湾区码工包裹工资系统介绍(Facebook, Google为例)

Cash counting stock equity refreshment for google

这个湾区工资的月经贴看得我头大,还是给大家一个比较系统的介绍吧,有想法来湾区
的,可以根据自己实际情况判断。

我的背景:某湾区独角兽hiring manager,过去几年中接触过各种级别几十个offer,
也在FLAG工作过,朋友众多,熟悉FLAG的情况。经常参加interview和offer decision
,对于面试人的级别以及包裹有足够的insight和一定的决定权。

大家经常所说的包裹,或者年收入,其实包括以下几个部分:

Base salary:每个月的固定工资,通常由级别决定。
Bonus:每年额外的cash bonus,通常由performance决定。
Stock (RSU or Options):股票,一般签offer的时候给个数字,分四年发,通常由级
别决定,要看option会过多久expire,比如有的是6个月,有的是好几年,那么你即使已
经离开公司,只要后来公司上市了,你还是可以在expire 前Exercise.
Stock refresher:类似于Bonus,但是是股票的形式,通常也是每年给一次,分四年发
完。通常由performance决定。

Sign on bonus:一次性的cash bonus,入职的时候给。
经常有公司有所谓的retention bonus,对于high performer在第四年的时候又发一大
笔。至于一般人估计就没有了。

不同的公司,根据公司发展的不同阶段,以上部分在包裹中的比重不同。FLAG大概是一
半一半,或者stock略少,Pre-IPO startup可能股票多于base,很成熟的大公司股票可
能很少,等等等等。

级别在总包裹里起决定性作用。级别和一个人的经验年限,之前的title,有没有
startup经验,有多少别的offer相关。
每个公司对级别的定义也不同,以Google为例(FB和很多startup有相似的级别),正
常的expectation是
fresh grads (under or MS): L3 (入门Junior软工)
fresh grads (PhD/MS) + 1-4 yrs exp: L4 (能正常独立工作的软工)
3-8 yrs exp: L5(senior,或者tech lead)
L5以上就比较wild了,有人十几年经验还是L5,有人很年轻就L7, L8了。L6+开始进入
管理层。

然后,不同公司对于相同的级别的包裹也不同。FLAG这样的土豪给的多,Pre-IPO
startup给的也不错,但是股票有变纸的风险,成熟的大公司给的就少一些。几个例子:
—————————–
以下例子中的数字只是FLAG和少数独角兽,不代表湾区大多数公司!但是所有的
package structure仍然有普遍意义!
—————————–
L5 FB: 16-18w base, 60-80w RSU (4yrs,60-80w分四年发,一年15-20w,不同公司的
vest plan 不一样的,比如AMAZON, 第一年5%, 第二年15%, 40%, 40%。如果攒到
一年给, 税要交到哭死。Uber家三年就fully vested 走人也可以了), 5-8w sign
on bonus, 2-3w bonus, 8-12w stock refresher (4yrs) => $35-40w total cash per
year

L6 GOOG: 20-25w base, 70-120w RSU (4yrs), ?? sign on, ?? bonus, ?? refresher
=> $45-60w total cash per year

L5 Unicorn startup: 16-18w base, ~1M RSU (4yrs), ?? sign on, 0 bonus (
startup穷啊,没cash), ~10w stock refresher (4yrs) => $16-18w total cash per
year,加上股票有可能暴发,有可能是纸…

L5 unicorn startup 的1M 股票,这个unicorn跟FLAG抢人有多desperate… 反正我经
手过L6 $1.6M的offer,同时期L5 $1M也不惊讶了。看你negotiate的能力,60W-1M还是
都有可能的。

当然,大家要记住,这个1M完全可能变纸啊,所以……并木有什么鸟用

L3 Unicorn startup: 10-12w base, ~20-30w RSU (4yrs), ?? sign on, 0 bonus, ~3
-5w stock refresher (4yrs) => ~$12w total cash per year,加上股票有可能暴发
,有可能是纸…

同个级别package上下浮动个十几万,哪怕同一个公司,都是很正常的。

Manager track和同级的IC是一样的(所以完全存在我组里的人比我工资高的状况?_?)

