Rental Property in Irvine, slam dunk?

J

jumpinjacks

New member
We have a single family home in Lake Forest and are happy with it. But got some dough in the bank, currently making 7% off our mutual funds. High level thoughts on putting 20% down on something in Irvine at 400k or so, seeing how the demand/pricing is pretty steady.

That would likely be a 2 bedroom in an older area without Mello-Roos...what areas in Irvine would that be?

New build 1 bedrooms are around 2k right now, what's the range for rent for an older 2 bedroom?

Is there still a market for 2 bedrooms, counts out growing families, but maybe couples/students?

Anything compelling arguments for the market (I get actively managed mutual funds on the cheap based on my employment)?

Maybe the timing on buying is not ideal, but is Irvine really it's own animal?

Still gotta run the ROI, this is right from what I've seen for considerations?
Purchase price:
Downpayment:
30 year fixed at:
Monthly Rent:
Vacancy rate:
Property taxes:
Insurance: r
HOA: 3
Property management:
Cap Ex/Maintenance:

Thanks in advance everyone!
 
There's only 7 homes listed under $450k that match your criteria of 2 bedroom
The sq ft is 800-1000

The locations you want to be looking at on streamwood (older community across the street from zion market, next to eastwood) and older parts of woodbridge next to the lake

96 streamwood
65 streamwood
628 springbrook n #5
49 rockwood #9

Biggest issue with those condos are The $300-$300 hoa and the costs of renovation of older homes. 

Both seem like decent places for students in mind or growing families expecting their first child

Rent wise: I would think $1800-$2100 would be your rent estimate for these homes

I don't know your financials so you got to run your own ROI to see if you can break even.  These older homes usually have no MR so good there.  Vacancy isn't usually an issue in Irvine.  You can contact USCTrojanCPA (or something like that) or have a realtor run the rental comps in that area to know for sure

But in my own opinion, the best combos currently in Irvine are those 3 bedroom 2 bath that can command more rent in older neighborhoods with no or little MR, like the 97 Ardmore USCTrojanCPA posted not too long ago, I posted the link below...that's probably the best value kind of pick vs the older $400k 2 bedroom condo
http://www.talkirvine.com/index.php/topic,15237.0.html

GOod luck!  >:D
 
Just as an example, I honestly think that 97 Ardmore I posted before might be close to breaking even

purchase price $650k, According to redfin, total payment is $3485/month
30 Year Fixed, 4.040% Interest
Principal and Interest
$2,495
Property Taxes
$645
HOA Dues
$227
Homeowners' Insurance
$119

The Insurance is a bit high, $50/month is more close, so $3430 around

I think it could rent for $3300-$3400, so it's either break even or pay $100/month which isn't too bad
https://www.redfin.com/CA/Irvine/97-Ardmore-92602/home/5844526http://www.talkirvine.com/index.php/topic,15237.0.html
 
I also recommend to get a bigger, 3+ bedrooms property instead of smaller 2 bedroom one.

1 or 2 bedroom rental property are facing more competition from those TIC apartments and the buyer pool are very limited compares to those bigger and more bedroom homes when you want to sell them. 
 
SoclosetoIrvine said:
Just as an example, I honestly think that 97 Ardmore I posted before might be close to breaking even

purchase price $650k, According to redfin, total payment is $3485/month
30 Year Fixed, 4.040% Interest
Principal and Interest
$2,495
Property Taxes
$645
HOA Dues
$227
Homeowners' Insurance
$119

The Insurance is a bit high, $50/month is more close, so $3430 around

I think it could rent for $3300-$3400, so it's either break even or pay $100/month which isn't too bad
https://www.redfin.com/CA/Irvine/97-Ardmore-92602/home/5844526http://www.talkirvine.com/index.php/topic,15237.0.html
Click to expand...

I'd be very surprised if you could get a 30-yr fixed for 4%. Since you'd be applying as an investment loan, the rate is going to be 4.5% to 4.75% - including a potential premium since it's attached/condo. You could potentially do an ARM in the 4% or lower range.
 
