Moving to Oxnard, CA for work. 4-Plex on an FHA good idea?

Question

Hi there! So I recently got word that my wife and our soon-to-be-newborn will be heading to Oxnard, CA this coming Summer, and will be living there for the next few years. I own a few properties now (3 doors currently) and was torn between 2 strategies. I was considering just renting in California and buying more rentals in Indianapolis, or using the housing money I'll get every month to buy a 3 or 4 plex and living in one of the units, then renting out ours when we move away down the road (or selling if that makes more sense).

Any tips or investors with experience in the areas west of LA? Also any experience with Camarillo, Ventura or any of the surrounding area would be appreciated as I don't necessarily need to live in Oxnard, just within commuting distance.

Ali Boone · Answer

For general househacking considerations, check out-

https://www.biggerpockets.com/renewsblog/considera...

I would say ultimately, just run the numbers on both scenarios. That alone should probably point you in one direction or the other.

Cornelius Charles · Answer

@James R. Copeland

Several people from BP who live out of state or just moved to Southern Cali have reached out to my wife (she's a realtor) to help search for a small multifamily.  In all cases, they were looking to spend a lot less than what's currently on the market.

We live in Oxnard, so feel free to reach out or send me a PM if you have any specific questions about the area. I could also give you my wife's info if you would like her to send you a list of some properties on the market, or to talk about the market in general.

Michael T. · Answer

James, congratulations on the move to Oxnard!  Oxnard is a great place to be as it's close to Ventura, Thousand Oaks, Malibu, beautiful beaches and some great state parks.

There are definitely a few differences between Oxnard and Camarillo from a housing expense perspective as Oxnard is about 15-20% less than Camarillo.  Camarillo is more white collar and the income per capita and household is much higher versus Oxnard.

There are quite a few options from an investment perspective for both cities, however, it depends on what you want to achieve.

Similar to you when I moved to Los Angeles a few years ago we had to decide whether to continue to focus on OOS cash flowing properties or buy something here in Los Angeles that would appreciate and have our renters pay a portion of our rent.

We decided to buy our multi-unit here in Los Angeles and we are extremely happy we did as the home as significantly appreciated and we've completed a refinance and a HELOC since our purchase and have purchased more OOS cash flowing properties with the money we've gained.

My recommendation based on my experience is to buy a multi-unit in the Oxnard area and have your tenants pay a portion of your rent and then let appreciation do it's job.  In a few years you'll be able to refinance and do more OOS investing.

Michael T. · Answer

@James R. Copeland that's great and definitely the best route to go!

Unfortunately zillow does not have a filter for 3-4 units, however, I'm more than happy to set you up in the MLS so you get the list of multi-units in the Oxnard, Camarillo and surrounding markets.

I recommend you get the MLS listings and then cross reference with zillow and redfin values to make sure that you're getting the best deal that will allow appreciation.

Feel free to ask any questions.

Albert Bui · Answer

Hey James congrats on moving from Clark county WA down to Ventura county CA.

The one thing you'll find is that the prices are almost double or more as expensive as clark county for comparable 3-4 unit properties. If you'd like pricing that is similar to clark you'd have to go out to san bernardino county  where a fourplex is still 550-700k.

One downside with FHA and 3-4 units and the subject is severely talked about over and over here on BP is the self sufficiency rule. You'll need roughly .90% of the monthly gross rents to be higher than your entire monthly PITI payment (prin/interest/taxes/insurance monthly) which is near impossible to do in Ventura county even if you buy extremely distressed but then FHA wont finance you (probably) due to min health and safety requirements with FHA (unless if you do a 203k FHA rehab loan but thats another discussion).

The only way to combat the FHA SS rule is to put more money down which negates the benefit of 3.5% down FHA loan, find ways to decrease your monthly payment like rate buy downs, use of FHA 5/1 ARM instead of 30 year fixed, get lower insurance quotes, or to increase the rental income (either or). There are some other strategies to work around this SS rule, it can be done, but is tough.

Let me know if you have any questions on strategy. I've work with a lot of house hackers, invest myself, have house hacked a couple fourplexes and some townhomes in orange county and up in Seattle.

Ronald Morris · Answer

Hey welcome to the area! Ive been looking in Oxnard for a 3-4 plex as well without much luck everything seems to be to far out of my budget for a first time buyer. I currently live in Camarillo and can tell you its significantly more expensive out here, though our current home has appreciated almost 150k in the 5 or so years we've been here. Im not sure how much help id be but feel free to message me if you need someone to bounce ideas off of.

Chet Mazur · Answer

CA is a lot more expensive than other places ut the appreciation is phenomenal.

I moved from Westwood, CA to Silicon Valley in '99. I was able to sneak into a SFR here via a I/O loan. The property has appreciated  4x over than time w/ ~300K in improvements.

I don't know if Oxnard has more affordable opportunities.

Rob Massopust · Answer

All of So Cal has the same issue. Multifamily is priced beyond multipliers that make any sense. When the cost per sq foot is 25%+ higher than condos or SFR you really have to pause in your assumptions that just because its a 4 unit its a good deal. What is the CPU on a 4 unit - Hitting over $400k, that means its tough to make it ever cash flow.

The main reason is most areas it is tough to find 4 units [Long Beach and LA but those areas can be tough and not best for owner occupied, not sure how many are in Camarillo but when I lived in Thousand Oaks I cant remember ever seeing a 4 unit]

Here is what might be a good alternative, buy fixer condo, fix it up and rent out,

Buy a SFR and do an ADU conversion or add on

Buy in an area you would not live in but ok to rent out.

just my 2cents

Taylor Scott Siemens · Answer

Hey James,

Good luck with your move and property search!  I recently wrote a blog on how to use refinances as a stream of income.  Works great for multi-unit properties and would definitely help with the high costs of that area.

https://www.biggerpockets.com/member-blogs/11934/84488-getting-paid-to-refinance-every-6-months-bi-annual-refinance-program

Let me know if you have any questions and good luck!

Uday Raju · Answer

Thanks for the reply Albert. I am still hunting for the house. What is meant by SS rule?

Moving to Oxnard, CA for work. 4-Plex on an FHA good idea?

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