All Forum Posts by: Chris F.

ok I'll weigh in here. I'm a midwest transplant and I've been here about a decade, so I have a decent lay of the land.

California is great if you fit into one of 2 classes:

1. 20-something and single-IOW looking to "live the cali lifestyle"
2. income of 250K+ (business owner, high-earning DINKs, upper management, etc-Obama definition of "rich)

If San Fran is #1 in income inequality, Orange county is #2. I recall reading an article a few years back that the affordability index was about 11%. Meaning 89 % of folks who live in Orange county, can't afford a home here. To live in Orange County comfortably(as well as San Francisco) you have to be either or a millionaire or generating enough income to cover a $800k+ house payment). No "gets by" on minimum wage or even double minimum wage, unless they have a support system.

I'm fortunate enough that my day job allows me to be a home owner here. But it irks me that I could afford a 3k+ SQFT home in most other parts of the country for what I paid on my dinky condo. A 2K 3BDRM2/BA home in Orange County can easily top 600K even with the market depreciation the last few years.

People come for the sun and surf but the fine print gets you.

Can I definitively say I'll be here in 10 years, even if I'm generating 200K+/year? I can't. The beach is great but the negatives are tough to swallow.

The alternative of course, is the desert areas, but as the article points out, most people would rather move to phoenix or vegas if you're going to do that.

Not to mention the fact that California isn't as conducive to small businesses as other states.

I think I'm answering my own question here.. Do I still get an influence point for answering my own question?;)

I know this has been discussed before, but I'm just looking for some experience-based weigh ins on this.

SFH PRO

one tenanant, longer term. Will tend to take care of the property better.
lease option
appreciation

SFH Con

vacancy= no cash flow
cash flows typically not as good as Multifam

Mult PRO

better cash flow
can still cover mortgage with vacancies.
maintenance is all under one roof for 4 tenants.

Multi CONS

shorter term tenant(apt vs "home")
appreciation may not be as good
smaller target audience for selling (investor-only sales)

I'm debating this. My strategy is going to be long term B&H..(retirement) so not as concerned with appreciation play. Also I'm looking to build a portfolio up over the next few years, so I'm looking at the best ROI. from what I can see, multifam, even accounting for vacancy (excluding exit-aka selling) would be the best play.

Thoughts on this?

compounding is dependant upon your reinvestment strategy. The more of your income you can put back into the company the steeper the curve is, but eventually you reach critical mass and decide to stop buying. or you decide to take profilts..

from another angle, to make this deal work:

(1300/2)-100= 550
<550 30yr@6%=91,000-15000repairs=76000 maxium offer for this to work.

At least as a rental.

http://maps.google.com/maps?hl=en&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&biw=1600&bih=1031&wrapid=tlif133236145366710&q=morningside+detroit&um=1&ie=UTF-8&hq=&hnear=0x8824d5cfbcc1d64fab5528b3,Morningside,+Detroit,+MI&gl=us&ei=9zhqT7fWFMSEsgLVvtSvCQ&sa=X&oi=geocode_result&ct=title&resnum=1&ved=0CCQQ8gEwAA

I am a Detroit native and some are sugar-coating it. It's a slum-bad neighborhood, call it what you will. Now that doesn't mean you can't "make it work" but it's extremely challenging to do this remotely, and you'll have a lot of troubled tenants(when you can get them) and all sorts of crime issues. avg rents for 3 bdrm home seem to be around 800/month, but if you can keep someone in there who will consistently pay rent you'll be lucky.

My suggestion is to sell it (hopefully not taking to huge of a loss) and move on.

Boomerang kids:

http://en.wikipedia.org/wiki/Boomerang_Generation

just reread that.. did I mention it's tough?;)

There is wholesaling going on. However it's a very tough market, the deals are fewer, and far in between, and most of the market gets eaten up by the big players who have the money needed to deal in the higher price points.

My 2 cents, it's a very tough market to wholesale in.

@Rich-no worries.. resent

@Nick-I'll be sure to mention your name:)