Rental Leasing Increase

[irvinebullhousing]

an update...for my case above. I finally rented my house out for $2700.  So hopefully the new renters are good.
So my rent went from $2200 to $2700 in one move out at the end of JUN.

$500 more a month.  The hell is going on with this economy?  I feel like a bandit taking that much in rent.
But there were 6 offers.... fuck burning man.

While my new renters were moving in, another couple came to look at the house and were shoo'd away by the new renters.

Are you renting a 2/2?

Seriously, 3 bedroom apartments are $3000 (okay, $2955), an actual townhouse or detached 3bd, a little more.

Rental demand in Irvine and immediate vicinity is very strong, such that if you own a place, financially it may be better to move, landlord and rent than sell and buy.  Essentially using the new renters to supplement your rent while paying for your old place.

Makes sense.

It probably makes more financial sense, though, to sell the $700,000 house and buy 2 $350,000 houses elsewhere and rent them for $2000 per month each.

 

[irvinebullhousing]

an update...for my case above. I finally rented my house out for $2700.  So hopefully the new renters are good.
So my rent went from $2200 to $2700 in one move out at the end of JUN.

$500 more a month.  The hell is going on with this economy?  I feel like a bandit taking that much in rent.
But there were 6 offers.... fuck burning man.

While my new renters were moving in, another couple came to look at the house and were shoo'd away by the new renters.

Are you renting a 2/2?

Seriously, 3 bedroom apartments are $3000 (okay, $2955), an actual townhouse or detached 3bd, a little more.

Rental demand in Irvine and immediate vicinity is very strong, such that if you own a place, financially it may be better to move, landlord and rent than sell and buy.  Essentially using the new renters to supplement your rent while paying for your old place.

Makes sense.

It probably makes more financial sense, though, to sell the $700,000 house and buy 2 $350,000 houses elsewhere and rent them for $2000 per month each.

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

 

[eyephone]

an update...for my case above. I finally rented my house out for $2700.  So hopefully the new renters are good.
So my rent went from $2200 to $2700 in one move out at the end of JUN.

$500 more a month.  The hell is going on with this economy?  I feel like a bandit taking that much in rent.
But there were 6 offers.... fuck burning man.

While my new renters were moving in, another couple came to look at the house and were shoo'd away by the new renters.

Are you renting a 2/2?

Seriously, 3 bedroom apartments are $3000 (okay, $2955), an actual townhouse or detached 3bd, a little more.

Rental demand in Irvine and immediate vicinity is very strong, such that if you own a place, financially it may be better to move, landlord and rent than sell and buy.  Essentially using the new renters to supplement your rent while paying for your old place.

Makes sense.

It probably makes more financial sense, though, to sell the $700,000 house and buy 2 $350,000 houses elsewhere and rent them for $2000 per month each.

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

The train already left the station to buy cheap CA property. I guess you can look out of state.

 

[irvinebullhousing]

an update...for my case above. I finally rented my house out for $2700.  So hopefully the new renters are good.
So my rent went from $2200 to $2700 in one move out at the end of JUN.

$500 more a month.  The hell is going on with this economy?  I feel like a bandit taking that much in rent.
But there were 6 offers.... fuck burning man.

While my new renters were moving in, another couple came to look at the house and were shoo'd away by the new renters.

Are you renting a 2/2?

Seriously, 3 bedroom apartments are $3000 (okay, $2955), an actual townhouse or detached 3bd, a little more.

Rental demand in Irvine and immediate vicinity is very strong, such that if you own a place, financially it may be better to move, landlord and rent than sell and buy.  Essentially using the new renters to supplement your rent while paying for your old place.

Makes sense.

It probably makes more financial sense, though, to sell the $700,000 house and buy 2 $350,000 houses elsewhere and rent them for $2000 per month each.

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

The train already left the station to buy cheap CA property. I guess you can look out of state.

Been there done that. Got burned in Arizone Tucson, GA, and even in Durhan NC close to Duke. Rent rate even now for 3/2 bed/bath is around low 1K. I will stick with local rental market.

 

[nosuchreality]

This is a single story house that is 3/2 but not in Irvine.  It's been a rental since 2010.

Okay, makes sense, old RE101, location, location, location which having been floored by house prices in what was the rougher parts of OC.  I think the primary driver is gentrification and transition to sharing economy.  Neglected unit are bought, upgraded, churned via aggressive rent increase and re marketed for a capitall gain based off of the new proforma rent.  Other higher end units, particularly beach or attraction local units are more profitable via airBNB than as a long term rental.

The net result is a loss of higher quality rentals and substantial pressure on the low end driving all rents up.