SubSolar said:
Please tell me where to buy a rental Irvine and break even with only 20% down.
Click to expand...

Correct, lenders will require you to put down 25% for an investment property purchase.
 
Good analysis Soclosetoirvine.  One thing I factor into my calcs is the principal payment.  I assume a 5 year hold minimum and on the 97 Ardmore example, that would be about $10K a year in principal.  Obviously there are other costs like vacancy and repairs.
 
daedalus said:
I wanna buy your mutual funds.  Tips?
Click to expand...

I'm not licensed, yadda yadda yadda. But I will say it's a big mutual fund family (in many company retirement plans), low fees, and a location in Irvine. I've been invested and continue to add since I started working here outta college so been through at least a cycle or almost 2.

Thanks everyone, I think I underestimated how much I can get into Irvine with and it makes sense to go 3 bedroom. I think I just got excited when I saw some of the cheapo condos in Lake Forest for around 300k.
 
We rented out our Tustin Ranch detached condo for right around 3k (probably about a mile from Ardmore), getting another 400-500 out of an attached seems high to me even if it is in a gated community.  Ours was a 3bed/2bath at around 1500+sq ft.

SoclosetoIrvine said:
Just as an example, I honestly think that 97 Ardmore I posted before might be close to breaking even

purchase price $650k, According to redfin, total payment is $3485/month
30 Year Fixed, 4.040% Interest
Principal and Interest
$2,495
Property Taxes
$645
HOA Dues
$227
Homeowners' Insurance
$119

The Insurance is a bit high, $50/month is more close, so $3430 around

I think it could rent for $3300-$3400, so it's either break even or pay $100/month which isn't too bad
https://www.redfin.com/CA/Irvine/97-Ardmore-92602/home/5844526http://www.talkirvine.com/index.php/topic,15237.0.html
Click to expand...
 
rkp said:
Good analysis Soclosetoirvine.  One thing I factor into my calcs is the principal payment.  I assume a 5 year hold minimum and on the 97 Ardmore example, that would be about $10K a year in principal.  Obviously there are other costs like vacancy and repairs.
Click to expand...

Huge brain fart!  Good catch on the investment mark up...I should know since I just got out of a 1031  :p

20-25% = 130,000 to 162500 so 30k more
487500 x 4.75% (mark up for investment) = $2543 P * I so you are up $50/month there

For that 65 streamwood example, That $425k purchase price
$106250 down for 25%
318750 loan at 4.75% = 1662.75 piti
add in $421 property taxes, $285 hoa, and $50 hoa

= $2418 monthly... this is just simple math so correct me if I'm super off

At that $1800-$2200 rent, you could either be down $200-$400/month is my expectation based on how much you can rent it out for...none of this like you said adds vacancy and any property management fees of course!

I know people don't usually consider it when they are buying, but investment homes really help your tax returns with all the expenses, mortgage interest, repairs, yada yada, so with that considered it would help your bottom line 

akkord said:
We rented out our Tustin Ranch detached condo for right around 3k (probably about a mile from Ardmore), getting another 400-500 out of an attached seems high to me even if it is in a gated community.  Ours was a 3bed/2bath at around 1500+sq ft.
Click to expand...

My bad if I was off that much!  I know Irvine company apartment rates have been increasing so figured homes would go up too.  I got that much for my lake forest home, so figured Irvine would be about the same. 

If what you are saying is true, then the sweet spot for Irvine is a mortgage around $400-$450k tops for a 3 bedroom as a 450k mortgage at 4.75 is $2347 which is $200 less
 
One thing to watch out for on the older condo communities - sometimes it's difficult getting financing due to HOA litigation or owner/renter ratios. Not always applicable, but worth asking.
 
SoclosetoIrvine said:
I got that much for my lake forest home, so figured Irvine would be about the same. 
Click to expand...

You got 3.4k/month for a 3bed/2.5 bath in lake forest?  The op should look in lake forest over Irvine if that's the case.
 