一般到L5就可以开始原地踏步了,self push的人无上限。不是一定努力上进的话,停
在L5 L6是比较常见的range吧。

四年后呢,除了每年发的Stock refresher, 没其他了吗?因为股票refresh以及这几年
科技股大涨, 4年后哪怕不promote收入也会更高,可以升职啊,加薪加股票。而且湾
区这地方四年跳槽一次已经算很久了。

每个half recruiter都会给hiring managers写个report review过去发的offers,还有
给组里的人涨工资的时候也会有业界guideline,我的数据是有统计意义的。

当然,我们统计的对象是同类型的公司,非硬件,非金融,等等等等

苹果家软工也是100% rsu refresher,就是每年refresh rsu 大概是一倍左右base。
senior的base和FLG的L6低端差不多,大概18-20万。苹果家硬工不清楚。

所以苹果家软工跳FLG总觉得有些鸡肋,只有L6差不多能beat,但是FG又不轻易给L6。
。。

以我司的情况来判断,大概就是L3 15-20W,L4 20-30W这个range吧,看你的面试表
现和competing offer的多少
而且今年FB据说招得不多,大概L3 L4会受影响

现在应该只有很高级别(L7+)才有可能60w以上股票每年了。Senior director or VP
这样的,没上限,几个米一年的也不少。 反正我级别不够也看不见…

好的时候 股票赶上大涨 本来一年值15万的股票翻两倍三倍光股票就超贫困线了 但不
好的时候 股票变成纸也有可能 而且去flag都是前四年钱多 之后股票跟不上也降
package. 得靠换工作才能保证这个package 值,也很辛苦。关键是湾区房价太高了,
挣这么多先交30,40%的税,再付月供,没剩多少。真的买3,4米房子的都是靠股票买
的,靠工资没戏

另外咱中国人的高管其实并不少,package也是million级的,只是我也不会自讨没趣去
问人家具体数字……这种时候也不是考虑多少钱,而是发展空间,团队前途,甚至是自
己在业界的名誉了。

总结:对于6年以上经验performance好的牛人,单人40-60w的总包裹是完全可能的,不
过光cash估计就20-30w,而且选择很多抢得凶。new grads大概也就是15-20w左右的总
包裹,什么一毕业就40w,要么是超级牛人,要么是去了撞大运的startup(IPO以后股
票暴涨),在成熟稳定公司是不太可能的。

就酱。股票变数太大,所以大家还是按base生活。。。

公司内部各种各样的俱乐部小团体特别多,很多是公司出钱出力sponsor的,不难找到
志同道合的年轻人一起玩,多处处说不定就对上眼了。我家这已婚的还参加了烹饪,攀
岩,骑车,风帆,钢琴,健身等各种小组呢。周围几个公司经常有串场参加活动的。感
觉就和大学里面差不多,单身的男女约会也可以去各食堂。

在FLAG大约20分钟的地方, 租的房子1600尺是6000/月, 如果去城里, 能找到4000
的公寓, FLAG有很多班车, 上班时间灵活, 如果一个人挣28万, 去除40%的税, 还
有17万, 交5万房租的话, 还有12万。 很多其它的地方税前工资就是一个人12万。

湾区双职工一年40-50万确实是普遍存在的,资深双马40岁以上的,70-80万也不少。反
而50岁以上的老人比正当盛年的要拿钱少,工作难找,都在养老公司混着。好在这批人
早就完成了原始积累,倒是也不怕裁。

湾区就是这样的,财富热钱涌入

看看Los Altos现在三百万这个级别的房子都不好买就知道了,我的意思是之前三米还
可以买到房子的,现在至少要四五米了。大家收入越来越高了,Los Altos因为离高大
上公司近嘛,成功码工扎堆,所以才贵, 在大城市要想不commute都是要花大价钱的。
两个人50w的很常见,一个人上50w的不多,但是也有,还有很多看起来工资一般但是进
公司早,股票,ipo各种发了小财的,来看看湾区的房价就知道了,1-2m的房子就是绝
对大部分人可以负担的,在湾区住了很多年了, 真正有钱一掷千金的阶层还是本地old
money和国内来的壕还有做生意的本地人, 这些人才是购买3米以上SFH的主力军。双
码农家庭收入50万是很正常, 可是这种家庭在整个湾区的比例也不能说是普遍啊。更
多是高薪单码农, 老婆是主妇家里蹲还有可能是搬运过来的。何况所谓的股票收入部
分, 不cash out也就是账面上的收入啊。 也别死盯着annual household income 看,
还是disposable income高的人更厉害, 本身家底厚房贷少的, 随意开销大一点, 生
活品质比死挣工资还房贷的更好。 还有做生意的家里的房子都是买地然后自己修,花
一百万搞一个花园,装修都几百万美金。最重要的是 大家保持平常心好吗?天天比来
比去 一定要知道别人赚多少过什么样的生活累不累啊