IMO when you have a job family or job and good school combo, where you live is relatively inflexible resulting in fairly inelastic demand

 

[eyephone]

an update...for my case above. I finally rented my house out for $2700.  So hopefully the new renters are good.
So my rent went from $2200 to $2700 in one move out at the end of JUN.

$500 more a month.  The hell is going on with this economy?  I feel like a bandit taking that much in rent.
But there were 6 offers.... fuck burning man.

While my new renters were moving in, another couple came to look at the house and were shoo'd away by the new renters.

Are you renting a 2/2?

Seriously, 3 bedroom apartments are $3000 (okay, $2955), an actual townhouse or detached 3bd, a little more.

Rental demand in Irvine and immediate vicinity is very strong, such that if you own a place, financially it may be better to move, landlord and rent than sell and buy.  Essentially using the new renters to supplement your rent while paying for your old place.

Makes sense.

It probably makes more financial sense, though, to sell the $700,000 house and buy 2 $350,000 houses elsewhere and rent them for $2000 per month each.

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

The train already left the station to buy cheap CA property. I guess you can look out of state.

Been there done that. Got burned in Arizone Tucson, GA, and even in Durhan NC close to Duke. Rent rate even now for 3/2 bed/bath is around low 1K. I will stick with local rental market.

I wouldn't recommend to buy in Vegas, or Arizona.
You mentioned GA. (Did you invest in the JCreek?) lol

 

[riznick]

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

A family member in Alaska is renting their $350k place for $2000/mo.  I'm not saying to invest there, but that's where I got the number from.

Here's area I've been looking.https://www.zillow.com/homes/1046-Kelly-Creek-Cir,-oveido-fl_rb/
House is probably worth about $250k  I saw bigger 4 bedrooms selling for $270k in that area.
Asking rent is $1750/mo

A $350k place renting for $2000/mo isn't a far stretch.

I am told, though, the best ROI is with cheaper houses in bad neighborhoods.

Been there done that. Got burned in Arizone Tucson, GA, and even in Durhan NC close to Duke. Rent rate even now for 3/2 bed/bath is around low 1K. I will stick with local rental market.

I wouldn't have ever recommended Tucson.  Phoenix/Tempe/Scottsdale area maybe, in the past, but not Tucson, AZ. 

 

[Liar Loan]

You can buy a condo for $345k that rents for $2k/month in Huntington Beach.  I own a condo in this complex, so I'm very familiar with it.
https://www.redfin.com/CA/Huntington-Beach/16627-Viewpoint-Ln-92647/unit-8D/home/5322694

Rental Zestimate is $1,950 but a recent comparable on Craigslist was asking $2k.
https://www.zillow.com/homes/for_rent/16627-Viewpoint-Ln-.num.-8d,-Huntington-Beach,-CA-92647_rb/

 

[nosuchreality]

Where do you buy 350.000 and able to rent out for 2K a month? Its easy to punch in some numbers and throw it on the board.

Show me where you have in mind that you can buy on the cheap and collect high rent.

A family member in Alaska is renting their $350k place for $2000/mo.  I'm not saying to invest there, but that's where I got the number from.

Here's area I've been looking.https://www.zillow.com/homes/1046-Kelly-Creek-Cir,-oveido-fl_rb/
House is probably worth about $250k  I saw bigger 4 bedrooms selling for $270k in that area.
Asking rent is $1750/mo

A $350k place renting for $2000/mo isn't a far stretch.

I am told, though, the best ROI is with cheaper houses in bad neighborhoods.

Been there done that. Got burned in Arizone Tucson, GA, and even in Durhan NC close to Duke. Rent rate even now for 3/2 bed/bath is around low 1K. I will stick with local rental market.

I wouldn't have ever recommended Tucson.  Phoenix/Tempe/Scottsdale area maybe, in the past, but not Tucson, AZ. 

According to civic dashboards, Irvine has a 9% rental vacancy rate and a 46% home ownership rate.
Ovieda has a 34.9% rental vacancy rate and a 78% ownership rate.

 

[eyephone]

As in Honda car online forums?

 

[nosuchreality]

As in Honda car online forums?

You trust Honda don't you?
http://www.civicdashboards.com/city/oviedo-fl-16000US1253575/rental_vacancy_rate

Frankly, the Irvine number is kind of putzed, so the 35% number is putzed, but it should at least be proportional.  We're really spoiled landlording around here, anywhere within about 2 hours of here.  Elsehwere, vacancy is real.  It's winter, and it's coming.

 

[riznick]

According to civic dashboards, Irvine has a 9% rental vacancy rate and a 46% home ownership rate.
Ovieda has a 34.9% rental vacancy rate and a 78% ownership rate.

Yeah, your place will get rented out pretty quickly in Irvine.  To be on topic, that makes it easier to raise rates as you don't have to fear longer vacancy periods.

