All Forum Posts by: JJ P.

Seller's market here and every where we've looked.  I have no idea why, but RE investments are on fire.  The National Assoc of Realtors said this is a delayed "peak buying time," which usually would be in the springtime and start to wane during the summer.  Instead, it's hotter than ever.   San Diego has limited inventory and multiple offers at all price points across the board. It tapers off a bit at the top end.  

Well, you've got a couple of people to contact and get input about San Clemente and Coastal Oregon.  Those are also the areas I'm familiar with.   I'll talk more about ideas since the others didn't.   

So Cal-- SUPER STRONG  appreciation. High price point entry.  What's your budget?  San Clemente is great area and less expensive than many areas to the north of it (Newport Beach through Malibu).   San Diego is cheaper generally and Oceanside is very cheap.   There's lots of direct, inexpensive flights from Denver to SNA or SAN.   That would make it easier to get to from Denver, if that's where you're flying from.  There's lots of competition for vacation rentals, but the market is strong and demand is high.  Expect greater demand if you've got an ocean view, and even more if you can walk or bike to the beach.  Ocean front has the highest demand.   Summer time is usually booked out, winter rentals are more sporadic.  

Coastal Oregon-- beautiful and runs less than half price from So Cal.   Sometimes, if you're looking down near the California state line along the Southern Coast, the entry price is more like 25-30% of what it would cost in So Cal.   Oceanfront/bayfront/lakefront/riverfront is possible.   Huge panoramic views of  river, bay or ocean are there to be had.  Why is it cheap?  Because that southern coast is hard to get to!  There are no easy ways to access the very northern coast of California (The Lost Coast) or southern Oregon.   It's a  long drive from pretty much anywhere.   We opted for Coos County due to affordability and proximity to an airport that has flights from two hubs (SFO & DEN).  As a general rule of thumb- The closer to Portland you get, the pricier the real estate becomes.   The more remote areas would have less of a VRBO draw off season, but Portland would be more year-round.   It's easy to fly to PDX from anywhere in the world.  

Florida- I would think it would be very easy to find a beach location to buy that's affordable.  Much of the construction is newer and there is lots to chose from.  However, I'd never buy a vacation home in a place I've never seen, and you shouldn't either.  IMO, there's not much that interests me to see in Florida.   If you are a boater, that would be different.   I can't speak to the VRBO market, either.   Usually when people are raving about how great an area is, it's saturated.   

Myrtle Beach-- more activities in the area, lots of history.   Some interesting looking older homes that vary in price.  If you got an old duplex, you could claim one side and rent out the other, maybe throwing in a little sweat equity for a rehab.   I think your families would enjoy exploring the area, if the travel time allows.  

How about Texas or Louisiana?   Very affordable options along the coast in both states.   And they are half the distance from the East Coast from you, although I don't know much about the ease of getting flights to Louisiana.   Texas obviously has huge airline hubs and lots of flights.  

Don't forget that you can sell the house if it doesn't work out.  So try it for a few years, then reassess.  

I would ask your realtor to get the financials.  They would probably want to have an offer on the table before releasing that information.  

Any properties that are still priced at 50K in 2020 are unlikely to appreciate in a significant way, unless the price point is due to extensive repairs.  If it's in good, rentable shape, it's got to be in a terrible neighborhood or a depressed area with little or no job advancement opportunities.   If the location was excellent, the purchase price for the property would reflect this.  Low economic opportunity is the basic formula for low purchase price, high rental income properties.   That's where the best cashflow is.   You're buying in an area where people or Section 8 pays a basic formulaic price for rent, so the rents are high relative to the purchase price.   People are just trying to get by.   This is one reason why Section 8 can be great for this kind of investment.   The inspections can actually work in your favor and the checks are stable.  

 Unfortunately, if you're investing out of state, you loose some of the ability to mitigate costs through applying your common sense or putting in sweat equity.  Roofs and appliances will still cost the same in a cheap house vs. a better home.  

My feeling is that a 30% drop is pretty steep. That's what it would take to break even on your 1031. 

We just forge ahead with purchases and hope for the best, making informed decision based on the data that's laid out in front of us.  Long term RE investors are like long term stock market holders, you gotta ride the dips and soldier on.  Could Covid fire sales be right around the corner?  Sure, but who really knows?  Maybe foreclosed houses will flood the market in 2021, but you never know.   At some point you jump in.  I'd take the sure thing of 30% tax savings and buy something now. 

  Do you have any prospective properties identified?  It might be a bit rushed if you haven't found them yet.  

I think any given tenant is allowed one chance to get shown how to light the fireplace on your dime.   That could have/should have been done at move in, and perhaps was.   Now you know to give the management company a check list of things you want reviewed in person at the time of move in.    The second time, and being invoiced for it on your bill, seems a bit tacky.   Did the tenant not understand the instructions the first time?  What did you pay for that?  

I'd suggest that you tell the management company to 1) call you to discuss and approve any expense over $200 and 2) Charge the tenant for the service call if they continue to have confusion over the issue.   This can be done kindly and gently, and will like prod the tenant to remember the procedure instead of haphazardly calling for assistance.  The tenant probably has no idea that there was a fee for that.  They tend to think there's a handyman roving around waiting to work on the Property Managers houses.  

@Darius Ogloza,  some easy research is to 1) drive the area late at night, weekday mornings, and on Fridays after work.  See who lives there.  Who's walking around? People with dogs or kids, or people that look like they're up to no good?  Do the cars look beat up with taped up windows?  Do they have to pop the hood to start the car?

2) Look up the crime log for the area.  I use SpotCrime to see exactly what arrests have been made.  It works nationwide.   

It does appear that we are poised for a downturn, but it hasn't happened yet.  Real estate is a big lumbering elephant compared to the nimble stock market, but it's still a gamble to wait to time the market for downturns and upturns.  

 If you know your market inside and out... what's a good deal; what the micro-neighborhoods are like; which streets bog down during rush hours; etc, then you already have the tools for swooping up a good deal.  Good deals and motivated sellers happen in all markets, the person who makes out is the person who has done enough homework to know what a good deal looks like.   Knowing your market area allows for safer purchases based on knowledge, not so much market timing.   It's like getting to home base one base at a time, instead of waiting for the home runs.   The home runs are the funnest, for sure, but investors look for opportunity on the doorstep in every market.  

@Uwe G., thanks for the explanation.   We just invested in the Oregon South Coast, and so far are very pleased.  The houses are attractive, already rented with nearly no vacancy time,  and the cash flow is good.  But we are looking for very long term buy and hold.  In other words, we can sit back and see if/when/how much the area appreciates (or not).  I can see that anyone who needs to scale up in volume might hit the limitations of the area.  

 I think the regional airport OTH is  a huge potential draw.  Tourism is the natural economic growth area for the region,  and so not much can be expected until Covid runs its course, and then the whole world will be trying to get back on its feet and the competition for tourist dollars will be stiff.  

I'm curious to know why you experienced Oregon investors don't invest more along the coast or other scenic, if somewhat rural locations?   It seems like there are bargains to be had and perhaps vacation rental opportunities.