New Member from Southern California

[Jeff Howard]

Hello,

I am an absolute newbie excited to learn about potentially investing in our (my wife and three boys of 4,6 and 10) first real estate investment.  My wife and I are both 37 years old.  We will be selling our current home and purchasing a new primary residence in the next 1-2 years and I want to learn about what it actually takes to operate and create income from owning rental properties.  We will have approximately 100-150K to invest to start out, but we want to take it slow and steady and potentially grow it into something my wife can operate as the kids get older.  I am particularly interested in learning how to organize our real estate investments through our small business and maximize our tax advantages.  We are spooked by prices here in Orange County CA, but I am not opposed to looking in other areas or even states, but both prospects are intimidating, and I feel like we are poised on another bubble at the moment.  Thanks for the help and I am excited to learn about a new subject!

Jeff

[Glenn Humphreys]

@Jeff Howard

Hello and welcome to BP! Getting some tax advice would be wise before you start investing - let me know if you need a referral to a CPA. 

In respect to a price bubble, I believe there is good reason to be cautious about the existing market. On the surface it appears that the simple laws of supply and demand are in play - a growing work force is chasing relatively few properties which is forcing home prices up - nothing unusual there. However, when you look more closely at the underlying problem of affordability in California, you have to wonder why homebuilders are not rushing to make a buck and fill the huge demand for affordable living - they obviously see a rocky economy ahead and have no desire to be caught out like they were when the credit bubble burst. Globally, China is experiencing its own credit problems in the housing industry and it also has excess inventory. If the Chinese housing market were to show any signs of going into free fall, you can guarantee there will be a large ripple effect in the U.S. housing market - just as we have seen in the stock market in last few months with concerns over the Chinese economy. As investors, buying opportunities might be closer than we think...

Best of luck and please reach out if you have any questions.

Glenn