Lately I’ve been checking out hard money, but even once I get that worked out… CA prices have taken a dump and will probably soften for another year.
But… on the other hand, there’s always that rare deal that just begs for rehab. I’m in escrow right now for a double-wide manufactured on a .18 acre… got it for only $70k (!!!). For California, that’s practically giving it away. It’d be like picking up a midwest home for $20k.
So if anyone is doing it in CA, please post any comments on finding the home. Using online or the old-fashioned “drive around at random” method?
Rehabbing works in any market, its just harder in CA than it was a short time back because you actually have to think about what you buy…a few years later you could have bought ANYTHING and it would have gone up in value.
I believe that rehabs are all over the place. I don't know how it is down south (I'm in Sacramento), But I can find houses that are selling for about 50% of comps right off the MLS. Buying materials for retail or at a discount, then saving as much money as possible on the labor can result in large equity increases, the problem is that in the meantime, you have a vacant property, so be quick or be dead.
People use several techniques for finding properties, there are the "I buy Houses" guys who post classifieds in newspapers to find pre forclosure deals, there are REOs, then the MLS. I believe that with adequate research of a neighborhood and diligent screening of the MLS, you can find places. I met a guy who retired with twelve houses. His girlfriend was a realtor, he was a contractor. Every day she showed him the five cheapest houses in the county, and he would look for potential for sweat equity, and good long term hold prospects. Twelve houses later, he was done.
It’s not at that point down here yet. You can find a 75% deal with some effort. The 65% and 70% deals are pretty scarce. I just found a 70% that I’m trying to get HML on.
There are a couple of areas (92114 and Chula Vista) that are diving fast, but it’s becuase the market is glutted with REOs and short sales. So, you can get a great deal, but you can’t sell it.
I am active here in the San Diego area. Easy to find deals around 60% ARV.
Last deal:
Bought at 1M and going to do a double escrow at 1.25M. Did not have to do a thing to the place. This was very rare. Comps out at 1.6M.
Bought at 390K, 35K in repairs, and sell at 545K. Comps at 580K.
Ocean front home for 1.8M. Repairs at around 600k. This is a 6 bedroom and the closest comps are for 4 bedroom homes with no ocean views that have sold recently for 4M. So possible this will comp out at 5M easy.
I plan on doing at least 10 this year.
Of course the key is to price it right and it will sell.