Hello all,
I know there are some SoCal investors on this board, and I need your help quickly.
I have been offered a lucrative job in Irvine but I currently live in Texas. I already have a home here that is worth roughly about $150K, with maybe $25K equity. I love it where I am at.
I am a beginning investor and am wondering what kind of prices can an investor find for a SFH that needs work and maybe in preforeclosure? It doesn’t seem like these come around too often for a bargain.
My goal is to rent out my home in Texas, move to SoCal and get a home under contract at a discount, live there for about 2-3 years, and sell for a profit and go back to Texas where my money can go further.
If this is not very realistic, then it wouldn’t be worth it for me to take this job in Irvine. I have a family so it has to be worth it. The quality of life would be lower, even though I could be making six figures, and about $70K in Texas. My mortgage in Texas is about $1400 for a 2700SF house, where it would be well over $3000 in SoCal for a MUCH smaller house. So again, if I could buy at a discount, live in it for a couple years, and sell for a profit without capital gains taxes, that would be a nice setup to go back to Texas with maybe $60-$100K of pure profit.
Any help appreciated.
irvine is very expensive. its also pretty new. your chances
of finding a fixer are slim. you’ll probably pay atleast $600 sq ft
to buy a home on LEASED land. for every preforeclosure there
are 1500 investors writing or calling.
the market is stagnant. i’m sure it will not go up in the next 2-3 years. gas prices are 2.45 for regular and a gallon of milk is about $3.
if i were you i’d stay in texas for 3 years and then move here once people’s 3 year ARM’s kick in and they start losing their
homes.
What about surrounding cities like Corona, CA? They are a lot more affordable and not very far from Irvine. Think there could be a potential fixer there?
depends on how you calculate affordable. compared to Irvine,
maybe. so its a little cheaper. but i doubt you’ll see any deals
there. the only places you’ll see deals are in bad neighborhoods, and when the market turns marginal neighborhoods go down the most.
I live in southern cali, and honestly like everyone said good luck finding a home. With the increases like last year and the year before showed. 19-28% depending on the region of so cal. Homes are grossly over priced!! I am a first time buyer, and so far even houses in the most run down ghettos are running at least 260k and more are sold before a sign can even get into the yard or a listing can go on mls.
Orange county is suppose to be a little bit slower but still expensive.
Also being from TX i am sure you are aware of the commute time you will also be looking at if you move to th riverside area and decide to drive to the O.C. daily
Just stuff to keep in mind.
Yeah, that’s pretty much what I figured. Maybe with enough marketing and door knocking I can find something. I only need one, and I’m not being picky about the particuliar house, since I’m only going to be in it short term. Also, it doesn’t have to have enough room for an investor profit, as I just need to get in and live myself.
I would hope you have been out here and seen how little $500k will buy in and around Irvine or alternative out on the 91 Freeway (West bound in AM; Eastbound in PM) and spent an hour or two with tens of thousand of other folks.
If you done that then maybe it the right move for you, but there is a fairly reasonable chance the SoCal market will get soft in the next few years. If you got a great set-up in TX, it seems like you are taking on a lot of risk and hassle to make $100k.
Native of VA now living in Northwest Orange Co.
From what I’ve been seeing on the internet, Corona has plenty homes/condos under $400K. However, that doesn’t mean that the final price is that number, if everything is going above asking price.
Corona is close on the map, but culturely a good bit different, much hotter and plenty of smog. Probably a good 1 hrs commute to Irvine. Just a guess, but the freeway from the 71 down to the 55 Freeway is jammed packed solid during rush hours (see my last post). There are plenty of people doing that commute to get the cheap housing in Corona and points beyond.
I’m not saying don;t do it, but I would say you need to drop $200 for plane ticket and fly into SNA (John Wayne airport) and try and head out to Corona on a Friday afternoon and look around.
Interesting dilemna. You do not see nor hear of many people making the move to so cal to invest with our outrageous prices. My friend just bought a home in Austin, has a few $100,000 left over from selling his home in the valley, to begin rehabin’.
I live in north LA county (Valencia), just to give you an example of the home appreciation. I bought a very modest 1450 sqft home built in 1972, 3B/1.5B for $258,000 (zero down, financed the closing cost as well). In less than three years it is now worth $529,000! I just spent $20,000 to remodel my kitchen which will add even more value. I really do not believe this will continue, it may still appreciate but at a much slower rate. I have locked in the equity by means of a HELOC, just in case it does begin to decline. I am currently evaluating multiple markets out of state. I will be making some offers in the next couple of weeks. The realtor that helped me has become a friend, we both felt (as did many people) that the market was at it’s peak back in 2001-2002. Not even close! He had multiple homes here in LA (nine rentals) and recently sold them to purchase a mini mall and a gas station in Bullhead City, AZ. Major cash flow!
