Would you buy a house now for semi-investment if you have the cash?

I would not invest in Irvine because price-to-rent ratios are on the high side historically and the prior two times they have reached these levels (1989, 2004), a crash ensued not too long after.  If you believe that Irvine is immune to crashes like many of the people here, then feel free to ignore fundamentals.  Maybe this time really is different.

The other problem with high price-to-rent ratios is that your ability to cashflow is much more difficult. Even paying all cash, your cash-on-cash return is probably between 1-2% once you factor in management fees (your time should be accounted for).

If you want to invest in RE despite stretched valuations, there are certain types of commercial property that do well during recessions - self-storage for instance.  You have enough wealth to be considered a 'Qualified Investor', which would allow you to invest in private funds that specialize in commercial real estate.  With your REIT accounting background, you should be good at performing due diligence before deciding where to invest.  The drawback is your money will be tied up for a number of years, and you won't have direct control over the investment strategy like you would with a SFR rental.
 
irvinekids said:
What makes you feel the market will stabilize or pull back a bit next year? A few months ago, I thought the market will slow down a bit when the winter months approach, but it doesn't feel that way really.

I used the word "semi-investment" because cash flow wise, I wouldn't buy the best property, not even close. I am not interested in REITs, I am biased, I used to work as an REIT tax accountant when I was a CPA, I am not a fan of them for many reasons. I enjoy and take pride in owning houses, not a huge fan of being a landlord, but I am pretty experienced in dealing with tenants and repairs (10 years now since my first rental). Nowadays, I am more interested in buying a house that I like, and maybe my parents or my in-laws will live in one day when they are older, so something a little more more pricy than a typical rental, maybe around 1.5+perhaps.

Agent Joe said:
Danimal said:
irvinekids said:
So I know this is a good problem to have, but I would still like some advise.

My husband and I have a a few rental properties and haven't been really looking to buy more because they have been a lot of work and headache for me. We now have more savings, and we have some in stock of course, but we are pretty conservative and always worry about putting too much in stocks. I know OC real estate pretty well and I am now thinking of getting another one. I have been on Redfin everyday for years now and have seen the trends during covid. While I know no one can predict where housing price is going, would you buy another property right now if you were in my situation? I am looking at south Irvine, because that's the area I like the most. I have a pretty open budget. I do not need any agent recommendations. Thank you!
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Investing in RE can be very time consume.  It is fine if you have time to deal with tenants, maintenances? Have you thought of investing in REITs? It?s another way of RE investment w/o doing all the dirty works.
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Unless you're in the lowest tax bracket, I personally wouldn't put any significant amount of money in REITs because dividends from REITs are taxed as ordinary income (not even as qualified dividends from stocks) and you wouldn't get any leverage (you could use margins but that's a whole different topic).

It's very interesting that OP emphasizes that she doesn't want any agent recommendations. I will give you a non-typical realtor answer. If you're looking for an investment property, considering how much you would likely need to bid over asking prices due to extremely low inventory at this time, the rent to value ratio would hardly make any sense. Irvine is also fairly saturated with rental properties. I expect more rental properties to come on the market as the eviction moratorium ended back in October. If I had a long-term horizon (10+ years), could lock in a 30-year fixed mortgage at a low rate, and wouldn't mind dealing with tenants, I still would continue to look and possibly buy next year when the market stabilizes or pulls back a bit. Irvine or south OC is an extremely desirable area and will likely appreciate more than the national average over the long run. The key word is long term.

If you hate dealing with tenants but still want some cashflow, I'd consider 2 other options: selling puts on stocks that you want to own any way; converting cash into USDC (USD Coin) and earn 9% annualized return.
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One can reasonably expect the market to at least stabilize at some point because 20-30% appreciation in a year isn't sustainable in a relatively mature market like the US. No one knows when but I think next year seems probable due to a few factors such as rate hikes, no more eviction moratorium or forbearance, and the higher than usual number of property tax delinquent properties (more so in LA county than in OC). A pull back is probably just my wishful thinking though.

Btw, you sound a lot like a buyer that I dealt with earlier this year.  ;D
 
Agent Joe said:
One can reasonably expect the market to at least stabilize at some point because 20-30% appreciation in a year isn't sustainable in a relatively mature market like the US. No one knows when but I think next year seems probable due to a few factors such as rate hikes, no more eviction moratorium or forbearance, and the higher than usual number of property tax delinquent properties (more so in LA county than in OC). A pull back is probably just my wishful thinking though.

Btw, you sound a lot like a buyer that I dealt with earlier this year.  ;D
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Things are pointing to stabilization end of next year. Until then, we'll probably see another 15% appreciation. Personally, I would like to see appreciation until at least next summer, when I'm going to sell my rental and current home that I'll be moving out of, both of which are in Riverside County.
 
zubs said:
Why not collect houses?
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I thought about that. But if the market turns and it's not profitable to rent or flip, you could see lots of supply coming on the market.

