Need serious opinions on this woodbridge condo please.

T

timatoz

New member
What do you guys think of this condo?[url]https://www.redfin.com/CA/Irvine/21-Alderwood-92604/unit-4/home/5498882[/url]
With 20% down, the total monthly payment including high HOA ($432) is around $2,700. I'm currently renting a 2bed/2bath apartment for $2,200. With around 100k initial down payment, I'm no longer at the liberty of Irvine Company. Is this property worth it especially with the high HOA? If I ever upgrade to a bigger home in the near future, the unit can probably fetch $2,500/month in rent? Need all the constructive opinions please....Thanks
 
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant. 
 
1121 is really small for a 3 bedroom

Can you stretch to $600k?https://www.redfin.com/CA/Irvine/20-Wintergreen-92604/unit-8/home/5420322https://www.redfin.com/CA/Irvine/52-Concierto-92620/home/7216772

Both these have 1500 sq ft plus and more suitable for growing families

$435,000 they bought it in 2006
Selling now for $474,900
so after the huge Irvine price increase...after 10 years, looks like appreciation is only $10k which is terrible.  Assuming closing cost at 6% or 30,000...difference is 9900...terrible.  And is there any more appreciation in the future?  Even $30,000 worth to cover the closing costs? That hoa is a killer

I think you honestly are right in the middle of two roads.  Rent at $2200 or purchase something like this for $475,000 and pay $2700 a month.  If it were my decision, I'd probably continue renting at $2200 and save the $500/month into a savings account I couldn't touch and increase my downpayment to finally buy something you could call a "forever home" instead of this...$5k a year x 5 years = $30,000...and put the $100,000 into higher yield accounts to help savings. 

Good luck!
 
Is living in Irvine a necessity too? Have you considered any other areas besides Irvine?  For what you are looking for, you can probably get larger homes and lower HOA in different cities that can fit a growing family.  Look at Lake Forest, Tustin, Costa Mesa, Foothill Ranch, Laguna Niguel, Aliso, mission Viejo, Ladera Ranch, Rancho Santa margarita etc
 
You didn't mention your reasons for looking to buy a place and your current situation.  For example, do you have a roommate?  If you had a 3b instead of a 2b, would you take on an additional roommate?  And you mentioned renting this out when you look to move up.  You won't need your downpayment back then right?  And how close or far is "near future"?

You heard the negatives already but here is how I see it assuming you will stay there 3-5 years.

$2700 is the total outlay but $500 is principal payments so you are paying yourself.  And depending on your taxes, I bet the property tax and mortgage interest deduction will be a wash which gets you another $400+ back per month.  While you live there, your real cost will be $1700-1800 a month.  When you rent it out, your real cost will be $2200.  Rents over time will rise and if you make the place nicer, you can probably get more in rent.  And if prices do jump up, you can sell and if you sell within 3 years of moving out, you will get any gains tax free.  Not a slam dunk investment by any means but a lot of upsides.  If market and rent stays flat, you aren't losing money. 
 
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
 
dream16 said:
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
Click to expand...
Have you taken into account the principle amount paid by tenant?
 
dream16 said:
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
Click to expand...

Your situation is exactly like mine. I was loosing $500 a month to break even on my cypress village home. It's almost impossible to break even on those new developments with high MR.  I ended up swapping it on my baker ranch sfr with no MR so I could finally break even. I did it with a 1031 so you can look into it. I'm not sure your tax or income situation but it allows you to swap like to like property so investment to investment and the gains become tax deferred. You can maybe look at older houses in Irvine without MR or some of those in Irvine but zoned to Tustin unified school district for those low $500/year MR. I saw usctrojan posted a few like that recently. that 5k loss was a killer for me too. Has your house appreciated enough to home onto long term? Maybe you can "move in" for 2 years and sell it, up to $500k for married couple tax deferred etc

Good luck!
 
There are pros and cons.  If you like the property and want to keep it for future use, then renting it out makes sense.  If you want your rental to be as close to you as possible, it might make sense.  If you think the house values in your area are going to appreciate at a much higher % than houses elsewhere, then it might make sense.  Negative cash flow isn't necessarily a bad thing as you are gaining an asset. 

From what I've been told, though, from a purely financial perspective, it's better to buy your investment property elsewhere at this point in time. 
 
OCLuvr said:
dream16 said:
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
Click to expand...
Have you taken into account the principle amount paid by tenant?
Click to expand...

