Investment Condo - Advice - OC/LA or AZ/CO/TX? 420K Budget

If you're  in NYC area why not pick up stuff closer to you that's cash flowing.  Go a little rougher into say Trenton or other parts of NJ.  Pick up some stuff like this one.
https://www.redfin.com/NJ/Trenton/42-Carroll-St-08609/home/36696937

For the price of a condo in irvine, buy three of them, set up a property manager to deal with headaches and take cash flow.

Yea, that one is on loopnet too so it's one of the crappier deals out there, but NYC area burbs and outlying is cashflowing
 
This chart below should be a guide to where it makes sense to investment vs not. Four of the worst places to own investment properties are obvious: San Francisco, San Jose, Los Angeles, and San Diego. Texas also has very high property taxes reaching 3% in certain counties. You sort want to invest in the next Austin. Austin used be a one of the highest Cap Rate MSAs but you can see that is not case anymore. Need to look for an MSA where the numbers are in the high 90s and eventually will drop down to the low 70s like Austin did. Today, investing Austin, TX is no longer attractive due to the low cap rates.

Qb7eIZQ.jpg
 
Well, I do buy properties in the high desert, so this would be the equivalent for New Yorkers.  Still, I don't like to buy stuff that I can't see myself living in, so properties that are structurally obsolete, have major deferred maintenance, or crime and safety issues, I will steer clear of no matter how good the cash flow looks on paper.
 
Liar Loan said:
Well, I do buy properties in the high desert, so this would be the equivalent for New Yorkers.  Still, I don't like to buy stuff that I can't see myself living in, so properties that are structurally obsolete, have major deferred maintenance, or crime and safety issues, I will steer clear of no matter how good the cash flow looks on paper.
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Very practical liar. Still there's a world of opportunities between slum lording and being upside down thousands in Irvine
 
dream16 said:
marmott said:
Why not selling your Willow condo and go for something else?

Value has not increased much but you would still end up ahead I think.
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At 5% selling costs on a 550k purchase price = $27,500 will be lost in that alone. I am not sure if same portola spring - willow condos are being sold for 600k now

Goal is to keep raising rent every year - $100/year is what most manage to and Then eventually bleeding will reduce in next 2-3 years
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All bad real estate investments will stop bleeding eventually.  Based on this argument, ANY rental is ok because eventually you will pay off mortgage and cash flow will be good.  What you are not considering is opportunity costs, which is HUGE.
 
dream16 said:
hello said:
Sometimes the best thing to do is to do nothing.  (although I would sell a cash flow negative rental ASAP)
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And then do what exactly with that money? Thing is I am emotionally attached and obsessed with Irvine - so if I sell and move out now - I am not sure if I will be able to scoop up a 1600 Sq ft attached tri level condo in there again for 550k in next 5 years
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Invest the money in other things or pay down debt or use it for something fun.  Whatever you want to do.  Never get emotions mixed with sound investment options.  If you are bleeding money, then sell it especially since it seems you wont lose much due to appreciation.  Even if you can pick up another rental here who cares?  I would care more about making money and not losing money.
 
hello said:
dream16 said:
hello said:
Sometimes the best thing to do is to do nothing.  (although I would sell a cash flow negative rental ASAP)
Click to expand...

And then do what exactly with that money? Thing is I am emotionally attached and obsessed with Irvine - so if I sell and move out now - I am not sure if I will be able to scoop up a 1600 Sq ft attached tri level condo in there again for 550k in next 5 years
Click to expand...

Invest the money in other things or pay down debt or use it for something fun.  Whatever you want to do.  Never get emotions mixed with sound investment options.  If you are bleeding money, then sell it especially since it seems you wont lose much due to appreciation.  Even if you can pick up another rental here who cares?  I would care more about making money and not losing money.
Click to expand...

Zillow report on 92618 tells me appreciation has been 3.5% over last year. So technically, will i be able to sell my property for $20k more only?

Selling costs in itself are 5% = so i will end up with a minimum of $10k loss.

Unless i can be atleast $15-$20k+ in profit from selling it to cover my 1st year of $11k losses (2 month vacancy + one time closing costs etc.), its hard to sell it.

Experts, please share your insights on how much a 2016 built 1614 sq ft 2 bed 2.5 bath can be sold for? It is a tri-level and tandem-garage - a complete leg workout.
 