最后,本人7年经验管理层,离开FLAG来现在的startup也好几年了,如果光看公司
valuation,我自己一年收入轻松beat贫困线。
但是事实是,其中绝大部分是未上市的股票。如果公司挂了,那我的cash收入连FLAG的
L3 L4可能都不如………………………然后就真的是操着卖白粉的心,挣着卖白菜的钱
了……
所以只要公司有点啥负面新闻都会睡不着觉……
然后每天在家跪求老公包养……

如果别的公司的话,行业不同很多。我以前公司,1千多人,公司前十的人工资1百万整
,奖金4百万左右,公司股票(不上市)分红5百多万,招人全靠承诺做得好分股票。

老公手下几十个人,从二三十万到四五十万,都有,包括股票。如果股票涨,年收入会
更高。即使刚毕业的新手,一般也要二十万了,否则根本招不到人。

湾区就是这样,不错的公司都抢人很厉害,特别是特殊红火方向的码工。现在聊最多的
就是如何抢到人。

估低了,GOOGLE, FACEBOOK, AMAZON AND MICROSOFT SALARIES

Cash counting stock equity refreshment for google

GOOGLE, FACEBOOK, AMAZON AND MICROSOFT SALARIES

80 Votes

Over the last month, we’ve seen a lot of compensation data provided anonymously by tech employees. We compiled and standardized some of this data to improve our understanding of what companies are paying, and we realized that we might want to share our findings.

Summary of Results

For this first pass, we focused on engineering compensation at Google, Facebook, Amazon, and Microsoft because there were more data points to work with. We standardized the engineering levels to the best of our abilities to compare compensation across companies for each level. We welcome any feedback or corrections to improve our analysis.

We found that Total Annual Compensation is the highest at Google, mostly due to their cash+stock bonus.  For Levels 1 and 2, base salaries are comparable across the four companies. At Levels 3 and 4, Google and Facebook offer the highest salaries. Google’s cash+stock bonus value trumps all others, especially at more senior levels.

Median Annual Compensation Per Level  

level comparisons

 

A Closer Look at the Data

Here’s the underlying data to the chart. You can also view the raw data here.

Count Annual Comp (Median) Salary (Median) Bonus (Median) Stock Bonus (Median) Signing Bonus (Median)
Level 1
Amazon SDE1 33 $ 117,500 $95,000 $15,000 $20,625 $25,000
Facebook E3 14 $ 154,550 $107,000 $10,800 $33,750 $75,000
Google T3 10 $ 172,000 $110,000 $16,125 $49,000 $11,000
Microsoft SDE1 (59 or 60) 32 $ 123,500 $107,500 $11,000 $12,500 $15,000
Level 2
Amazon SDE2 25 $ 147,500 $120,000 $42,000 $25,000 $25,000
Facebook E4 20 $ 183,050 $138,500 $33,750 $33,750 $25,000
Google T4 25 $ 201,000 $ 130,000 $49,000 $49,000 $ 15,000
Microsoft SDE2 (61 or 62) 53 $ 143,000 $123,000 $10,000 $10,000 $20,000
Level 3
Amazon SDE3 11 $ 180,000 $140,000 $0 $38,769 $50,000
Facebook E5 19 $ 249,700 $170,000 $62,500 $62,500 $50,000
Facebook E6 4 $ 358,750 $200,000 $118,750 $118,750 $20,000
Google T5 12 $ 306,500 $ 160,000 $100,000 $100,000 $ 30,000
Google T6 2 $ 472,500 $ 207,500 $205,000 $205,000 $ 7,000
Microsoft Senior SDE (63 or 64) 7 $ 199,000 $143,733 $24,000 $24,000 $17,500
Level 4
Amazon Principal Software Engineer 1 $ 445,000 $160,000 $35,000 $250,000
Google T6 2 $ 472,500 $ 207,500 $205,000 $205,000 $ 7,000
Microsoft Principal SDE (65, 66, or 67) 1 $ 261,000 $179,000 $43,000 $43,000
Notes:
Google's T6 straddles Level 4 and Level 5, which is why it appears in each band
Bonuses and stock amounts were all annualized straight-line. In reality, Amazon's vesting schedule is 5%, 15%, 40%, and 40% over the 4 years, but we ignored this for comparison
Signing bonuses were not included in the Total Compensation calculation

 

Another way to look at this, for example, is that an SDE2 at Microsoft might make  $123,000 base with $20,000 in cash and stock bonus. The equivalent level at Facebook would be an E4 making $138,500 base  and about $44,500 in bonus.

