home buying advice in socal for investment?

[cabri]

Can you give an example? I don't get the price to rent ratio out of whack part.

And I hope that stigma sticks around forever I might be force to buy there because I can't afford to buy a home in fountain valley or garden grove on my military salary (even if it an officer salary)

I knew very few officers below O3 that were able to purchase a home and keep it after being on station as a rental. (buying a second)

Income level is not normally high enough without time in service as an enlisted.

Unless it is two incomes.

 

[ringtail]

Buy in 93108

If (it'll NEVER happen) local demand declines, then there'll always be national demand, then international demand


....EVERYBODY will always want to buy a slice of paradise.

Plus aside from investment aspects, it's absolute heaven here to live in it yourself

 

[OverVolt]

Rental income!

 

[Timorous]

Rental properties like duplexes, triplexes, etc are extremely overbid. Factor in upgrades, costs after every renter leaves, etc and I doubt you eke out a gain.

You really need an accountant to do an ROI.

I bought an extremely cheap rental property during the 2008 crisis, upgraded it and I'm still in the negative (as expected in my spreadsheet...it will eventually pay off handsomely in my retirement years). Quality renters are hard to find and one black sheep renter will eventually cheat you. Court mandated eviction process will cost you and stress you. I'm going through this process right now with one of them......NOW imagine if I would get into a bidding war with Asian investors in 2014 for a rental property. Imagine my ROI. :hmm:

I am in the UK and I am not sure exactly how different the market is in my local area vs SoCal but as an example I am buying a property with a 75% LTV mortgage, total down payment + cost to upgrade is around £20,000. Yearly rental income after tax, mortgage, repairs, voids etc is in the region of £3,000. That is a return of 15% which is pretty good. On top of that you have the equity increase due to the repairs/upgrades and on average the housing market shows about 5% + growth YoY even when you take into account previous market dips.

Unless that is a lot different to what you can expect in the USA I see rental property as a great investment, if you choose wisely.

 

[doubledeluxe]

You should go see some properties. My experience was that it was incredibly overvalued still and incredibly in need of renovations. Lots of properties with terribly old interiors and lots of people with dreams of grandeur.

There might be good areas to make money but I was looking all up and down the beach cities in LA county. I figured that was a safe bet. I couldn't find anything.

Maybe you're better at it than I am though.

 

[doubledeluxe]

If he wants rental property though, it's almost a sure bet since rent is ridiculous in most areas. Almost certainly enough to cover a mortgage.

Is it really? I rented by the beach on a regular basis. Two blocks from the beach in Marina Del Rey was going for about $2400 a month for a 3 bed room giant place when I was there. You couldn't buy even remotely close to that.

You really have to look at rents and if you can profit from this. If you have to dump $50,000 in the property to get rid of 70's shag carpet and wood paneled living rooms plus inevitably a new kitchen then it's hard to make money on these places as rental properties.

Want to get in on one of the areas that only had a minor correction? Sure go for it. Hit up Beverly Hills, Beverly wood, Cheviot Hills, and that whole area for $1,500,000 and see if you can make a profit on rent. It's not easy. If you want to try to buy a duplex or something in that area it will probably be in a somewhat less desirable area and it will still cost you a boat load of money.

Maybe try San Diego. I haven't looked down there in a long time but maybe they have it better.