Here in Southern Calif., homes range from the low $200K to $425K for relatively new homes in decent condition. Even a busted up Ike-and-Tina-Turner battered home goes for $200K here. Since most of the examples I’ve read involved properties for about $100K I’m presuming those are in other states.
Anyone doing RE-investment here in CA at these inflated prices? What’s the usual outstanding balance on properties in foreclosure? I’m just now beginning to look, so I’m wondering if everyone here owes a note of at least $150K and I’ll have to be getting purchase financing for that size loan.
there are always people investing in every market.
the problem is, there are too many people buying 500k homes and renting them out for a 1k/mo loss who think they are investors too. these people are speculators. they are gambling that appreciation will bail them out at some point and a greater fool with pay 700k for that house.
i’ve personally moved my investing out of state to a market thats been undervalued and where i think the next boom will occur. i buy new construction, get 100% financing and put in lease-option tenants so i cashflow or atleast break even.
I like the Ike and Tina Turner comment. Very true, hard to find buy and holds that cash flow here in Ca.
I am following Nirav’s lead. Out of state there are differing markets that make more sense.
I have my hand in a few markets. There are some out of state apartment buildings that cash flow (DSCR 1.2 or better, double digit CAP rates) including property management and 10% vacancy rates. I have located a couple in the 20-50 unit range and I have also located a commercial lender that will lend 90% of FMV.
The beauty of RE is that there is a strong market somewhere out there. I have hasd a number of freids bail on the CA market and head to FL and Las Vegas. I have really been doing my homework and sounds like Utah is another great area and closer to you on the other cost. I personally dont want all my eggs in one basket but have done very well with a developer that i can buy under appraised value, creating great position on my investment and also recieivng a 24 month optional leaseback from the developer which covers all my expences for the first 2 years, this is all waterfront properties so at worst i sit on the strong historical trend waterfront has appreciated, i have done very well with him and are happy to spread the word, www.waterfrontresortinvestments.com. Dont be afraid to look past your own backyard, there is godl up in them hills Best to all! Colin
first off, price means almost nothing. You have to work the math and see how things look based on how much rent you can pull, expenses (current and future), etc. I have looked at property for a $100k in the middle of nowhere USA that was way over priced compared to stuff in SoCal (yes this is possibile). However, for the most part, it is very, very tough to find stuff that cash flows in SoCal. From what I have seen you have to look in some niche markets on the outer edges of the LA metro area.
I’m in the Sacramento area. Our local REI club had a speaker last week, Robert Campbell, a S. Californian that wrote a book on timing markets. His take on CA right now was sell, hold the cash until after the “correction” or buy in another market. He pointed out things like historically the avg home cost 4 times the avg household income, but right now its at 8, and the only reason they’re still selling is existing homeowners using equity and all the easy financing. Another indicator is that the over a mil homes are just starting to level off, which he said is a sign.
I drove by a duplex the other day. Both sides currently rented at $1200 each and they wanted $450k for it. Whats that, about a $1000 neg equity each month. Gah!
I’d like to do some rehabs but it seems that even when selling a fixer the sellers see $. There’s got to be some deals out there though. I’m new to REI so I’m still learning how to find them.
I was looking online at the Raleigh, NC area. Anyone doing business there?
I used to live in Raliegh and still have a lot of connections there. The real estate is appreciating but not that rapidly (compared to ther areas). With the construction of the new outer loop, it has enabled the surburban sprall to expand outward with very little real pressure to control growth since there is plenty of open farm land surrounding the metro area. For example, a buddy of mine just sold his house (~20yrs. old) near Crabtree Valley Mall (very desirable are when I lived there in the 90s) and only made 30% or so after 6 yrs of ownership. While its a gain/profit, as an investor that would not get me excited. However, I am sure there is money to made in that market since traffic is terrible and people are always willing to pay a premium to be close to the jobs (in RTP is this case). Probably need to look in areas that cheaper (south side of Raleigh) or newer (>10yrs old). One final comment is Cary was “the place” to live 10 yrs ago and experienced solid appreciate over many years. I would suspect there is still a healthy demand to live there since the schools are good and its close to RTP/I-40.
all markets[stocks, real estate, gold, oil] regress to a mean value. in california RE, this mean is maybe 4-5 times the annual houshold income. at 8x, its too expensive. thats why
i’m moving my investing to utah!
NC and SC have a linear growth pattern. as opposed to the coastal areas, they just go up 3% every year like clockwork. its more of a hedge against inflation!!!
Yeah, Cary is where I saw townhouses for under 100k that rented for about $750. I only looked there b/c a relative was talking about selling her 400k house in DC and moving there. Like more and more DC’ers she prefers the Outer Banks to DelMarVa for vacations so thats a plus, not to mention crime, traffic, milder winters. I’m just looking for reasons why Raleigh could experience greater appreciation in the future.
Best to all! Colin