We also looked at each company to see how Total Compensation changes across engineering levels. Compensation growth is highest at Google and Facebook, while Amazon has the smallest increase. Reported salary ranges for each level varied significantly.  This may reflect different seniority and performance within a level, the value of the company stock when equity was awarded, or other supply and demand factors.

Total Compensation Ranges Per Level

Comp Ranges for Levels

 

Breaking down compensation between Salary, Equity, and Cash Bonuses, we can see that Facebook and Google offer the largest opportunity for salary and equity value growth with increasing levels.

Median Total Compensation Breakdown

Comp Breakdown

Contribute to the Analysis

We pulled this data together from a few sources listed at the bottom of this post, and we’d like to build on it and make it better.  We could use more data points for the four companies, particularly at the higher levels, as well as compensation data for other companies and tech roles. This would allow us to map levels and compensation across the larger companies or see how compensation for each role changes with company growth at smaller companies.

Share your compensation:

https://docs.google.com/forms/d/1vA5fCF5OkNBzNRXRG96SoTmc1tUZjE4KIrqnwW0BZ9w/viewform

All answers will be anonymous and posted to a public sheet for anyone to view and download.  We’ll also update our findings and analyses for different companies, tech roles, etc.

很多猛料:大家最关心的Google Equity Refresh到底有多少?

Cash counting stock equity refreshment for google

话说楼主就是因为以前的公司没有给stock refreshment才跳槽的,现在收集了以下数据点:

发信人: novice (novice), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Tue Jun 16 01:50:23 2015, 美东)

 

干了一年,才拿到一次啊。

 

refresh(分四年发)。base的30%。算是多还是少啊。

 

=======

 

发信人: freezzdom (freezzdom), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Thu Jun 18 00:09:01 2015, 美东)

 

我也是类似啊,t4入职不到一年吧,九个月左右,30%。第一次的perf是constantly

meet。t5有没有人出来说一下?

 

=======

 

发信人: recursive (递归), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Thu Jun 18 15:57:00 2015, 美东)

 

提供一个t5的数据点(估计是lower bound),base的60%,半年前刚升的t5

 

=======

 

发信人: tailai (tailai), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Thu Jun 18 17:07:57 2015, 美东)

 

我来说一下自己的case

t4,  7月份入职,perf是 exceed,拿到refresh差不多就是30%–别人跟我说这个类似半

年的,算到perf时间(end of Q1)。有人Q4入职的第一年压根没有。

 

以下info全为道听途说:

t5 average 一年30w,refresh估算是十几w到15w吧

 

=======

 

发信人: swjtuer (灌水和coding都要敲键盘), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Fri Jun 19 12:23:01 2015, 美东)

 

exceed才给30%,很不给力,也不好说下次是不是一样

 

在酱油组里面混,再努力估计也就30%了

 

=======

 

发信人: nclri (ccd), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Fri Jun 19 13:27:42 2015, 美东)

 

我近两年的情况一次 exceed,一次 strongly exceed,股票refresh是一样的, 看来

升级很重要,t4 差不多 30%, t5 60%, 那t6 不是要 100% 了 :)

 

=======

 

发信人: lamxdotx (All is well), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Mon Jun 22 19:03:52 2015, 美东)

 

base的四成左右,比去年少

 

=======

 

发信人: cttian (cttian), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Wed Jun 24 03:06:08 2015, 美东)

 

今天终于发refresh了, 53%。 I joined July last year, T5, meet, not ads, not

search, not hot group. 知足了。

 

今天和director 1:1, 问怎么当TL,怎么奔T6, director说team在grow,人员在流动

,有的是机会,老老实实干就行了,出来迎头碰到老板,说两个干了三年到T4要

Transfer了,让俺去交接工作。。。哎,就这么混着吧。

 

=======

 

发信人: RobinBlake (Robin), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Wed Jun 24 04:03:32 2015, 美东)

 

我听到的数字是t4大概45% of base.

