All Forum Posts by: David Hodge

Hi David,

Im not a mentor but I think it will be difficult to prove your premise wrong in Orange county unless you find a very unique opportunity out there. With todays values in orange county it will be very hard to find something that cash flows good, most likely that if you leverage you wont get positive cash flow. And if you are looking for appreciation then that may be even more difficult, a crash does not seem likely but if you want appreciation you should at least be able to recover costs of sale and with todays values you may be looking at several years for your property to appreciate beyond costs of sale. I would caution against thinking that Orange county properties will always hold value, this is especially important if you have a negative cash flow property.

Your may be able to find cash flow properties at inland markets in California, but it is challenging.

If you are looking for passive investments in real estate perhaps you should consider other options such as investing in Deed of Trusts or Notes.

@David Hodge Welcome to BP! Did you know there's a meetup in Lake Forest on the 3rd Wednesday of the month? It's at Round Table, on Lambert and Lake Forest Dr. at 7:00 p.m. It's a great place to meet BP members. 

You didn't say how much you had to invest, etc. There's different options for investing in high priced areas, such as partnering with other investors, etc., or you might consider buying condos rather than houses.

Also, in regard to cash flow, there's a lot of investors that cash flow with Vacation Rental properties. 

There's been so many posts on those encouraging people to buy outside of California. But, remember prices are based on supply and demand. Orange County, and much of southern California have all the drivers that create demand. 

• Broad based strong economy
• World class education and healthcare
• Manufacturing, high tech, you name it, the biggest names are here
• Amusements, professional sports, recreation and cultural venues
• The beach
• Perfect year round weather
• Tourists and business people visit from around the world
• Every mid to major airline flies in to both Orange County and LAX
• BEST OF ALL - Qualified tenants and buyers. 

All of those things drive demand, which pushes up pricing (and yes costs) but, there may never be lower prices than there are right now! On the other hand, you can buy cheap houses in areas where you can watch the grass grow, and pay the bills, but won't realize any appreciation for years and years. 

David,

What are your goals for wealth creation?  Ryan makes a good point about average OC appreciation of 4%.  In places like Oklahoma, you can get good cash flow, but minimal capital appreciation.  In Socal, you can still find nice reasonably priced homes in Temecula and Murrieta along with the rest of Riverside County.  I bought and flipped over 500 homes in the 1990s and early 2000s.  I think you can make money in real estate doing just about anything if you plan properly.

Mark

 Yes, you are right. But Orange County rents have increased at a rate of 4% a year over the last 40 years, so I think this is something to consider. Not to mention healthy capital appreciation caused by low inventory, steady job growth, a robust economy among many other factors. 

Hi David:

Can you qualify for a full doc investment property mortgage?  Have you checked into financing?  Do you have funds for a down payment of 20%-25% for something in Southern California?  Also, maybe taking advantage of Fannie's Homepath is a great way to get into an investment property with minimal down in OC?

Hi, David.  

We live in AZ, but since Laguna's been like our second home for decades, and we want to end up in South OC or North County SD, we bought rentals in OC (a condo in RSM) and SD Counties (a home in the Rancho del Oro section of Oceanside) in spring of '13.  Both cash flow, as do our mobiles in NorCal.

First of all, our O'side PM (also an investor/flipper) said she's waiting to buy anything there until after the first of the year.  If we were buying anytime soon, we'd look in O'side.  You get more bang for your buck down there.  There are some very nice pockets of RE (Rancho del Oro/Ivey Ranch, for example) that are less expensive than in OC.  Taxes in SD County are less than in OC, as well.  

It really comes down to how much you want to spend, and how much you want to cash flow.  There are some areas of Central and NorCal that have yet to recover from the market downturn.  If you want to stay in SoCal, you'll either have to get creative, or bring money to the table.  

Hi David, 

I can't speak from a position of experience but from what I understand (and after analyzing several properties in SoCal), you can get just about anything to cash flow but it depends on how much you are leveraging. I think a better question to ask your mentor is can you obtain a favorable cash on cash ROI in SoCal.