Bailey: Fixed repair costs erode rental yields in low-cost housing markets
David Bailey · Why He Never Sells: The Buy-and-Hold Formula That Works · Sep 15, 2025 · at 33:58
Real estate investor David Bailey and host Paul Morris discuss why relying on the 'one percent rule' in low-cost housing markets fails to account for fixed capital expenditures.
0:00 / 0:35exact quote · 35.2s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“So in proportion, your repairs and maintenance in proportion to your rents, even though the only reason you're getting that one percent in Kalamazoo is you have a very low house valuation. Yeah. However, when you go to refurbish that house after the tenant moves out with new carpeting, new painting, new dishwasher, new refrigerator, and all your appliances, your turnover costs are going to be Pretty close to what they are in LA, maybe 80%, and yet in LA, your rental in that house might be 10,000, so you're gonna recoup those costs faster. So what you're looking at is a very superficial way of looking at it, not taking into consideration repairs and maintenance.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from David Bailey
David Bailey claims real estate prices have fallen to 2015 levels
“The last 10 years of appreciation as of today have been wiped out. We are back to prices that we haven't seen since 2015.”
David Bailey predicts California's economy will overtake Germany by 2026
“California next year will probably become the third largest economy, overtaking Germany.”
David Bailey claims San Francisco has 78 new AI-driven billionaires
“There are currently 78 new billionaires in the city of San Francisco, all as a result of AI.”
David Bailey opposes rent control generally but supports it for seniors
“I am not a proponent of rent control. I think it stifles, stifles development. It doesn't do what it's supposed to do. However, I am in favor of rent control for seniors, because I do not feel, based on increasing rents, that the elderly population should be, …”
David Bailey bought a Los Feliz property at a $1M COVID discount
“So when COVID hit in early 2020, prior to, just prior to it hitting, there was a building that came on the market in Los Feliz, and I was one of three people, I think, who had looked at it and walked some of the units. Anyway, we ended up in a multiple offer s…”