 

=======

 

发信人: subchap (subchap), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Thu Jun 25 23:15:18 2015, 美东)

 

我也刚拿到,63%的基本工资,T4去年6月入职。我是apps的组,参加了两次review,第一次meet expectation,第二次exceed。

 

=======

 

发信人: smallxm (smallxm), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Fri Jun 26 22:53:12 2015, 美东)

 

即便t5的话, 63%也很高了,很少有这么高的,有50%就偷笑了。

t5以下就不要做梦了。

 

当然个例总是有的,尤其是那些base很低的,那就没什么好说的了。

 

p.s. 由于各种渠道,我知道不少真实数据,信不信自己判断。

 

=======

 

发信人: mzcez (cc), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Sat Jun 27 13:01:00 2015, 美东)

 

数据点太稀疏看不出来哪个组好的,关键还要看performance和组里的资源。

 

给个数据点,search t4 70%+

 

=======

 

发信人: nclri (ccd), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Sat Jun 18 09:24:33 2016, 美东)

 

楼主回来了 去年发的帖 今年已经这么高的楼了 给几个数据点

t4 14年refresh 63% base   exceed

t4 15年refresh 59% base   strong exceed

两年绝对数差不多

t5 今年还不知道

 

=======

 

发信人: swjtuer (码农的小船说翻就翻), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Sat Jun 18 14:34:10 2016, 美东)

 

t5 meet的,60%吧

t4 meet的,50%吧

 

=======

 

发信人: flgtspd (flgtspd), 信区: JobHunting

标  题: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Mon Jun 20 20:18:38 2016, 美东)

 

今年狗家给力啊,

 

bonus / base 22%

refresh / base 82%

 

perf :SE

 

=======

 

发信人: hisunnysky (), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Tue Jun 21 22:58:32 2016, 美东)

 

T4 Exceed 2015 10w

T5 Promo 2016 14w

 

=======

 

发信人: zp0327 (zp0327), 信区: JobHunting

标  题: Re: g家股票每年refresh大概多少

发信站: BBS 未名空间站 (Wed Jun 22 06:42:07 2016, 美东)

 

more data points:

 

T4 SE 15 56% base

T5 E  16 72% base

 

search pa

 

=======

 

很多料:如果有实力同时拿google和facebook的offer,应该这么做最大化[T4,T5,E5,E6]

我去年拿的G家的5,F家的6,我一个朋友今年拿的同样的offer,具体数字就不贴了。

 

有几点建议供参考:
1)最重要的一点:G的offer是match-driven,F不是。F会尽量match,但是不会超过每
个级别的范围。G不一样,G几乎100% match/beat F。所以最好情况是先去G拿一个初始
数字,然后用这个去让F match,再把F的结果让G match,得到的就是你的最优结果了
。但是G现在也精明了,一般死活不出第一个数字,所以就看你操作了。
2)G会跟你说自己的5相当于F的6,但F会说G的5相当于自己的5,所以很难说是不是被
lowball了。我个人倾向于两个一样。
3)数字最近一直在下降,我朋友的就没有我的高,所以具体数字没有太大参考价值,
相互match是最重要的。但是这两家应该都可以轻松beat你现在的数字,毕竟有RSU的四
年和没有RSU的还是差很多的,除非你现在的数字真的太高了,或者你还在拿现在公司
的RSU。

Must Read for Bay Area Investor:  San Francisco Real Estate Cycles in past 30 Years

The original article is here: http: / / paragon – re.com/ 3_Recessions_2_Bubbles_and_a_Baby

Chart one and two: recession and recovery time span

The first chart below charts changes in dollar values, according to the Case-Shiller Index method (January 2000 = a home value of 100). The second chart graphs ups and downs by percentage changes at each turning point.

 

How I read (guess) chart 1&2:

  1. Peak most likely will take place at 2017 or 2018.
  2. At the worst it does down -27% (2008-2011), probably 2014 or 2015 level.
  3. With 1 and 2, you may “lose money” if you buy at median price in 2016.

Chart three: rebound in recovery

This Recovery vs. Previous Recoveries

The light blue columns in the above chart graph the home-value appreciation that occurred in the first three years of each recovery.

How I read (guess) chart 3:

Peak of this recovery/bubble will go over 100%.

Chart four five six: decline magnitude

Chart 4 below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 66% of those in January 2000; 175 signifies prices 75% higher.