So as I said, I'm moving to AZ for a number of reasons after telling my kids flat out for years I would NEVER EVER move there, so stop asking. I still own my house here, so I don't want lots of supply in January (I do think we'll see supply coming from those who wanted to sell or have a house that is finally ready to move into but didn't list in Nov/Dec due to the holidays) and if we get it I want to see it quickly go.

I'm buying two houses there. One I need to store my stuff that I don't want here (declutter) while my house here is listed and it gives me a place to move into in case I get a good offer to get out in a hurry where I can bring the rest of my stuff.

The other doesn't have the foundation poured. Weird way they do things there. You pick the lot you want (when it's released) and then choose what floor plan you want on that lot. THEN they pull the permits. Currently takes at least a year for the house to be completed and maybe 13-14 months if something goes wrong in supply chain. My foundation isn't poured yet, hence why I need another place to stay.

SO.... because it takes so long to get the house it's been working in buyers favors big time. You put down earnest money. Month or two later option money. You don't owe anything else till the house closes in a year. Front yards are put in by the builder. Lots of people do nothing with the backyard or maybe pavers, rocks, few plants, fake grass. Property taxes are less than 1% on a much lower price than here, HOA in the $100 range. In a year, when the house is done it's a profitable flip with not a thing done and maybe $50-$75K oop.

Lots of new development there. New tech plants being built (chip factories are the biggest... Texas doesn't get everything). The place literally looks like OC did when I moved here and that is before anyone on TI was born I bet.

I know it's hot (temp wise) but that area is going to be gold and buying now is a no brainer to me.

I don't want to own too many houses though so that is the only thing stopping me from buying another.
 
a buddy from my golf club recently sold his pad in Los Gatos and moved to a golf/resort community in Scottsdale where his property tax on a $1M property is $6K/yr. Plus no state tax on that massive capital gain over the exemption amount. 115 deg is a deal breaker for me. I'd rather move back to NH with no state tax/sales tax and endure winter when I can drive to snowboard in < 1 hour or Montreal in 4, but AZ will definitely see large appreciation in the coming years as all those skilled mfg jobs come on line.
 
Must be the apocalypse... I'm agreeing with LL again... I wouldn't invest in Irvine... I would only buy in Irvine if I planned to live there (for at least a few years) and could afford it.

The caveat is you have money to burn and can afford to buy investment properties in Irvine without any return for the next X years.
 
talkirvine said:
Is this the latest version of the wealth levels in the US? It should be updated after the pandemic with the high inflation.
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But you can be over leveraged with out cash flow properties. (just saying, it may not apply to you)
 
Its wonderful to move to AZ,,,,in December. When the temperature is tolerable. In June,,,,Let's move to cooler location,,,Las Vegas.... :)

The homes price is attractive to move some of 40 millions residents of CA away. Arizona 8 millions can handle more exodus.

I had a few buddy that have a few doors for rent in AZ in the 2005-2006 craze. All given up and sell at a lost during the GFC. One guy held on to this day. Last I talked to him, the house in Scottdale AZ finally break even after 12 + years. The good thing is 90 % of his mortgage paid for by the renter. Go long in realestate whereever you put your money and you will be fine.
 
Here is the list of over price home according to yahoo.
https://www.yahoo.com/finance/news/home-prices-cool-nation-10-161131055.html


Here?s a look at the 10 most overvalued markets and the premium buyers are currently paying (plus the change in the past four months):

Boise, Idaho ? 80.51% (?0.13%)

Austin, Texas ? 57.13% (+6.41%)

Ogden, Utah ? 54.46% (+4.76%)

Provo, Utah ? 49.18% (+3.02%)

Phoenix, Ariz. ? 48.94% (+6.63%)

Spokane, Wash. ? 47.61% (+2.4%)

Las Vegas, Nev. ? 47.42% (+5.54%)

Detroit, Mich. ? 47.28% (+1.71%)

Salt Lake City, Utah ? 42.41% (+4.61%)

Atlanta, Ga. ? 45.17% (+9.22%)
 
Compressed-Village said:
Its wonderful to move to AZ,,,,in December. When the temperature is tolerable. In June,,,,Let's move to cooler location,,,Las Vegas.... :)

The homes price is attractive to move some of 40 millions residents of CA away. Arizona 8 millions can handle more exodus.

I had a few buddy that have a few doors for rent in AZ in the 2005-2006 craze. All given up and sell at a lost during the GFC. One guy held on to this day. Last I talked to him, the house in Scottdale AZ finally break even after 12 + years. The good thing is 90 % of his mortgage paid for by the renter. Go long in realestate whereever you put your money and you will be fine.
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My rental in Lake Elinsore is pretty much the same scenario. Bought it back in 2005 and it's finally break even this year after 15+ years.
 
CalBears96 said:
Compressed-Village said:
Its wonderful to move to AZ,,,,in December. When the temperature is tolerable. In June,,,,Let's move to cooler location,,,Las Vegas.... :)

The homes price is attractive to move some of 40 millions residents of CA away. Arizona 8 millions can handle more exodus.