Ardmore would rent out for about $3,100/mo +/- from the rental comps that I'm seeing.  The rental market is on fire and rents are up 8-10% in the past year or so.  HOA is $227/mo and Mello Roos is only $700/year so with 25% down you'll be about $100 negative...that's as good as it probably gets in Irvine. 

The sweet spot for rentals are 3bed/2.5bath condos/homes.  You have almost no competition from apartments and it opens you up to a much bigger rental pool.  Plus it makes it easier to sell because that's the first move-up type property for many buyers.
 
akkord said:
SoclosetoIrvine said:
I got that much for my lake forest home, so figured Irvine would be about the same. 
Click to expand...

You got 3.4k/month for a 3bed/2.5 bath in lake forest?  The op should look in lake forest over Irvine if that's the case.
Click to expand...

Good point. Ardmore is a tad more than what we paid for our Lake Forest 1500 sq ft, single story, 8300 sq ft lot with no neighbors behind SFH almost 2 years ago (same if you count renovations we've done). For Irvine attached condo price, can buy a single family here and command LF SFH rental price but not Irvine :p
 
USCTrojanCPA said:
Ardmore would rent out for about $3,100/mo +/- from the rental comps that I'm seeing.  The rental market is on fire and rents are up 8-10% in the past year or so.  HOA is $227/mo and Mello Roos is only $700/year so with 25% down you'll be about $100 negative...that's as good as it probably gets in Irvine. 

The sweet spot for rentals are 3bed/2.5bath condos/homes.  You have almost no competition from apartments and it opens you up to a much bigger rental pool.  Plus it makes it easier to sell because that's the first move-up type property for many buyers.
Click to expand...

USCTrojanCPA: Do you have much biz in Lake Forest/Mission Viejo? Seems like the area is being boosted as well with folks being pushed out of Irvine market like us. You see much growth or correlation in these areas?

Also, taxes in progress this year, but do you do taxes, tax planning, estate planning in addition to real estate? I may PM you if you do!
 
jumpinjacks said:
USCTrojanCPA said:
Ardmore would rent out for about $3,100/mo +/- from the rental comps that I'm seeing.  The rental market is on fire and rents are up 8-10% in the past year or so.  HOA is $227/mo and Mello Roos is only $700/year so with 25% down you'll be about $100 negative...that's as good as it probably gets in Irvine. 

The sweet spot for rentals are 3bed/2.5bath condos/homes.  You have almost no competition from apartments and it opens you up to a much bigger rental pool.  Plus it makes it easier to sell because that's the first move-up type property for many buyers.
Click to expand...

USCTrojanCPA: Do you have much biz in Lake Forest/Mission Viejo? Seems like the area is being boosted as well with folks being pushed out of Irvine market like us. You see much growth or correlation in these areas?

Also, taxes in progress this year, but do you do taxes, tax planning, estate planning in addition to real estate? I may PM you if you do!
Click to expand...

Yeah, I've done a dozen or so purchases, sales, and rentals in Foothill Ranch and Lake Forest...not too much in MV (more so in Aliso and Laguna Niguel and even Ladera Ranch).  I've had several clients buy in Foothill Ranch, Aliso, and Laguna Niguel because of the value proposition.  In general there is a lack of sub $800k home inventory everywhere not just Irvine. 

I do tax returns for clients and definitely can provide good real estate/tax planning suggestions as I'm doing that for myself.  Just PM me.
 
akkord said:
SoclosetoIrvine said:
I got that much for my lake forest home, so figured Irvine would be about the same. 
Click to expand...

You got 3.4k/month for a 3bed/2.5 bath in lake forest?  The op should look in lake forest over Irvine if that's the case.
Click to expand...

I've posted it here before, just don't want to sound like a sales agent like Mark@parkside...I got 3.4 for a Baker Ranch smaller 4 bedroom rental.  It's in Lake Forest, but it's probably one of the newer developments (2015 I think)  Only reason I cashflow is the no MR... hard to find that in Irvine but it's do-able...


 
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