4. 1983 through 1995
(After Recession) Boom, Decline, Doldrums

 

5. 1996 to Present

(After Recession) Boom, Bubble, Crash, Doldrums, Recovery

Across the country, home values fell 15% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15% to 25% range.

6. The Recovery since 2012 (Case-Shiller)

Chart 6 above looks specifically at home price appreciation since 2012 when the current market recovery began. Generally speaking, the spring selling seasons have seen the most dramatic surges in appreciation.

Chart seven: buying a house? Don’t wait to the next year.

Chart eight: house vs condo

The Current Recovery: 2012 – Present

Chart nine: this recovery appreciates much faster

Longer-Term: 1993 – Present

Chart ten: San Francisco very expensive comparing to CA and US median

Comparing San Francisco, California & National
Median Price Appreciation

Chart eleven: rent is appreciating faster than price

San Francisco Rents

Besides, home prices, home rental rates are major indicators of what is occurring with housing costs and the local economy. If anything, rents have appreciated even more extremely than home prices in San Francisco (and other areas of the Bay Area) – and, of course, renters get no advantages from low interest rates, multiple tax deductions and advantages, or home-price appreciation over time. One classic indicator of an overpriced home market is when prices outpace rents. So far, this has not happened in San Francisco: Both types of housing costs have soared in recent years.

Chart twelve, thirteen: interest rate

Mortgage Interest Rates since 1981

Interest Rates: 1993 – 2015

Chart fourteen: still affordable?

Housing Affordability Index (HAI) Cycles, 1991 – Present

Chart fifteen: real money, inflation and interest rate adjusted

Chart sixteen to nineteen: most likely to pickup low/mid priced house cheap at a crash

Different Bay Area Market Segments:
Different Bubbles, Crashes & Recoveries

2000 to 2014

Updated Case-Shiller Price-Tier Charts
Low-Price Tier Homes: Under $587,000 as of 9/15

Mid-Price Tier Homes: $587,00 to $950,000 as of 9/15

High-Price Tier Homes: Over $950,000 as of 9/15

Conclusion/guess:

  1. Price appreciation will slow down in 2016, but no crash.
  2. Look for signs like lower tier houses prices surpassing 06/07 high, or rents going up but house price lagging.
  3. When recession comes, there’re 2 to 4 years to pick up good deals. Single family houses in higher tier will withhold value much better than lower tiers.
  4. If you are investing for cashflow in 2016, almost anywhere in US is better than bay area. I.e., invest in out-of-state rental.

 

Landloards: How to Profit Help the Needy by Renting to Section 8 Tenants

I am about to invest in an out of state property which is going to serve section 8 tenants. I found this article very helpful.

It can make a lot of sense for a landlord to rent to tenants who qualify for Section 8, or government subsidized, housing. In California, the Section 8 program is sponsored by county governments and subsidizes the rent payments for citizens unable to afford the entire amount of a market rate rental. The idea is that over time the tenants in the Section 8 program will become self-sufficient and essentially won’t need government assistance.

Subsidized housing in general has a certain negative stigma associated with it. There is this notion that subsidized tenants are worse tenants because they will “trash the place” or “won’t pay rent.” In my experience renting to hundreds of Section 8 tenants, I have encountered a very high quality of person and renter. In fact, focusing leasing efforts on subsidized renters was one of the biggest things that made my single-family business successful.

Section 8 can be a little tricky because different counties can have different rules. There has also been an increase in bureaucracy in the program, which is obviously a deterrent for landlords. On the whole, though, I still really believe in the Section 8 program.

Related: Rent to Section 8 or No?

Here are the six best reasons to give subsidized tenants a chance at your next rental.

6 Reasons for Landlords to Rent to Section 8 Tenants

1. Higher Rents and Built in Increases

Section 8 tenants pay a fixed percentage of their income, and the government or Section 8 program pays the difference. When I was trying to raise rents on a number of homes in my portfolio by increasing asking rental rates, I found that there were a lot of Section 8 tenants applying to the homes that were on the higher side of market rate. This actually makes a lot of sense because whether the Section 8 tenant rents a home that is $1,000 or $10,000, their portion of rent actually stays the same.

For example, if a Section 8 tenant makes $2,000 per month, they will only pay about 40% of that as their portion, so about $800 in this case. If this person rents a house that costs $1,000, then the government will pay $200, and if they rent a house that costs $10,000, the government with pay $9,200. The tenant pays $800 in both scenarios.

