Multi-Family in Desert Hot Springs (Riverside County, California)

[Jose Perez]

So I'm following a lead that a wholesaler sent my way. It's for a 8unit (1br/1bth) MFR located in Deser Hot Springs, California. It is priced in the mid $100s and is fully occupied. Each unit is rented out for $500 for a total of $4k/mo.

The problem is that Im in the east coast and have NO IDEA about the market over by that area. Any local investors in this area that can shed some light and help me determine if this is a good potential deal?

Thanks ahead of time.

[Ali Boone]

Hi Jose. Well...I live in LA- can't speak for specifics about Desert Hot Springs but can speak generally to it, and I'm from GA. I can honestly say I've never heard of anyone living in GA wanting to buy in CA. Even people in CA don't like buying in CA. Tenant laws here are nearly impossible for owners, cash flow is rarely a thing, etc.

Desert Hot Springs is out by Palm Springs, but way less lively than Palm Springs. It's just a small town. Not that it would be bad, necessarily, but it's not some booming town. 

But town aside, mid-$100s for 8 units in basically any market in the nation sounds risky. That's wayy too cheap. So then if you are talking about CA, even the remote nothing towns, that's incredibly risky cheap. The building would almost have to be a dump, and even then in CA I would think it still wouldn't go for less than $500k.

Lastly (and I swear I'm not trying to be a total buzzkill), any tenant living in CA (or anywhere, but CA especially) paying only $500/month in rent is most likely going to be the bottom of the barrel for tenant quality. So you would be taking just about the riskiest tenant pool, in a state where tenant laws are so detrimental to owners that it could cost you a fortune just in tenant drama. 

Having grown up in GA and invested there as well, I would stick to GA for property shopping! Easier to have something local that you can keep an eye on.