I had a few buddy that have a few doors for rent in AZ in the 2005-2006 craze. All given up and sell at a lost during the GFC. One guy held on to this day. Last I talked to him, the house in Scottdale AZ finally break even after 12 + years. The good thing is 90 % of his mortgage paid for by the renter. Go long in realestate whereever you put your money and you will be fine.
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My rental in Lake Elinsore is pretty much the same scenario. Bought it back in 2005 and it's finally break even this year after 15+ years.
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But now is a different time. Businesses are moving to AZ with good paying jobs. Vacancies are low.

My daughter bought a resale built in 2017 in June for $425K and that model is selling for over $500K now. Tay Mo houses that sold for $350K less than two years ago are mid $500's now. Lots of sales in those houses. They're moving to Toll Brothers homes which are over $800K, before upgrades.

Rents have doubled there, which is why I'm buying a temp place rather than renting.

Been there in the summer. I don't have to go to work so its fine if I stay in the A/C, sit by the pool or go on vacay. Lots of insulation in the walls so A/C is not as high as you'd think and does it matter when property taxes are under $3000 per year?

Although I don't work a real job, I do have some pretty significant swing stock trades so it's going to be nice to have a max 2.75% state income tax as opposed to 13.3% here.
 
Not to get political, but Arizona is turning into Democrat state.  There are two Democrat senators from Arizona. Also, the state of Arizona went to Biden.

In regards, to covid and vaccines. Phoenix-based Banner Health is at its most overwhelmed since the pandemic began, leading the company?s officials to issue a warning Tuesday that its hospital system may have to eventually choose who can receive care.
https://www.fox10phoenix.com/news/arizona-reports-2168-new-covid-19-cases-203-deaths1.amp

 
eyephone said:
Not to get political, but Arizona is turning into Democrat state.  There are two Democrat senators from Arizona. Also, the state of Arizona went to Biden.

In regards, to covid and vaccines. Phoenix-based Banner Health is at its most overwhelmed since the pandemic began, leading the company?s officials to issue a warning Tuesday that its hospital system may have to eventually choose who can receive care.
https://www.fox10phoenix.com/news/arizona-reports-2168-new-covid-19-cases-203-deaths1.amp
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I wouldn't call Kyrsten Sinema a Democrat.
 
AZ family news article: Phoenix area hospitals pause non-emergency surgeries

Valleywise Health said it has so little room available; some patients are waiting in the ER for more than 24 hours before they are able to get a bed.

If it can wait four to six weeks without hurting a patient, surgeons are asked to hold off on the procedure. With COVID patients taking up about 40% of Arizona ICU beds, other hospitals face a similar situation.
To keep beds open, White begs people to get vaccinated.

"This morning, 95.6% of the patients that we've had in the hospital were not vaccinated," said White.
https://www.azfamily.com/news/conti...cle_a678eb96-5c73-11ec-be7a-d34d395dc161.html

My comment: I guess masks, social distancing, and vaccines are not for the cool people in California. But I can tell you this. The hospitals are open in California! Lets go!





 
eyephone said:
AZ family news article: Phoenix area hospitals pause non-emergency surgeries

Valleywise Health said it has so little room available; some patients are waiting in the ER for more than 24 hours before they are able to get a bed.

If it can wait four to six weeks without hurting a patient, surgeons are asked to hold off on the procedure. With COVID patients taking up about 40% of Arizona ICU beds, other hospitals face a similar situation.
To keep beds open, White begs people to get vaccinated.

"This morning, 95.6% of the patients that we've had in the hospital were not vaccinated," said White.
https://www.azfamily.com/news/conti...cle_a678eb96-5c73-11ec-be7a-d34d395dc161.html

My comment: I guess masks, social distancing, and vaccines are not for the cool people in California. But I can tell you this. The hospitals are open in California! Lets go!
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don't talk too soon... cases are going up here too...
 
sleepy5136 said:
eyephone said:
AZ family news article: Phoenix area hospitals pause non-emergency surgeries

Valleywise Health said it has so little room available; some patients are waiting in the ER for more than 24 hours before they are able to get a bed.

If it can wait four to six weeks without hurting a patient, surgeons are asked to hold off on the procedure. With COVID patients taking up about 40% of Arizona ICU beds, other hospitals face a similar situation.
To keep beds open, White begs people to get vaccinated.

"This morning, 95.6% of the patients that we've had in the hospital were not vaccinated," said White.
https://www.azfamily.com/news/conti...cle_a678eb96-5c73-11ec-be7a-d34d395dc161.html

My comment: I guess masks, social distancing, and vaccines are not for the cool people in California. But I can tell you this. The hospitals are open in California! Lets go!
Click to expand...
don't talk too soon... cases are going up here too...
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Ducey to continue fight against vaccine, mask mandates in Arizona
https://ktar.com/story/4741338/ducey-to-continue-fight-against-vaccine-mask-mandates-in-arizona/amp/

gg
 
I guess health care availability/access is not the same across the Unites States.

It is unfortunate, but it possibly might be like that in the future. 
 
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