I don't know much about Oviedo.  It's on my list of places to check out.  The area is growing, is near Orlando and UCF. 

I was just giving real world numbers per the request.  I thought my numbers were rather conservative as I hear there's much better ROI in cheaper areas.

 

[nosuchreality]

Better yes, good, I'm not too sure.  I've been scouring other locations and cash flow is still ugly.  My primary concern with a place like Ovidea would be what I've heard from landlord acquaintances that end up with properties like those that sit empty for months. 

AFAICT, the problem with cap rate is play for equity has infected everywhere I've looked.  Their cap rate might be better, but still same issue.  IMO, most properties being sold for rentals are not being sold based on cash flow, they are being sold on cap gain expectation.

I checked rentometer and the Kelly Cir house has 15 rents within about 2 miles that average $1550 for rent.  $1750 will put it above the 80%-tile.

 

[nosuchreality]

You can buy a condo for $345k that rents for $2k/month in Huntington Beach.  I own a condo in this complex, so I'm very familiar with it.
https://www.redfin.com/CA/Huntington-Beach/16627-Viewpoint-Ln-92647/unit-8D/home/5322694

Rental Zestimate is $1,950 but a recent comparable on Craigslist was asking $2k.
https://www.zillow.com/homes/for_rent/16627-Viewpoint-Ln-.num.-8d,-Huntington-Beach,-CA-92647_rb/

These are around.  Would you buy it at today's price, rates and rents?

At all cash, the return is low but it has potential, IMO.  If rents are going to increase another 20% over the next three years, even more so.

At 30% down and financed at 4.25%, PITA with insurance basically blanks the $1950 without vacancy and other repair or expense is coming out of your  pocket (or the security deposit if you pin it back to them)

 

[momopi]

I like this question. Let's get down to brass tacks. Being a landlord in California doesn't seem like something I can even fantasize about given my line of work, but I can tweak the question a bit: "If you were to monetize "adequate landlord" how much would it be?

When I really thought about it, I think my number was about the same as yours: All things being equal, I'd probably pay about $250/mo to escape a bad landlord.

You don't need to fantasize.  You only need to save money, wait for RE down cycle and invest in the "left coast" of California (along I-15).

When you go to a casino they have different minimums for table games.  South OC is like the higher stake table in the back vs Riverside County is the lower stake table in the front.

 

[paydawg]

Generally, what are the worst months to have a lease end? 

I'm assuming it's Sept-Dec because families are generally situated by the Summer, in anticipation of the upcoming school year. 

 

[Liar Loan]

You can buy a condo for $345k that rents for $2k/month in Huntington Beach.  I own a condo in this complex, so I'm very familiar with it.
https://www.redfin.com/CA/Huntington-Beach/16627-Viewpoint-Ln-92647/unit-8D/home/5322694

Rental Zestimate is $1,950 but a recent comparable on Craigslist was asking $2k.
https://www.zillow.com/homes/for_rent/16627-Viewpoint-Ln-.num.-8d,-Huntington-Beach,-CA-92647_rb/

These are around.  Would you buy it at today's price, rates and rents?

At all cash, the return is low but it has potential, IMO.  If rents are going to increase another 20% over the next three years, even more so.

At 30% down and financed at 4.25%, PITA with insurance basically blanks the $1950 without vacancy and other repair or expense is coming out of your  pocket (or the security deposit if you pin it back to them)

The returns are too low for me to be interested in buying it.  For investment properties, I like the cash-on-cash return to be 5% higher than I could expect to make from stocks (so for instance, if I expect to make 8% on stocks, I want a 13% CoC return to make up for the hassles of landlording), or it needs to be an appreciation play that is compelling.  This condo doesn't meet either criteria.  I think it would be ok for an owner occupant already paying rent though.

The time to buy this was in 2011.  One of my friends bought in this complex in 2011 at my urging for $157k.  He then put $15k into renovating it, for a total of $172k all in.  I believe the purchase was for all cash, so today that would be yielding a 10% cash return on top of almost $175k in appreciation.

I think those of you living in Irvine should think about investing in stuff like this after the next downturn.  Entry level properties got hit so much harder due to the weaker financials of those buying them.  So whereas, OC as a whole dropped about 40% and Irvine dropped around 20%, this complex dropped 60% from peak to trough.  The highest comp in 2006 was $400k and the low was my friends purchase for $157k in 2011.  You can make so much more money riding that appreciation wave during a recovery in areas that crash hard (The IE is similar, especially San Bernardino county.)

Buy your primary in Irvine to limit downside risk, but buy your investments in areas that crash hard for maximum gain on the rebound.

P.S.  The areas most susceptible to crashing hard next time will be anywhere that FHA loans are clustered.  These are the new subprime.