The problem you face is the entry timing, it is at a very high risky market phase. Most people now are using interest only, option arm, etc. to purchase. The numbers just do not make sense anymore. The slightest correction will really create chaos. Though you must determine this on your own, there are many factors that lead one to believe that prices will still continue to increase. Land is the biggest reason, there is only so much. There is an incredible shortage of homes still, properties are just remaining on the market for slightly longer than the one or two years previous. The weather is great and people will always want to live here.
I believe that a sound, intelligent, and educated real estate investment plan will not include dependance on apprecation. That is the bonus. It might be different if you could rent out for positive cash flow, I considered this for my current home in order to purchase another. Not possible in this market. There are some hot markets, earlier in their stage than so cal, that can still support rents in the area with positive cash flow. Nothing around here though. Even a house in the desert (Palmdale, Lancaster) will run you over $300K.
I hope some of this helps, if you job opportunity is a step up it may be worth it. I would keep the Texas property and collect some rents.
Take care,
Andy Gibbs
Stay in Texas if your happy. Think about the family first…I live down the street from Irvine. The polution is horrible in LA!!! Invest out of state! Inflation is coming! I invested in Las Vegas. I will never buy in Cali. I feel that it is capped at it’s highest level. C’mon half a million dollars for a home built in the 40’s. Nasty 3 bedroom 2 bath home. 1300SF. My parents have over 400K in equity…I don’t ever think this home is worth that much but thats whats going on the market…
i live in san diego and i agree with all my northern neighbors…southern cali is a tough place to find deals…and aak had a good idea…fly to la on a friday, rent a car and try and get to corona in under an hour and a half…you won’t believe it…driving the freeways up there makes you believe that everyone in cali is on your freeway
don’t do it dude…we have too many people here anyway… 8)…good luck
dave
That’s great (refering to previous post)! Too many people here already!
Though, if you think about it, if you do decide to move here and invest it will only add to my equity by increasing the demand thus allowing me to close more deals out of state!
Just kidding. I welcome anyone to our plethora of culture, industry, and over 300 days of sunshine annually! As Nirav pointed out earlier there is a great chance that many home owners will be defaulting in the next few years.
Keep us updated.
Take care,
Andy Gibbs
You have to ask yourself is their a potential to finding a higher paying employer. You should also check out the prices in Lake Forest which is only 10 minuets away form Irvine. Its probably the worst part of South O.C. which isn’t that bad.
These are all great replies, and I appreciate all of them. It seems it just wouldn’t be worth it to go through all of that, when I can make money right here in a market where California investors are trying to get into.
If this were 3 years ago, it would be an easier decision, but I agree with it being at the peak of the cycle.
Thanks again guys!
I grew up in Southern California, my brother still lives there. It has a lot of good points, but I live in Austin now and I wouldn’t move back there for all the money in the world. I think this is the greatest place in the country to live ! Definitely check it out before you move, it really just isn’t worth it.
Good Luck !
JoanAlyce
SeniorC, I believe you should do what is in your gut. Consider your family, lifestyle and changes (budgeting, etc.) however, should you go soon, you may be setting yourself up to be in a prime position for when the market starts to turn. You would have been there, picked up ideal resources, learned the markets and possibly positioned yourself to develop properties there.
I live here in Houston and yes, we have a great market for investing however, I’ve been back and forth visiting, researching and marketing the LA and surrounding areas. I’m gathering much information that I would have not otherwise and have picked up a couple of rentals!! Not necessarily where I would like to live however, they are developing great equity and ideally, I’ll be back there to live. I love Cali and all that it has to offer! So, if it’s just for the regular job, I wouldn’t suggest it however, if it’s for additional investment opportunities, than discuss it with your family, research your budget for living expenses and so forth then do it!
Otherwise, you may be thinking “I should’a, could’a, would’a”. Good luck with you decision!
jc
Hi There!
I am a newbie from SoCAL. Just like what everyone is saying, it is not easy to find a place in CA, there’s even shortage of houses. My husband’s cousin lives in Corona where the brand new houses are but I don’t think that I will go that way and visit them because it smells so bad. There’s cow farms everywhere and it really smells. (they said that they are movings the farms soon) Plus the air quality is really poor, I think you are much better off where you are right now, just wait for few years when the interest goes up, and watch out for foreclosures. Then you can buy a house for the price that you want in a better area. Or maybe by that time all the farms are gone then it wouldn’t be that bad anymore.
I think you’ve got Corona confused with Chino. Corona is off the 91 close to the 15 freeway. Chino is where the daily farms are (or should I say were since they are developing all the dairy property) off the 15 and the 60 freeways. Plus you have a landfill close to there and a sewage treatment plant.
There is a small section of Corona that has a fair amount of cows. You cannot see them, but you can certainly smell them driving the 15fwy.
Agreeing with everyone’s comments; you’re better off staying where you are. The cost of living is insane, the traffic is even worse (Corona to Irvine in traffic averages around 2 hours; 45 minutes without traffic), and the average attitude of the people around here sucks (I can say that; I live here ;D). The only reason I haven’t moved to TX is all of my family in So Cal (many of us have considered the move though). (2¢)