California - Does elevated prices even matter? Low Interest Rates are now more important

[Jeffrey Magenes]

Example property is an Anaheim, CA fourplex for $750,000.

Do you think buy/hold is a good strategy right now? Interest rates are soooooo low right now that a $100K-$300K increase in property price, is being gobbled up by such low financing. Your monthly is only going up a couple hundred bucks.

Obviously, we missed the low housing prices and they are now at elevated levels, but does that price appreciation even matter at this point? Isn't it all about acquiring cheap financing/30 yr amortized loans at these 4-5% extremely low rates? You'll make money from a cash flow basis and can weather any kind of downturn because of the great financing.

So who's buying and who's selling?

I'm looking to purchase a Long Beach/South Bay/North OC 2-4 plex at a fair market price right now, finance with 20% down, get a solid 30yr loan in place and buy/hold for the long haul? Maybe do a loan wrap on the property, and sell to another buyer, in the future when rates shoot up to 10-15%?

[Clint Kreider]

@Jeffrey Magenes I guess it comes down to how much cash flow is acceptable to you. Do you manage your properties personally? I have been analyzing 2-4 unit properties in Santa Ana, Orange, Fullerton, Anaheim, and surrounding cities for the past couple of months.

With 20-25% down, all units generally need to be at or very close to market rent to produce decent cash flow. So, it's important to consider the current rents and condition so that you know what it will cost to get the rents where they need to be.