Newbie Investor from SoCal/LA/Orange County, CA

[Charles Stevenson]

Hey BP,

My wife and I are brand new to REI and BP. We just had our third child and if that isn't a strong "Why factor" I don't know what is. I have been using all of my free time(not much with 3 kids and we both coach, volunteer etc) to read and even listen to podcasts when I am feeding my newborn at "crack of dawn". My wife and I both have accounting/finance backgrounds. We both work for Fortune 500 Cos now and have been entrepreneurs in our previous lives as well. Crunching the numbers and the running and managing the business side is our strong suite, hands on Real Estate "ins and outs" is our opportunity for learning.

We got pre-approved and have been looking at properties to fix and flip in North Orange County. Our goal is to acquire a property by end of year and have it sold by Spring(April). After that, we would like to acquire one property per quarter in 2017. House prices pushed by high demand are impeding our opportunities in Orange County. For example, this Saturday I saw about 5 properties in Santa Ana with an agent and stopped in another 5 open houses on my own that I happened to see while driving around to gain information with my contractor (who happens to be my father in law.) Prices for "TLC projects" for the area were so high that the deal numbers don't make sense to flip. We wanted to pick a lower cost area for our first deal to learn the business and minimize potential risk. We were looking in Santa Ana, Orange, Anaheim and Tustin if you know Orange County. I know those are four cities but I am still doing research on each one to narrow it down even more. I would love some advice on what to look for when finding target areas when doing the research.

Here is a very abbreviated version of my research on just one city, Anaheim(Disneyland is in Anaheim), and my assumptions(in parentheses).

Anaheim, CA:

1. Population - 348,305 - 11.2% of Orange County (PRO: high/dense population?)

2.  # of Households - 99,944 - 9% of Orange County(OC)  

3.  Housing Units - 105,987 - 10% OC (CON: # of Units outgrowing # of households causing lower demand?)

4. Median Home Price- $445k vs. OC - $581 (PRO: Lower home price than other areas in OC)

5. # of people in a Household: 58% 2-4 people per household (PRO: 42% of population are single people(1) - 18% or families of 5+ - 28%)

6. 50.8% Rent, 49.2% - Own a home (Multi-family a more in-demand route for cash flow as 51% rent?)

7. 52% of houses built after 1970 (PRO: less major upgrade/repairs with these homes vs homes built before 1970?)

8. Housing Breakdown: Single family - 50.8, Multi-Family - 44.8%( 5+units - 34%, 2-4 units - 10.7%)(Large multi-family overbuilt?, High demand for duplex, triplex four-plex?)

Are we way off in our assumptions or should we look in different data points for analyzing locations and potential deals? High home prices tell me that Multi-family may be the best way to go as an investment in OC. We want to do multi-family, but a little nervous to have that be our first deal and refuse to concede to the notion that they are "no flip opportunities in OC".

Let me know if our research is off or not and any adjustments/suggestions to help get us going to that first property in the next 53 days.

Thanks for reading and God Bless,

Charles Stevenson