Good time to buy another place? (Los Alamitos: real estate market, renters, HOA)

[HB2HSV]

In an earlier thread I mentioned I have a rental property in Los Alamitos. As life has it, we find ourselves possibly moving back to OC. So the logical choice is to move back to our rental, or keep the rental and buy another property.

I’d be interested in your opinion of pros & cons of either approach. How’s the real estate market this year? Do you expect an increase, neutral, or a drop in the market?

[Electrician4you]

Originally Posted by HB2HSV

In an earlier thread I mentioned I have a rental property in Los Alamitos. As life has it, we find ourselves possibly moving back to OC. So the logical choice is to move back to our rental, or keep the rental and buy another property.

I’d be interested in your opinion of pros & cons of either approach. How’s the real estate market this year? Do you expect an increase, neutral, or a drop in the market?

Nobody can tell you as we don’t know your finances. Can your income handle a double mortgage? Werent you the one who was gonna jack the rent into the stratosphere on your current rental? High rent usually means a small pool of applicants.

There will always be a need for rentals. That said if rents go down you’re gonna have to go down in asking price. There is competition for good tenants too. It’s not all in the LL court. I had a hard time finding great tenants. I could get my puck of crappy to mediocre t9 somewhat good but i didn’t want those.

[HB2HSV]

Yes I can afford the double mortgages. Technically it’s not “double” as the rental is producing positive cash flow.

My debate was whether continue to be a landlord and have the rental continues to produce income & eventually property appreciation, or taking back the rental as primary residence & enjoy less financial liability and monthly expenses. Ironically the biggest discriminator on expenses with a new property is the property tax as one expected to pay more.

I am guessing the obvious answer is, if I can afford to rent it out while assuming another mortgage, then I should continue to do so from an investment view point.

[Electrician4you]

Originally Posted by HB2HSV

Yes I can afford the double mortgages. Technically it’s not “double” as the rental is producing positive cash flow.

My debate was whether continue to be a landlord and have the rental continues to produce income & eventually property appreciation, or taking back the rental as primary residence & enjoy less financial liability and monthly expenses. Ironically the biggest discriminator on expenses with a new property is the property tax as one expected to pay more.

I am guessing the obvious answer is, if I can afford to rent it out while assuming another mortgage, then I should continue to do so from an investment view point.

Yeah but it may not always produce a positive cash flow. It’s doing it now. Dont fall in that type of thinking trap. I’ve had times where a rental was vacant for months. It’s rare but it does happen. In one case the tenant left in November. Try filling a empty rental in Nov Dec. pretty tough. Try filling it with someone that can actually pay the rent, isn’t running from debtors, old landlords, has income, doesn’t lie about everything, etc,
I rather wait eat the mortgage and get a qualified tenant.


It’s really up to you and your finances. How badly do you wanna or not wanna be a LL. There are positives and negatives to that aspect. Remember that the bank will look at your length of time of being a LL and having the rental and they will only use a percentage of that income generated by the rental. So the rental may not be as much of a asset as you think.

Really....imo the property taxes are not the biggest factor imo. I bought another house. My property taxes were higher but it wasn’t unaffordable.. For example my last place taxes were 3600. My current house taxes are 5,000. I still own the other property

[HB2HSV]

I have this rental for over 10 years now and fortunately for me, the longest period it sits vacant was one month. Interesting that bank will only take a % of rental income for qualifying. I bought a house while having this rental, I’ll have to go back to loan documents to see how rental income calculated in my Debt/ Income ratio.

My thinking is, over the long term, property value appreciate in OC. My current thinking is to keep the rental and buy another place as primary residence. It’s better to have 2 separate properties appreciate over time if I can handle the finances. When I need to sell, I’ll move back to the rental for 2 years and rent out the other property instead.

As a LL, do you think a condo/ townhouse is a better rental or single family house? What do renters prefer?

[thelopez2]

Originally Posted by HB2HSV

I have this rental for over 10 years now and fortunately for me, the longest period it sits vacant was one month. Interesting that bank will only take a % of rental income for qualifying. I bought a house while having this rental, I’ll have to go back to loan documents to see how rental income calculated in my Debt/ Income ratio.

