Author Topic: $888k for a $3950 rental?  (Read 2231 times)

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Offline woodburyowner

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$888k for a $3950 rental?
« on: November 06, 2012, 04:48:45 PM »
Just spotted this one and was scratching my head as to why anyone would make this kind of investment. 
http://www.redfin.com/CA/Irvine/25-Secret-Gdn-92620/home/5931522

New owner pays $888k for a 4/3/2315sq ft investment property and wants to get $3950 rent for it.  I doubt it will rent for that high, maybe $3750.  These numbers make no sense for an investment.  I guess this is the great thing about Irvine SFRs.  There will always be people looking to buy for their own primary residence and for investment purposes no matter what the price.

Any thoughts?

Offline daedalus

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Re: $888k for a $3950 rental?
« Reply #1 on: November 06, 2012, 05:23:12 PM »
Real estate only appreciates.  Duh.

Seriously though, one of the bi-products of low interest rates is increased desperation for yield.  The "investor" maybe did not think through the return math well enough, and appreciation maybe is the Plan B.  $3750/mo is 5% a year--not too shabby (today).  But minus taxes, maintenance, vacancy, etc, they might be lucky to get 2%.  Then again, maybe it's all about having some kind of hard asset to withstand the impending inflation apocalypse.

Offline USCTrojanCPA

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Re: $888k for a $3950 rental?
« Reply #2 on: November 06, 2012, 06:51:00 PM »
Wow, so the buyer set the new recent comp high (previous high was $865k for that floor plan).  I guess they wanted to park their money in some Irvine real estate. 
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Offline The California Court Company

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Re: $888k for a $3950 rental?
« Reply #3 on: November 06, 2012, 08:15:07 PM »
China is in the middle of major political power shift - it could be some very low rank official want to park his dirty money into some hard asset overseas.

Just spotted this one and was scratching my head as to why anyone would make this kind of investment. 
http://www.redfin.com/CA/Irvine/25-Secret-Gdn-92620/home/5931522

New owner pays $888k for a 4/3/2315sq ft investment property and wants to get $3950 rent for it.  I doubt it will rent for that high, maybe $3750.  These numbers make no sense for an investment.  I guess this is the great thing about Irvine SFRs.  There will always be people looking to buy for their own primary residence and for investment purposes no matter what the price.

Any thoughts?
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Offline woodburyowner

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Re: $888k for a $3950 rental?
« Reply #4 on: November 06, 2012, 10:42:34 PM »
I have friend who purchased 4 properties for 50k total in Ohio (multi-property transaction from another investor, cash purchase).  He gets $2500 rent between all 4 properties.  Now that's an investment!  Of course he has to deal with problem tenants, vacancies, maintenance, etc., but no matter how you look at it, $2500/month is a winning situation.  I just think about how many Ohio houses the Irvine investor could have purchased for $888k!

Offline woodburyowner

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Re: $888k for a $3950 rental?
« Reply #5 on: November 06, 2012, 10:44:49 PM »
Wow, so the buyer set the new recent comp high (previous high was $865k for that floor plan).  I guess they wanted to park their money in some Irvine real estate. 

Pretty crazy huh?  I wonder what the property actually appraised for.  I guess it really doesn't matter if he put a large down payment.  Good for anyone refi'ing or selling.  Sets the value pretty high for this model/neighborhood. 

Offline whatever

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Re: $888k for a $3950 rental?
« Reply #6 on: November 07, 2012, 07:35:53 AM »
I have friend who purchased 4 properties for 50k total in Ohio (multi-property transaction from another investor, cash purchase).  He gets $2500 rent between all 4 properties.  Now that's an investment!  Of course he has to deal with problem tenants, vacancies, maintenance, etc., but no matter how you look at it, $2500/month is a winning situation.  I just think about how many Ohio houses the Irvine investor could have purchased for $888k!

He only gets $625/mo per property?  That doesn't sound like much cushion if things start falling apart.

 

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