Talk Irvine

General => Real Estate => Irvine Real Estate => Topic started by: _echo on May 01, 2014, 01:46:57 PM

Title: Are Woodbury townhomes good investments?
Post by: _echo on May 01, 2014, 01:46:57 PM
Budget under 650K. We will live there for a few years and either sell it or rent it out. We like the walkability and amenities of Woodbury, but there are concerns about the high costs ($350 HOA, Mello Roos and higher property tax, etc.).

What do you experts think?
Title: Re: Are Woodbury townhomes good investments?
Post by: paperboyNC on May 01, 2014, 03:31:48 PM
No.

If you want to buy as an investment, buy a cheaper place with low HOA / no mello roos and try to get some land.
Title: Re: Are Woodbury townhomes good investments?
Post by: incognito on May 02, 2014, 12:12:36 PM
No.

If you want to buy as an investment, buy a cheaper place with low HOA / no mello roos and try to get some land.

I read that as - not in Irvine
Title: Re: Are Woodbury townhomes good investments?
Post by: The California Court Company on May 02, 2014, 12:37:17 PM
No for pure investment point of view. Cash flow will be non-existent and capital gain upside will be limited.

But if you are going to live it there for few years, and if you don't mind the elementary school, why not? Woodbury has the best amenities than all other new/newer Irvine communities.

Title: Re: Are Woodbury townhomes good investments?
Post by: paperboyNC on May 02, 2014, 12:51:39 PM
No.

If you want to buy as an investment, buy a cheaper place with low HOA / no mello roos and try to get some land.

I read that as - not in Irvine

Some of older home in Irvine can be good values. Renters generally are not as picky about schools, amenities, newness, etc. as buyers so if you want good cash flow find places close to the 405 & Jamboree where a lot of the jobs are that are older with low monthly cash outlays.

If you are looking at resale value for investment purposes, focus on buying homes that are either below market price (cash buyers often make a lot of lowball offers hoping for one to stick) or homes that are rare and will have low supply in the future.
Title: Re: Are Woodbury townhomes good investments?
Post by: _echo on May 02, 2014, 02:38:52 PM
Thank you guys for providing your perspectives.

How important is it for a townhouse to have a yard/patio? Some of these Woodbury townhomes are essentially set up like an apartment (aka no private outdoor space except for maybe a balcony). Would future buyers and renters view this as a big drawback?
Title: Re: Are Woodbury townhomes good investments?
Post by: eyephone on May 02, 2014, 02:51:29 PM
Thank you guys for providing your perspectives.

How important is it for a townhouse to have a yard/patio? Some of these Woodbury townhomes are essentially set up like an apartment (aka no private outdoor space except for maybe a balcony). Would future buyers and renters view this as a big drawback?


It doesn't matter. Make sure you are cash positive when you rent it out.
Title: Re: Are Woodbury townhomes good investments?
Post by: irvinehomeowner on May 02, 2014, 02:53:34 PM

I think it's an easy rule that the more br/ba/sf increases the value.

Irvine is one of the unique cities in the OC because it has a diverse rental pool... families, students, DINKs and single professionals. It just doesn't have vacation rental prospects like Fullerton.
Title: Re: Are Woodbury townhomes good investments?
Post by: IrvineRealtor on May 02, 2014, 08:58:48 PM
It just doesn't have vacation rental prospects like Fullerton.

First the Killer Instinct references. Now followed up with an oIHB hat-tip:
Congratulations, you've leveled up on the Old School Rankings...
Title: Re: Are Woodbury townhomes good investments?
Post by: OCBROKER on May 07, 2014, 04:37:18 PM
Budget under 650K. We will live there for a few years and either sell it or rent it out. We like the walkability and amenities of Woodbury, but there are concerns about the high costs ($350 HOA, Mello Roos and higher property tax, etc.).

What do you experts think?

As long as your rent is higher then your mortgage payment you are good!
Title: Re: Are Woodbury townhomes good investments?
Post by: IrvineRealtor on May 07, 2014, 04:55:58 PM
Budget under 650K. We will live there for a few years and either sell it or rent it out. We like the walkability and amenities of Woodbury, but there are concerns about the high costs ($350 HOA, Mello Roos and higher property tax, etc.).

What do you experts think?

As long as your rent is higher then your mortgage payment you are good!

It is more common for investors to look at the full PITIA rather than just the mortgage component.
(Principal, I nterest, Taxes (including Mello Roos), Insurance, and Association fees).

-IrvineRealtor
Title: Re: Are Woodbury townhomes good investments?
Post by: Panda on May 07, 2014, 05:06:28 PM
Echo,

The simple rule in investing is buying low and selling high. You want to buy an Apple stock when it is trading in the $60s not at $600. The second rule is to never purchase an investment property that does not cash flow. A woodbury townhome would be considered an Apple stock trading in the $600s. In real estate investing you make money in four ways: net cash flow, appreciation, amortization, and depreciation. Among these four methods, appreciation is where you make the most money in the shortest amount of time.

Let me give you an example of real numbers on an SFR 4bed/2.5 bath investment property I purchased exactly 11 months ago.

Purchase Price is $191,000
Down payment is $45,840 - Initial Cash invested
Exact same home and floor plan recently sold of $250,000 two weeks ago.

Net Annual Cash Flow is $7963
Amortization: $2737
Appreciation: $59,000
Total Return : $69,700
Annual Return 152%

You can see that 129% is made on Appreciation alone, and remaining 23% is allocated between net cash flow and amortization.
When you buy real estate in Irvine, you are not buying an investment, but buying a life style. A very very expensive lifestyle.







 
Title: Re: Are Woodbury townhomes good investments?
Post by: lnc on May 07, 2014, 05:09:45 PM
I remember a 170 rule that someone once told me.  The rental property's price should be equal or less than estimated monthly rent multiple by 170.

If estimated monthly rental income is $2000.  $2000 X 170 = $340,000  $340k is the maximum price one should pay for that property in order to break-even.

That 170 multiple is just a very simplified estimate and used for a quick initial estimate.  There are lots of other factor affecting carrying cost and every one's investment goal is different.  With all cash or low mortgage rate, one can increase that multiple to 200 or higher.
Title: Re: Are Woodbury townhomes good investments?
Post by: paperboyNC on May 08, 2014, 08:28:18 AM
I remember a 170 rule that someone once told me.  The rental property's price should be equal or less than estimated monthly rent multiple by 170.

If estimated monthly rental income is $2000.  $2000 X 170 = $340,000  $340k is the maximum price one should pay for that property in order to break-even.

That 170 multiple is just a very simplified estimate and used for a quick initial estimate.  There are lots of other factor affecting carrying cost and every one's investment goal is different.  With all cash or low mortgage rate, one can increase that multiple to 200 or higher.

I would imagine:

Low interest rates = good
Mello Roos = bad
HOA = bad

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