My thinking is, over the long term, property value appreciate in OC. My current thinking is to keep the rental and buy another place as primary residence. It’s better to have 2 separate properties appreciate over time if I can handle the finances. When I need to sell, I’ll move back to the rental for 2 years and rent out the other property instead.

As a LL, do you think a condo/ townhouse is a better rental or single family house? What do renters prefer?

Lenders typically will use your previously filed returns for qualifying ratios for your DTI, not % or rental income. The % is used for rentals that don't show up on your tax returns, such as a newly converted rental or newly acquired unit.

A few years ago they changed the 2 out of the last 5 years capital gains things, if that was what you were referring to.

The HOA fee can be a significant monthly expense compared to a single family home where the tenant pays for all of the utilities.

In a condo, there is an association that takes cares of repairs to the building. In a single family home you take care of it your self.

Renters prefer a place that will accept their pets.

[Electrician4you]

Originally Posted by HB2HSV

I have this rental for over 10 years now and fortunately for me, the longest period it sits vacant was one month. Interesting that bank will only take a % of rental income for qualifying. I bought a house while having this rental, I’ll have to go back to loan documents to see how rental income calculated in my Debt/ Income ratio.

My thinking is, over the long term, property value appreciate in OC. My current thinking is to keep the rental and buy another place as primary residence. It’s better to have 2 separate properties appreciate over time if I can handle the finances. When I need to sell, I’ll move back to the rental for 2 years and rent out the other property instead.

As a LL, do you think a condo/ townhouse is a better rental or single family house? What do renters prefer?

When we bought out our house the rental income on our taxes, they calculated a percentage of that income that was applied to our actual income. I guess because we itemize the rentals it shows up as other 8ncine. I’m not 100% surecwhy but I remember specifically the loan guy saying they only use a percentage. They figure a certainty n percentage of that is used for overhead on running the rentals I’m guessing. I didn’t need to use it as I had more than enough income but my loan agent wanted to use it to make it look better. Maybe it was a brag at the office thing. I didn’t care for my loan agent. I rarely get that feeling with people but sometimes I just don’t care to associate with some people. Not sure why. Wanted to know way too much about my business. Maybe I’m making too much about nothing but I did not like him. Probably why I went with the other lender.

Anyway

I have always personally believed in owning more property than not. As far as which type is better they both have their pluses and minuses. The HOA can be strict and sometimes annoying but to me as a rental it’s just that much more the tenants can’t get away with. So if they have “friends” staying, or party house, most likely you’ll get a letter. You usually have other fees but HOA dues are deductible as a expense on a rental.
A SFR usually rents for more money but you’re paying for exterior repairs, lawn care, roofs, and less oversight unless you know your neighbors.

As far as pets....i rather not have pets in my rentals. Yes you can get a little more money, but you can also get a huge headache. I have allowed pets but it’s rare that I do. Yo7 would need to be a exceptional renter. My problem isn’t with thecpets. I personally have no issues wit pets. It’s the owners that are usually the issue

[brown_dog_us]

Originally Posted by HB2HSV

In an earlier thread I mentioned I have a rental property in Los Alamitos. As life has it, we find ourselves possibly moving back to OC. So the logical choice is to move back to our rental, or keep the rental and buy another property.

I’d be interested in your opinion of pros & cons of either approach. How’s the real estate market this year? Do you expect an increase, neutral, or a drop in the market?

If you move back, could you stop using a management company? Depending on what you're paying for the service cutting them out after you have a solid tenant is a great way to increase cash flow.

[Electrician4you]

Originally Posted by brown_dog_us

If you move back, could you stop using a management company? Depending on what you're paying for the service cutting them out after you have a solid tenant is a great way to increase cash flow.

Yup. I don’t use a PMC.

[kwong7]

I think only you can answer whether you should or shouldn't buy another property because we don't know your circumstance, your values, or where the market is going (assuming you don't want to "overpay"). If it were me, I'd consider the following:

1) My cash flow and when I plan to retire.
2) How easy has being a landlord been for you historically/do you currently have good tenants/what's the profitability of your rental at 10% below rental market value (just to be conservative)?
3) What area of OC would you prefer to live in?
4) Are there other ways you'd rather invest or spend that money?

One thing is clear in my area and that is properties are sitting vacant for the first time in 6 years, but I live in an area that has been flip-happy for years and price/interest rates have probably reached their limit.