There are obviously limits to how much the government can pay, and there is also some diligence to make sure that the rental rate is around market, but as long as it’s close, there usually isn’t an issue. In some cases, I have been able to get about $100 over the nearest market rate comp.

Many Section 8 programs also have built in rent increases that the landlord can apply for on an annual basis. The tenant is indifferent because they only pay the fixed monthly rate. Again, the rent increases need to be around market, but any increase is a good thing for an owner.

2. Tenants Will Stay Longer

The key here is to make sure the homes you are leasing out are in really good condition and that you are a really good landlord. If something is broken, then fix it! I’m not saying that you should put in gold plated countertops, but it is important to make the home nice and a really good place to live. If you do this, then it is likely that the tenants will stay longer.

My Section 8 tenants stayed over three years on average. One of the main reasons is that I was a good landlord, but it was also due to the fact that it takes a while to make enough money to get off of the Section 8 voucher. This is by no means a knock on the tenants – they were great people; they just didn’t make a lot of money and couldn’t afford a place that was better.

The other reality is that there aren’t going to be many better places if you take care of your property and are a good landlord. There are loads of Americans who will be renters for life, and if you are a good landlord, this will end up benefitting you.

The real thrust of this point is that you make more money as a landlord if you can keep your tenants in place. Vacancy and turnover costs are killer. Section 8 tenants are more likely to stay long term, and remember that you also get a higher rental rate.

3. County-Guaranteed Rent

This is obviously a safe net. Many Section 8 tenants have lower credit than an ideal tenant. However, if the tenant loses their job or comes up short on a payment, then the county, or in some cases the city, will step in and pay you the entire amount owed.

Related: Section 8 Success Story

I was somewhat shocked when I found this out. I was renting homes in lower end cities that were partially guaranteed by other cities in the same county with ten million dollar homes. While you never want a tenant to be unable to pay, it helps reduce risk if you know you have a wealthy guarantor (particularly in the form of the government).

4. Lower Maintenance

I have heard people say that “Section 8 tenants destroy the place!” In my experience of renting to hundreds of Section 8 tenants, they are actually less likely to destroy your home, and they also require less maintenance! The reason is that most of my requests for maintenance happen within the first month of a tenant moving in.

This makes sense because we have just done repairs, and the house hasn’t been lived in for a while. As a landlord you expect this for the first month, and usually the maintenance issues iron out over time. Since Section 8 tenants stay longer in a home, the average maintenance costs end up going way down.

The other part of this is that many Section 8 tenants realize that they will never own their own home. I won’t get into the social issues of this point; it is just a financial reality. Because of this, many Section 8 tenants end up taking “ownership” of the home they rent… once they are there for a while. This is a key point because it is important as a landlord to make the home nice and fix the things that go wrong so tenants want to stay.

I’m not making a social comment, but purely a business one. If you do your job as a landlord, then the maintenance will be lower with Section 8 tenants as compared to regular tenants.

5. Tenant Accountability and Extra Screening

It is really hard to get a Section 8 voucher in many communities. There is far more demand than there is supply of vouchers and homes willing to take Section 8. This creates an environment of accountability for the tenants once they get into a good home – they will do everything they can to keep it. Again, it goes back to the point that it is important as a landlord to be a good owner.

Along with accountability, Section 8 tenants go through extra screening in order to get their voucher. Due to the high demand to get a Section 8 voucher, the program can be selective with its criteria. Some municipalities will do background checks and that type of thing. You should be doing your own screening of Section 8 tenants, but it is always nice to know that they have been screened by the government already.

6. You’re Helping People and Making Money at the Same Time

I’m in real estate to make money. I have to be because it’s my business. However, I also feel a responsibility to give back to society and the communities where I do business. If you read most of my blog posts, you will know that I’m usually against most things government.

The Section 8 program really is a good thing, though. One of the most fundamental needs of humans is to have a safe place to live, and this is particularly true of children. It is the responsibility of the community, which includes businesses, to take care of those who are less fortunate. The selfish reality is that giving back is also good for business. The biggest bang for your buck in terms of giving back is to provide a great home for a family who couldn’t otherwise afford it.

Embrace the Section 8 program, and programs like it. It will be good for your wallet, and your soul.

Landlords, weigh in: What do you think of renting to Section 8 tenants? What has your experience been with this?