same way, that’s why I based the offer on similar properties nearby, as well as alternatives I’d consider in the suburbs. My goal is to come to an agreement on a fair price that reflects the local market and makes you some money. When competitors have similar units available for $2,100, how am I supposed to pay more than that?
- Calibrated Questions
- How deep is your current waiting list?
- What percentage of your units are vacant? or It looks like about 25 percent of your units are vacant, how will you handle such a high vacancy rate?
- How has the COVID recession impacted tenants payment rates?
- How much value do you place on keeping tenants here long term?
- How long does it take you to turn around a unit and get a new tenant in it? Under good circumstances?
- How likely is it that you will be able to keep the pool, gym and spa open safely throughout the next year?
- How worried are you about losing tenants?
- What are your biggest challenges in the pandemic and recession?
- What’s the standard Cuse discount for being a loyal renter who’s never been late on a payment?
- Noncash Offers
- My terrace is shared with one other unit that’s currently vacant. Offer to stage that for them by removing my tarp from my patio furniture and making it look nice before walkthroughs if they give me a heads up, thus helping them out a bit as they try to fill that unit.
- Offer to leverage my social media for them: 1,400 IG followers and 2,400 on Twitter. Share that they were reasonable and worked with me and made this a good place to stay during the recession/pandemic.
- Offer to put them in touch with someone I know who rents out apartments to flip them as AirBNBs, although I have my doubts about that in the current environment
- The Competition (Voss suggests trying to find out their religion, driving emotional factors, etc that you can relate to.)
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The person I’m currently dealing with is woke and supports BLM. She’s probably around 30, I think she lives here, and she’s very into astrology. Perhaps that gives me an opening on some kind of language to use? Or perhaps I can mention something that connects me with supporting BLM? “I was actually thinking of moving to Fishtown after a year or two, but after seeing that racist vigilante mob, I was very happy to not be a resident there.” I don’t want it to come off as pandering, though, even though those are my true beliefs.
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She’s got about 1.5 years of experience in resident retention. She’s previously worked in marketing, as an office coordinator, leasing, as an Assistant Property Manager, and as a Leasing Manager. So probably several years of negotiating experience in there, but I don’t think she has any formal training in it.
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Her boss is likely about 25 years old, has three years in Sales and Leasing and three years in Community Management. She’s also woke, supports BLM, supports small business, promoted her friends body positive non sweatshop swimsuit line on social media, etc… Not sure how to use all that as of right now.
EMAIL DRAFT
NAME,
Thank you for reaching out to me about extending my lease. I haven’t visited The Pool yet, I’m waiting to check it out when there aren’t too many people around late at night or early in the morning given the pandemic.
I’ve reviewed the offer, and noticed that you are asking for an increase of greater than 38% over what I have been paying. How do you expect me to do that? As you know, COVID-19 has changed a lot of things. Times are tough and we’re all going to have to tighten our belts. I also noticed that your offer is significantly higher than the highest rent listed online for any apartment here. How much value do you place on keeping tenants here long-term?
Given these challenging economic times, I could agree to a rent of $1,400. I trust that you will find this to be a very reasonable offer given the current rental climate. We should be able to sign the agreement quickly upon your acceptance.
Thanks,
Cuse
Regarding the bolded, should I keep it in my back pocket for later? I also have the umbrage at the fact that they misled me before the first lease by insisting the pool would be done in early December when I pressed them on it, hence my almost certainly overpaying.
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I’m also considering that with at least 25% of this place vacant, a brand new building going up across the street that’s totally vacant, and a building not too far away that’s new apparently 93% vacant, maybe I should come in even lower? Seems to be big divide in the market, like people renting places for $1,000 or less in the city are stuck because the demand there exceeds the supply, so it’s basically whatever they can afford sets the price.
But at the high end, there’s a lot of competition as tons of new buildings were going up to match demand that suddenly evaporated. They know I’m not willing to go live in a bad neighborhood in an old unit for $1,000 a month, but it sounds like beyond that every dollar they get is a dollar that someone else could get instead given the competition. I’m thinking regardless of their response, I’ll start reaching out to other buildings over the next couple of days and see what kind of offers people can give me. So I guess I need to put together a draft e-mail for that, too. What do we think of this?
Dear Person in Other Apartment Complex,
I’m currently looking for an apartment in the neighborhood, preferably a large 1-bedroom apartment with a den. Some of the amenities that I’m looking for include on-site parking, an in-unit washer and dryer, and outdoor space on property. What do you have available that might fit that description?
Times are tough right now, given COVID-19 and the high unemployment rate in the area, so my main priority is getting the best deal at fair market value. It seems like you have a lot of units available and are placing a lot of importance on acquiring new tenants. What makes your building attractive in these times? What can you offer that would meet my description at a competitive price?
I prefer to correspond via e-mail for now, once I’ve gotten a handful of offers I’ll proceed to do virtual tours and then follow up with 2-3 places.
Thanks,
Cuse
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I’m looking at starting a SEP IRA and was thinking of just going directly to Vanguard. Is there a reason you didn’t do that, or would advise against it?
Get the other offers first?
I was between Schwab and Vanguard, I can’t recall what made me lean Schwab but I think they had better research tools available and still had the Vanguard ETFs I wanted.
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They won’t even read that (I didn’t). A simple:
“Your proposal is unacceptable, I am in the process of evaluating alternatives”
Is much better.
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There’s some merit to this in case they come in really low, right guys?
Thanks. I think I was just planning to put it all into one of their life stages funds. Since my needs are pretty simple here I guess Vanguard should work fine for me?
I think so, although I doubt they will. Somebody else said it earlier, but I think the kinds of places you are looking at are collectively high on their own supply. They also might rather just leave places open if some people are foolish enough to pay exorbitant prices and their places are half full. They are hoping for a quick resolution to the pandemic and I don’t think they’re unusual in that.
Basically I don’t think they realize what’s what right now. You’re ahead of the game.
That or, “Your proposal is unacceptable, I am prepared to pay $1400".
Just seeing the wall of text will be a tell you want to stay. Don’t do that.
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I agree with this. I will attempt to spell it out for them, but it seems like an alternative solution may be to offer to do a 4-month lease at the current price and revisit it in January. This also has the advantage of getting me into a winter turnaround, which is the down season for apartments and thus might get me a better deal. Of course then they might just be all, “Vaccine, 50% effective, pandemic over, pay us $4,000 a month!”
This seems like a line that significantly increases the likelihood of moving, and definitely isn’t in line with the book I just read lol… He’s all about not being super hardline and trying to let them lead themselves to your desired solution.
That’s a good point.
Yeah, if that’s all you want to do I would think Vanguard would be a fine choice.
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This is a little shorter.
NAME,
Thank you for reaching out to me about extending my lease. I’ve reviewed the offer, and noticed that you are asking for an increase of more than 38% above what I’ve been paying. How am I supposed to pay that? As you know, COVID-19 has changed a lot of things.
Times are tough and we’re all going to have to tighten our belts. I could agree to a rent of $1,400. I trust that you will find this to be a very reasonable offer given the current rental climate. We should be able to sign the agreement quickly upon your acceptance.
Thanks,
Cuse