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I think I'll hold out buying any properties at market value until this shake up shows a definite bottom (which I understand could be not months but years)... I'll keep my eye open for pre-foreclosures and other depressed properties in the meantime. You would stay away from option ARMs until we start seeing gains again in the housing market?

I'm guessing with a good deal on a foreclosure and an interest only loan, you could cover the mortgage payments with rent. If not, is an option ARM the only way to do that?

I haven't finished the book yet but I'm guessing it will be thru NOD listings and such.

I actually have a book by Thomas Lucier on pre-foreclosures. I was considering finding these properties thru pre-foreclosures. Would that change the game quite a bit?

There isn't too much real estate in southern California that has positive cashflow with a standard mortgage...

Hi Ryan,

Thanks for the response. Are you referring to the market correction and timespan, or to my plans on financing a home and renting it out?

If you are talking about the plan in financing using an option ARM and then renting out the property, what do you see wrong with that?

I'm 24 and just looking to venture out into the real estate market. I'm interested in getting into some rental properties in southern California where I'm currently living.

I know the market may still have another 6 months to a year of instability before things start to flatten out (does this timeframe sound reasonable?). I plan on waiting around until then unless I find a good pre-foreclosure or some other very motivated seller.

Anyway, I know it would be extremely hard or impossible to have positive cash flow with a conventional mortgage on a rental property in SoCal. I recently learned about option ARMs though. I was wondering what you guys think about these? If I could do an option ARM for the next 5 years lets say, I would be able to have positive cash flow each month and assume I'd catch appreciation after this lull in the market some years from now to get some equity later on for a sale.

What do you think?