What are good markets right now in souhern california?

Question

for people investing in southern california, what markets are you invested in? Any out of state investors have business in southern california?

Rick H. · Answer

In this stage of the real estate market economy, late entrance to the game and limited opportunities seems to encourage buyers to become desperate and seek outlying areas.

This is a mistake.

Go back and look at the old property value charts by zip code. The Norris Group has produced some good material to study.

If you look at each area, you'll see how volatile the SFR's prices are in these fringe markets.

Whether Kern, Central Valley, Vegas or Victorville, they all have higher risk of price drop when the market ranks (and it will).

Therefore, consider your leverage when you buy in the areas farther out and inner-city suburbs that get harder hit (Compton comes to mind). Make certain that your opportunity cash flows positively and does not primarily rely on appreciation.

We are poised for another hit, perhaps after elections when the economy sobers up from frothy optimism and begins dealing with a new President.

While it may make sense to be a desperate seller, avoid becoming a desperate buyer.

David Faulkner · Answer

What are you looking to do? Rentals? Flips? House hack your primary residence? Development? Hard money loans? Multi-family? Other commercial property? Different local sub markets are better for different things. Agree with Logan that outskirts of LA are best for rentals. Antelope Valley (Lancaster, Palmdale, and beyond) are good for that. The inland empire east of orange county can also work for that, as could Bakersfield, but I am personally not that familiar with those sub-markets.

For flips, anything closer to the coast all the way to the 210 fwy could work, so long as you can buy in at a good enough deal. Finding a good deal is getting harder these days and flipper's margins are getting squeezed by more and more folks bidding these properties up. Developers are doing very well in the same markets, but that is a whole other level to the game and carries significant risks of its own.

Southern CA can be a tricky and dynamic market to invest in. Matching your strategy to the correct sub-market and point in the real estate cycle are important. There are ways to play it to consistently make money without the need for speculative gambling, and once you get the hang of it, it can be very profitable.

Josh Justiniano · Answer

@Matt OwenBe careful on the east side in Bakersfield. Things can get dicey there. If you're going to go on the east side make sure you have a cap in the double digits.

Aaron Norris · Answer

@John Alanistotally agree with Rick H. here. There are still some great opportunities but I'd be going in with at least two exit strategies in Socal. I still qualify for regular financing so willing to into rentals knowing I'm going long and I'm not too concerned if prices get soft. Lots of people move to the fringe because they can't afford anywhere else. then when the market softens, those areas get hit, and painfully so.

However, another strategy is to make sure you're looking at different product type as well. hedge funds beat up a specific category in Sacramento and the Inland Empire driving the prices up quickly to where they don't make that much sense. AND, some of those areas aren't that nice. Can it go up another 10-20%. Yes, but if the market gets a little soft, are you really that excited about holding a 3/2 in a "C" neighborhood long term? What if you looked at 3,000 square foot homes built in 2005/06?  Hedge funds didn't go after larger properties but they are new built, seem to attract good renters, the new construction means less in repairs, and I like them for longer term investments.

Aaron Norris · Answer

@John Alanis , from my experience, if you can find a good deal, people typically don't pass it up. If you feel you're weak in a specific area, you've got to work on it. I lean more towards rentals so don't consider myself a flipper in the least. Hard to find the hours in my day to take that on. So I don't personally handle huge renovations. if that's what you're taking on, you need to practice. Maybe hire a contractor for a day. Go to HomeDepot and bid out supplies. Real estate investing is one of those businesses where hussle can make up for a ton.

John Alanis · Answer

@Aaron NorrisWould it be hard for a new investor like myself to get financing for deals even if i come across them? like for flips or long term holding? Or would a well put together packet of information be enough to convince investors and potential partners to overlook my inexperience?

John Alanis · Answer

Seems like almost all of southern california is really competative right now then, I am trying to get started through wholesaling, and house hacking to get my feet in the REI door. I would also like to do flips in the future as well. Would house hacking be the better strategy to focus on right now? Im living in wildomar/ lake elsinore area right now if anyone knows it. Thanks for all the feedback and information!

Dima Sereda · Answer

How is the current market for Orange County house hacks?

Jo-Ann Lapin · Answer

Any areas that are more older established areas were you can value add to the subject perhaps add bed add bath. North Orange county is a good example. Try and stay away from hillside properties.

Matt R. · Answer

@John AlanisNearest LA proper is good to great and always deal and strategy specific. It is not a high cash flow starting point though normally. According to UCLA we about 50% into a historic bull run but anything can happen. UCLA also reports the smart money is liking LA now. I think that translates to the big money folks from anywhere. Competition is fierce and that includes the rental market. I have one offer in currently on a foreclosure in the SFV. It won't be home run but could be a solid base hit. There is also sort of land banking type deals going and that takes big mula normally. Many infill tear downs and redevelopements seem to be at the highest levels in some of the better locations. I would agree with David and Ricks take as well.

What are good markets right now in souhern california?

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