Author Topic: Investment SFR in Irvine up to 1.5M - Anything??  (Read 2517 times)

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Offline rayzam

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #15 on: August 15, 2018, 12:33:15 PM »
@Irvinehomeseeker: I was under the impression that the high appreciations were mostly limited to new builds. It's quite a common practice for builders to price the earlier phases at lower numbers to test the market or generate excitement and once the people keeps coming in, they jack up the prices. I don't usually see annualized appreciations around 20% or so in existing homes in Irvine in the past few years. We bought a relatively new single level SFR in North Park with USCTrojan back in 2012 (a short sale) for around $900k and looking at the comps today, I don't think it goes for more than $1.3M now, so that's around 45% appreciation in 6 years or 7-8% annual.       

@Kenkoko/Inc: Thanks for sharing the info on Eichler homes. I'll look into them. I thought I knew a thing or two about RE but I guess I still have a lot to learn. I know the 4BR/2Bath single-level SFRs were quiet the norm in the 60s here but not sure why someone rebuilds a house from the ground up now and doesn't add an extra bathroom or at least a powder room. 
 
@meccos12: Thanks, I think I'm not ready for OOS investment yet, but do you have links to a few sample listings there? Just want to get an idea of the type of the products you're referring to.

@woodburyowner: Thanks, I did buy a commercial plus a few multi-units (10-20 unit properties, some section 8) in South Bay/Hawthorne/north OC area in 2010-2012 and they have been generating solid >9-10% cap plus nice appreciation (comps more than doubled in today's bubble). But I cannot find anything with caps over 4-4.5% today. If you look at their numbers, they commonly take the inflated pro forma rent and not the actual ones, artificially lower the expenses (e.g. take the current tax bill vs. the newly appraised value after the sale) and then multiply the "net" by 20-25 to be able to claim a 4-5% cap while in reality the cap is much lower. At least that's what I'm seeing now in this market...       

Offline HMart

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #16 on: August 15, 2018, 03:05:44 PM »
Cap rate compression is real.

If you are investing in LA, I would follow this guy's blog: http://kagansblog.com/

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #17 on: August 15, 2018, 03:59:58 PM »
Cap rate compression is real.

If you are investing in LA, I would follow this guy's blog: http://kagansblog.com/

Is he selling something. First thing it asks for your email.

Offline meccos12

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #18 on: August 16, 2018, 03:26:05 PM »
@Irvinehomeseeker: I was under the impression that the high appreciations were mostly limited to new builds. It's quite a common practice for builders to price the earlier phases at lower numbers to test the market or generate excitement and once the people keeps coming in, they jack up the prices. I don't usually see annualized appreciations around 20% or so in existing homes in Irvine in the past few years. We bought a relatively new single level SFR in North Park with USCTrojan back in 2012 (a short sale) for around $900k and looking at the comps today, I don't think it goes for more than $1.3M now, so that's around 45% appreciation in 6 years or 7-8% annual.       

@Kenkoko/Inc: Thanks for sharing the info on Eichler homes. I'll look into them. I thought I knew a thing or two about RE but I guess I still have a lot to learn. I know the 4BR/2Bath single-level SFRs were quiet the norm in the 60s here but not sure why someone rebuilds a house from the ground up now and doesn't add an extra bathroom or at least a powder room. 
 
@meccos12: Thanks, I think I'm not ready for OOS investment yet, but do you have links to a few sample listings there? Just want to get an idea of the type of the products you're referring to.

@woodburyowner: Thanks, I did buy a commercial plus a few multi-units (10-20 unit properties, some section 8) in South Bay/Hawthorne/north OC area in 2010-2012 and they have been generating solid >9-10% cap plus nice appreciation (comps more than doubled in today's bubble). But I cannot find anything with caps over 4-4.5% today. If you look at their numbers, they commonly take the inflated pro forma rent and not the actual ones, artificially lower the expenses (e.g. take the current tax bill vs. the newly appraised value after the sale) and then multiply the "net" by 20-25 to be able to claim a 4-5% cap while in reality the cap is much lower. At least that's what I'm seeing now in this market...     

Rayam:

https://www.talkirvine.com/index.php/topic,3823.0.html

Offline irvineband

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #19 on: August 19, 2018, 01:09:46 PM »
I agree with the purchase of a SFR with lower HOA and MR as the best strategy but not sure you need to go all the way to 1.5. I think you should target 1.00-1.25. Remember return goes up as rents go up and tax rate stays lower and increases slower.

My friend owns three homes purchased in 2014, 2015, 2016. There has been considerable appreciation on all in just a short few years. Minus that the rents have also increased. I'm not talking about the multifamily garbage in the news where people are talking about rents going up 30 or 40% from the year before (which is not cool) just your standard 3% increase.

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Offline shahshah

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #20 on: September 08, 2018, 09:06:54 AM »
Martin you mentioned 4 bedroom SFR in older communities as a preferred investment but what about 3 bedroom?

Hi I need your help again! I usually buy multiunits for investment but I'm very uncomfortable with the current OC/LA markets and their overinflated asking prices, so I'm back in Irvine. Any good investment properties below $1.5M to consider in Irvine? I never even considered anything with cap below 5, but I did a quick check on Redfin and the cap rates on SFRs I see here are not higher than 3-3.5% (and even lower in newer places with higher MR) so I'm open to make concessions on cap if there is realistic hope of equity growth in long-term. Please advise. 

I think your best bet would be to buy a true SFR with lower HOA and lower Mello Roos.  Maybe an older home with a larger lot that you can update.  I'd focus on 4+ bedroom with a downstairs bedroom and full bath home (having a loft is a plus).  In 4-5 years, Orchard Hills/Eastwood/Portola Springs will be sold out of new homes and that will force many buyers into the resale market so I see Irvine home prices rising as new home inventory declines.  Are you looking to do a 1031 exchange?

Offline USCTrojanCPA

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Re: Investment SFR in Irvine up to 1.5M - Anything??
« Reply #21 on: September 08, 2018, 09:36:56 AM »
Martin you mentioned 4 bedroom SFR in older communities as a preferred investment but what about 3 bedroom?

Hi I need your help again! I usually buy multiunits for investment but I'm very uncomfortable with the current OC/LA markets and their overinflated asking prices, so I'm back in Irvine. Any good investment properties below $1.5M to consider in Irvine? I never even considered anything with cap below 5, but I did a quick check on Redfin and the cap rates on SFRs I see here are not higher than 3-3.5% (and even lower in newer places with higher MR) so I'm open to make concessions on cap if there is realistic hope of equity growth in long-term. Please advise. 

I think your best bet would be to buy a true SFR with lower HOA and lower Mello Roos.  Maybe an older home with a larger lot that you can update.  I'd focus on 4+ bedroom with a downstairs bedroom and full bath home (having a loft is a plus).  In 4-5 years, Orchard Hills/Eastwood/Portola Springs will be sold out of new homes and that will force many buyers into the resale market so I see Irvine home prices rising as new home inventory declines.  Are you looking to do a 1031 exchange?

Depends on the price but if the home is over $1m then buyers might be more drawn to a 4 bedroom home (especially with a downstairs bedroom and full bath). 
Martin Mania
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