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Quote (you can go ahead and replace "Irvine" with "upper end SD community"
"A long-term equilibrium will likely either have condo prices rebound, relative to SFR prices – or will have SFR prices decline, relative to condo prices." Regardless of which path the market takes, if you are buying as an investment, it makes little sense to buy an Irvine SFR. If you believe in the Gospel of Irvine, and you want to make money purchasing Irvine real estate, you should be buying condos. When the equilibrium is restored -- up or down -- condos will move positively more than SFRs.
But the big thing I think you need to separate is buying a home as an investment and buying a "home" to live in. Although a house typically is one's biggest "investment". I still say you have to really separate buying investment properties vs. buying a home to live in. There is a huge difference.
Also, some of those blogs out there are really great. But the value of them was much more important many years ago before and during the bubble. Now, not as much IMHO.
I'm not saying property prices won't fall a bit more but eventually all these housing bubble blog sites will run out of things to say. Some of them you really run into a lot of permabears.
People just need to separate buying a home to live in for the long term and buying a potential "investment". I still say those buying now or next year and buying a home to live in for the long term (10-15+ years) in good areas....will feel good about themselves long term as long as they can comfortably afford it and enjoy the property/development and area they decided to buy in.
But the big thing I think you need to separate is buying a home as an investment and buying a "home" to live in. Although a house typically is one's biggest "investment". I still say you have to really separate buying investment properties vs. buying a home to live in. There is a huge difference.
Also, some of those blogs out there are really great. But the value of them was much more important many years ago before and during the bubble. Now, not as much IMHO.
I'm not saying property prices won't fall a bit more but eventually all these housing bubble blog sites will run out of things to say. Some of them you really run into a lot of permabears.
People just need to separate buying a home to live in for the long term and buying a potential "investment". I still say those buying now or next year and buying a home to live in for the long term (10-15+ years) in good areas....will feel good about themselves long term as long as they can comfortably afford it and enjoy the property/development and area they decided to buy in.
Agreed earlyretirement.
I am helping a family member right now now trying to find property here in San Diego to live in for ~300k (not married, no kids, retired).
Its amazing how many short sales there are in south and north Chula Vista area west of the 805. TONS. I expected it in the Otay Ranch area, but the condition of some of these properties are terrible. They are all over priced too in some of the nicer pockets. What I am seeing are teaser listing prices to lure buyers into a short sale bidding war.
Granted CV is an area that got decimated (still is) in this current economy. Some of the areas closer to the bay might be decent investments for slum lord types, but that would just make the area go to sh*t completely.
I was talking to an agent that represented a group of investor this past weekend. He said basically the same thing that I was seeing which was that even flippers have been priced out of the market compared to 2 years ago. They are getting squeezed on profits. Costs are too high to refurb, REO prices are too high for the condition and homes are sitting on the market too long and they are having to absorb those costs every month it sits.
There are simply no data points available for the SD market to make any type of clear cut decision on investing. I am all for sharing information on forums etc, but its a dead end hunting for that diamond in the rough blog bit or data point to jump into murky waters IMHO.
If it was that great of a deal to 'invest' for the sake of investment, you missed the boat already. However there are some solid deals for people that want a home to live in.
I am helping a family member right now now trying to find property here in San Diego to live in for ~300k (not married, no kids, retired).
Its amazing how many short sales there are in south and north Chula Vista area west of the 805. TONS. I expected it in the Otay Ranch area, but the condition of some of these properties are terrible. They are all over priced too in some of the nicer pockets. What I am seeing are teaser listing prices to lure buyers into a short sale bidding war.
Granted CV is an area that got decimated (still is) in this current economy. Some of the areas closer to the bay might be decent investments for slum lord types, but that would just make the area go to sh*t completely.
I was talking to an agent that represented a group of investor this past weekend. He said basically the same thing that I was seeing which was that even flippers have been priced out of the market compared to 2 years ago. They are getting squeezed on profits. Costs are too high to refurb, REO prices are too high for the condition and homes are sitting on the market too long and they are having to absorb those costs every month it sits.
There are simply no data points available for the SD market to make any type of clear cut decision on investing. I am all for sharing information on forums etc, but its a dead end hunting for that diamond in the rough blog bit or data point to jump into murky waters IMHO.
If it was that great of a deal to 'invest' for the sake of investment, you missed the boat already. However there are some solid deals for people that want a home to live in.
Shmoov,
Yeah, I noticed the same thing. I have only just begun to look in the area. I have been so busy with furnishing our new house and wrapping up some deals with work. But I've looked a bit at the area and I don't find so many compelling "investment" type properties. There are much better areas vs. San Diego.
I also noticed TONS of distressed properties in Chula Vista. I don't know enough about the rental market and occupancy rates in that area to want to even think about buying there.
I was talking to a good friend/client of mine that lives in Sacramento last night. He is a really sharp guy and he claims the flipping market is HOT there in Sacramento. He is buying on average a property each week and either flipping it or renovating and holding and renting. He's making a killing there buying things off the courthouse steps.
