SFH for 605K [Rentability Options in Brea]?

D

dream16

New member
Hi Guys, my friend bought a 1960 built 4 bed/2 bath: 1400 sq ft/6000 sq ft lot - SFH in Brea for 605k. There is no HOA/no mello and he sneaked in a 3.5 Interest Rate last Oct 2016. I visited his house and other than the backyard and front parking space, was not really impressed by the home itself. Tiny bedrooms as you can expect in 1400 sq ft space.

When i was in the market for an investment + primary residence property, i never looked at Brea, some analysis shows me that Brea only has 23% rentals, where-as irvine where i bought has 50% rentals, but now i am loosing $5k/year minimum due to HIGH HOA and Mello Roos of Irvine.

Is there anyone in similar situation like me? What options would you suggest? If i can sell mine for a laughable profit of 10-15k after expenses, then what should i buy?
 
I'm not a big fan of Brea.  I know which area you are talking about too

The biggest issues is the traffic and the congestion on the 57.  You have Cal state Fullerton right there, you have angels stadium on the way up and the traffic on the 91/57/60 going both ways.  It would be a bad commute unless you worked in the area locally I think.  The commute up to LA is pretty nasty too. 


 
dream16 said:
Hi Guys, my friend bought a 1960 built 4 bed/2 bath: 1400 sq ft/6000 sq ft lot - SFH in Brea for 605k. There is no HOA/no mello and he sneaked in a 3.5 Interest Rate last Oct 2016. I visited his house and other than the backyard and front parking space, was not really impressed by the home itself. Tiny bedrooms as you can expect in 1400 sq ft space.

When i was in the market for an investment + primary residence property, i never looked at Brea, some analysis shows me that Brea only has 23% rentals, where-as irvine where i bought has 50% rentals, but now i am loosing $5k/year minimum due to HIGH HOA and Mello Roos of Irvine.

Is there anyone in similar situation like me? What options would you suggest? If i can sell mine for a laughable profit of 10-15k after expenses, then what should i buy?
Click to expand...

If you can sell for a profit, then do it this year.  Perhaps the question is not what should you buy next, but moreso when should you buy.  Sometimes doing nothing is better than doing anything.
 
I find timing more important then location.
If you bought a house anywhere in the "low" range, you would make money no matter what location.


1990-1992 ~ high
1996-2000 ~ low
2005-2008 ~ high
2010-2012 ~ low
2017-2020 ~ high?

You can tweak my data if you like, but it seems we should be currently in the high cycle, and you should be selling, not buying.
 
Yes you can buy a house in Irvine in 2006-2007, and it would be nominally worth more today.
But if you would have waited 3 years to 2010, you would have gotten a better deal.

Do you think we are at the high side of the cycle? ..

From 1996 to 2004, you could have bought a house and made money all the way up to 2006.
So perhaps today, there is still another 5 years of upside.

 
YellowFever said:
zubs said:
I find timing more important then location.
If you bought a house anywhere in the "low" range, you would make money no matter what location.


1990-1992 ~ high
1996-2000 ~ low
2005-2008 ~ high
2010-2012 ~ low
2017-2020 ~ high?

You can tweak my data if you like, but it seems we should be currently in the high cycle, and you should be selling, not buying.
Click to expand...

But real estate prices are 'positive linearly cyclical' no?  That means, they are cyclical but the trend line is still positive.  Between 1960 thru 2017, house prices in the real estate crash of 2008 won't see prices at 1960.  This is because of inflation.

So let's say in the crash of the year 2100, prices are probably unlikely to drop to 2017 prices?  ;D
Click to expand...

You might find these two graph helpful.

First one shows nominal home prices nationally, but here in Irvine, the nominal price already surpass the housing bubble peak.

Second one shows real home prices adjusted for inflation.  As it shows, the real home prices barley outpace the inflation. 


CSDec2015.PNG


RealHPIApr2013.jpg
 
What caused the drop between late 80s to early 90s?  And the prices stagnated for 5+ years.
 
YellowFever said:
So what are you saying?  That we're not really in a bubble?
Click to expand...
We are certainly not in a bubble.  We are just on the high side of current real estate cycle. 

YellowFever said:
My point I'm trying to make is, in the next crash, whether it's 2025 or 2028, will the prices right at the bottom of the crash be as LOW as the prices in 2012?  ???  because according to this trend line for real house prices, it doesn't appear so.
Click to expand...

And yes, at least for the last 30-40 years, the home price always go up, whether it's nominal price or real price.  However its not always so.  If we go back to 100 years, the real home price adjusted for inflation are actually flat.  Only staring in the 70's with continuous lowing interest rate (from 30 yr @ 19% down to 3.5% recently), housing prices start to increase more than inflation. 

The Irvine's home prices are on the high side of current real estate cycle but it has not peak yet.  And with that great housing bubble where some city's home prices drop by over 40%, Irvine's barely drop by 15-20%.  When we hit the next low of the real estate cycle, Irvine might not even going to drop by 5%. 

When the next real estate downturn hit sometime in the coming years, the housing price bottom during the next low most likely will be still higher than today's prices.
 
zubs said:
I find timing more important then location.
If you bought a house anywhere in the "low" range, you would make money no matter what location.


1990-1992 ~ high
1996-2000 ~ low
2005-2008 ~ high
2010-2012 ~ low
2017-2020 ~ high?

You can tweak my data if you like, but it seems we should be currently in the high cycle, and you should be selling, not buying.
Click to expand...

A quick google analysis indicates me that people are trying to sell their condo's in my street and so far have NOT been successful, so i guess i might have to stick around with it
 
rkp said:
irvinehomeowner said:
rkp said:
What caused the drop between late 80s to early 90s?  And the prices stagnated for 5+ years.
Click to expand...

Wasn't that the dotcom bust?
Click to expand...

Wrong decade.
Click to expand...
Oh yeah, it was after that time.

Internet says 1989 was when it "dropped"... speculation seems to be rising rates because after that time, rates started dropping (sound familiar?). In the US overall, it wasn't a large drop, but places like LA, NY and SF it was measurable.
http://livingstingy.blogspot.com/2012/01/real-estate-bubble-of-1989.html
 
In 1990 Japan's stock market died...and so did US real estate.

TFTF_2.png


What will happen when China's stock market dies?
 
zubs said:
In 1990 Japan's stock market died...and so did US real estate.

TFTF_2.png


What will happen when China's stock market dies?
Click to expand...
China's stock market has been dead for awhile now. And remains sideways with no recovery in sight.

The Chinese with real money didn't make their money through the stock market or even invest in the stock market. They made their money through much different means.
 
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