Principal amount paid by tenant? I call that as rental income which will be declared in my taxes, how does that gain me any benefit? All i know is that the interest i am paying in mortgage is tax deductible.
 
SoclosetoIrvine said:
dream16 said:
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
Click to expand...

Your situation is exactly like mine. I was loosing $500 a month to break even on my cypress village home. It's almost impossible to break even on those new developments with high MR.  I ended up swapping it on my baker ranch sfr with no MR so I could finally break even. I did it with a 1031 so you can look into it. I'm not sure your tax or income situation but it allows you to swap like to like property so investment to investment and the gains become tax deferred. You can maybe look at older houses in Irvine without MR or some of those in Irvine but zoned to Tustin unified school district for those low $500/year MR. I saw usctrojan posted a few like that recently. that 5k loss was a killer for me too. Has your house appreciated enough to home onto long term? Maybe you can "move in" for 2 years and sell it, up to $500k for married couple tax deferred etc

Good luck!
Click to expand...

Right now don't have the bandwidth to do 1031 or search for newer investments, quick google tells me that people in my area who were recent buyers failed to sell off theirs for any profit, so i will hold on to it, perhaps live in it eventually for 2 years & tax defer the 500k atleast. That's what the startegy looks like for me at this time, i have never been to baker ranch, i have been to Lake Forest ..nice area.

The biggest + for me to invest in IR was schools/safety/media hype but MR/HOA is breaking my back
 
dream16 said:
SoclosetoIrvine said:
dream16 said:
You are right and that is why i am suffering negative cash flow on the portola spring tri-level monster condo i bought, the HOA + Mello eats up $615/month and its rented at $2750, so i am loosing $5000/year minimum (EXCLUDING the vacancy and repairs - which can increase the negative cash flow to $12000+/year) = definitely not worth it, i am contemplating selling it and WILL NEVER EVER buy an investment property with HOA & Mello

spootieho said:
Will 1121 sqft fit your future needs?  You mention buying something bigger down the road.  How soon do you think that would be?  IMO, I'd want 1400sqft+ and a garage in a 3 bedroom but that will cost you at least $550k.

IMO:  As a rental property, it's probably not worth it after HOA + taxes compared to other properties.  At least, that's what I'm told.  HOA+taxes is going to eat $900/month.  Add another $200/month for maintenance and stuff that you will need.  If prices were going to shoot up, then yes it's a good reason to invest in, but they already shot up and I think future price increases will be less significant.
Click to expand...
Click to expand...

Your situation is exactly like mine. I was loosing $500 a month to break even on my cypress village home. It's almost impossible to break even on those new developments with high MR.  I ended up swapping it on my baker ranch sfr with no MR so I could finally break even. I did it with a 1031 so you can look into it. I'm not sure your tax or income situation but it allows you to swap like to like property so investment to investment and the gains become tax deferred. You can maybe look at older houses in Irvine without MR or some of those in Irvine but zoned to Tustin unified school district for those low $500/year MR. I saw usctrojan posted a few like that recently. that 5k loss was a killer for me too. Has your house appreciated enough to home onto long term? Maybe you can "move in" for 2 years and sell it, up to $500k for married couple tax deferred etc

Good luck!
Click to expand...

Right now don't have the bandwidth to do 1031 or search for newer investments, quick google tells me that people in my area who were recent buyers failed to sell off theirs for any profit, so i will hold on to it, perhaps live in it eventually for 2 years & tax defer the 500k atleast. That's what the startegy looks like for me at this time, i have never been to baker ranch, i have been to Lake Forest ..nice area.

The biggest + for me to invest in IR was schools/safety/media hype but MR/HOA is breaking my back
Click to expand...

I'm not a CPA. But, in 2008 or 2009 the IRS put in additional language that prevents people from avoiding capital gains on investment to primary residence conversions. Basically if you purchased a unit after 2009 and it started as a rental and was later convert to a primary residence - you can only avoid capital gain tax on the time you used it as a primary residence.

For example, you purchase a condo for $500k in Jan 2012 and rented for 3 years. You lived in it for 2 years, Jan 2015 to Jan 2017, and sell for $600k. You would pay capital gain tax on 60% of the gain (3 out of 5 years used as rental).

Again, not a CPA - recommend you seek one before making any moves.
 
dream16 said:
Principal amount paid by tenant? I call that as rental income which will be declared in my taxes, how does that gain me any benefit? All i know is that the interest i am paying in mortgage is tax deductible.
Click to expand...

Your mortgage is going down.  Check your monthly statements and you will see your owed balance going down.  That is the gain. 
 
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