Panda said:
This chart below should be a guide to where it makes sense to investment vs not. Four of the worst places to own investment properties are obvious: San Francisco, San Jose, Los Angeles, and San Diego. Texas also has very high property taxes reaching 3% in certain counties. You sort want to invest in the next Austin. Austin used be a one of the highest Cap Rate MSAs but you can see that is not case anymore. Need to look for an MSA where the numbers are in the high 90s and eventually will drop down to the low 70s like Austin did. Today, investing Austin, TX is no longer attractive due to the low cap rates.

Qb7eIZQ.jpg
Click to expand...

Thanks for sharing chart, I checked with my friend about Cleveland and he confirmed it, so looking into it.

I have also been looking at Cedar Park, TX (Austin - suburb) and have to checkout dallas area.

One key question i have is regarding the following:

You can certainly buy another home in another location, but there are certain conditions. First, you have to have rented out the home for a minimum of 12 months, reported it on your tax return, and made some income on it. If you will owe money each month and its negative income, it's a liability, not an asset and counts against you in your debt-to-income ratio.

Most lenders prefer a minimum rental history of two years, reported on tax returns, showing the property was profitable. A property can be profitable, but after depreciation and other expense deductions,mother property may show at a loss on tax return, but the lender will add back certain things like depreciation, etc. Again, if it's a monthly loss out the gate, you would have to show enough income to lower your DTI. (Debt to Income Ratio)

Also, your income has to show it can support both mortgages and you need reserves for both mortgages in order to qualify for a new loan.

If the above is true, how will i get a private lender loan? Because i am negatively cash flowing every year = 1st year was $11k and now with IRS returning more money due to house purchase in 2nd year of ownership , i might barely break-even.

Will private lender consider IRS return (20% returns on Mortgage Ins + Tax Paid) = mine came out to be ++$4200 for 1st year.
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dream16 said:
hello said:
dream16 said:
hello said:
Sometimes the best thing to do is to do nothing.  (although I would sell a cash flow negative rental ASAP)
Click to expand...

And then do what exactly with that money? Thing is I am emotionally attached and obsessed with Irvine - so if I sell and move out now - I am not sure if I will be able to scoop up a 1600 Sq ft attached tri level condo in there again for 550k in next 5 years
Click to expand...

Invest the money in other things or pay down debt or use it for something fun.  Whatever you want to do.  Never get emotions mixed with sound investment options.  If you are bleeding money, then sell it especially since it seems you wont lose much due to appreciation.  Even if you can pick up another rental here who cares?  I would care more about making money and not losing money.
Click to expand...

Zillow report on 92618 tells me appreciation has been 3.5% over last year. So technically, will i be able to sell my property for $20k more only?

Selling costs in itself are 5% = so i will end up with a minimum of $10k loss.

Unless i can be atleast $15-$20k+ in profit from selling it to cover my 1st year of $11k losses (2 month vacancy + one time closing costs etc.), its hard to sell it.

Experts, please share your insights on how much a 2016 built 1614 sq ft 2 bed 2.5 bath can be sold for? It is a tri-level and tandem-garage - a complete leg workout.
Click to expand...

WELL this gives me hope, if they are being sold for 625K, sure heck mine can sell for 615K
https://www.redfin.com/CA/Irvine/401-Trailblaze-92618/home/143079706
 
dream16 said:
eyephone said:
dream16 said:
marmott said:
https://www.redfin.com/CA/Irvine/55-Plateau-92618/home/143336380
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Thanks so an increase of 40K in 20 months, yeah this gives me hope of selling mine for some pennies worth of profit 10k ish.
Click to expand...

Don?t worry. You will make it up with your side business.
Click to expand...

Haha well, its all going to be officially on papers soon + it isn't doing that great, so will have to work harder.
Click to expand...

Don?t tell me it?s a MLM type of business. (It?s ok if it is)
 
eyephone said:
dream16 said:
eyephone said:
dream16 said:
marmott said:
https://www.redfin.com/CA/Irvine/55-Plateau-92618/home/143336380
Click to expand...

Thanks so an increase of 40K in 20 months, yeah this gives me hope of selling mine for some pennies worth of profit 10k ish.
Click to expand...

Don?t worry. You will make it up with your side business.
Click to expand...

Haha well, its all going to be officially on papers soon + it isn't doing that great, so will have to work harder.
Click to expand...

Don?t tell me it?s a MLM type of business. (It?s ok if it is)
Click to expand...

Sorry, what is an MLM?
 
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