He said there are houses there as little as $60,000. He has it down to a science with his own team renovating and then flipping them. He says there are individual guys doing as many as 10 deals a week! It got my attention. I told him he should put together a service so that investors can get in on the action. I'd certainly do it. I wish the market here was like Sacramento but it's much different.
I just don't see San Diego as an ideal market for investment properties. I prefer investing in my "own backyard" in the city where I live....but the numbers don't look too compelling to me to buy properties in San Diego as rental properties. I could be wrong and still investigating the market. But there are better areas around the country where real estate is much cheaper and you get a lot more bang for your buck.
For example, last year I was looking at investment properties in Plano, Texas. There was a 5 bedroom 4.5 bathroom house in a great school district. They were asking something like $339,000. This was before the first time housing credit expired. I offered $300,000 all cash and told them they were crazy if they didn't take it. I already had a corporate rental lined up for 2 years at $3,500 a month. (There are TONS of corporate headquarters there in Plano, TX). The seller's realtor turned down my offer and I told them I'd see them after the first time housing credit ended below the $300's. They laughed at me.
Fast forward a few months later and I get an email out of the blue from my realtor asking if I'm still interested. I wasn't as I already purchased another investment property. Well it ended up going for around $279,000 for a 5 bedroom, 4.5 bathroom in a great school district. That type of property has great ROI compared to here.... Most of Texas didn't see the tremendous bubble type activity like you see here in San Diego...still, prices there went down a good bit as well.
Last edited by earlyretirement; 10-26-2011 at 01:01 PM..
...he should put together a service so that investors can get in on the action. I'd certainly do it.
I have seen some people start their own funds in Vegas but their cut was way too high. Something like 50%. I am sure others have starting similar funds in areas where the banks have already capitulated i.e. Vegas, Stockton/Sacramento.
I have seen some people start their own funds in Vegas but their cut was way too high. Something like 50%. I am sure others have starting similar funds in areas where the banks have already capitulated i.e. Vegas, Stockton/Sacramento.
Yeah, that won't work.... it's too high. I told him the same thing. You have to have a reasonable fee. Maybe a consulting fee of $X to have him handle everything and % of profits that is reasonable on any flips.
He said that this guy that is doing 10 deals a week is paying a flat rate of $2,000 to a broker to handle everything no matter how big the property is (all distressed property). But the broker is complaining as it's too low as he needs a huge staff to deal with it.
I've looked at investment properties in Miami and never been too thrilled and besides, many property managers are charging 50% management fees which seems insane to me.
Yeah, that won't work.... it's too high. I told him the same thing. You have to have a reasonable fee. Maybe a consulting fee of $X to have him handle everything and % of profits that is reasonable on any flips.
He said that this guy that is doing 10 deals a week is paying a flat rate of $2,000 to a broker to handle everything no matter how big the property is (all distressed property). But the broker is complaining as it's too low as he needs a huge staff to deal with it.
I've looked at investment properties in Miami and never been too thrilled and besides, many property managers are charging 50% management fees which seems insane to me.
What kind of net profits is he seeing in Sacramento for each unit? I think everyone agrees that investment properties in areas like SD are not good because capitulation has not begun. But in areas where capitulation is well under way, which city do you think is best? Merced? There is a new UC there plus there are plans for the high speed rail to have a stop in that area.
What kind of net profits is he seeing in Sacramento for each unit? I think everyone agrees that investment properties in areas like SD are not good because capitulation has not begun. But in areas where capitulation is well under way, which city do you think is best? Merced? There is a new UC there plus there are plans for the high speed rail to have a stop in that area.
He claims to be making 17% net profits. He is a good, honest guy so I believe him. He made most of his money getting funding first round of seed money for some of the dot coms that are around today.
To be honest, I don't know the best areas in California to invest in investment properties. Really, up until just recently I didn't think it was time to buy yet. I still think properties will fall a bit lower but I do think we are close to a bottom. I hear some permabears saying that real estate in good areas will fall another 30% and I laugh. Same attitude as the permabulls that thought their real estate would go up forever.
I'm really not in a rush to buy "investment properties" in California. I think it's getting better in some areas. Especially the distressed properties that people are buying off the courthouse steps. It sounds like that is where all the gravy and easy money is. My client bought a multi building unit and the next day someone offered him $200,000 more than he paid. Of course, the thing to keep in mind is you actually have to have the cash on these sort of deals which isn't for everyone. I think closer to the middle of 2012 will be a better time to get in. There is no rush to buy investment properties now, IMHO.
But some of these guys are absolutely making a killing buying properties off the courthouse steps. I've never done it before and have no experience in it but I'll probably invest in this sort of thing if the returns are truly as good as he claims. I have quite a bit of experience in real estate and buying investment properties but never off the courthouse steps.
"Bob Nielsen, chairman of the National Association of Home Builders, applauded the Senate Friday morning and urged the House to reconsider their earlier rejection of the measure.
"Congress must act soon to ensure that this measure is enacted into law," Nielsen said. "Otherwise, the current drop in mortgage loan limits will reduce housing demand and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery.""
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