[quote=kev374]yes, but the properties I am seeing are NOT cash flow positive so I am wondering HOW on earth are investors buying them. I am thinking they are just speculating on future price or rent increases that may not pan out. This is quite a big risk.

For instance, the rents in Orange, California for a 2bd, 950sqft condo with garage is around $1400/month. To be competitive this is what you need to expect…no more.

2bd condos with 1000sqft have asking prices north of $250,000 and some are even asking $300,000. Just do the math… $250,000 with 20% down, $200,000 financed at 4.6%, $1025 PI, $210 property taxes, $100 maintenance, $275 HOA = $1610 and that is in a perfect situation, what if the property remains vacant for a few months of the year? And HOAs and property taxes rise with inflation as well.

For investment it does not pan out at current prices.[/quote]

Kev, it matters jack to these investors about “cash flow.” I just spoke to a very local banker this morning and they’ve been opening 10-12 CD’s and MM accounts per day (new $$) for all of 2013 in the middle of a (gasp!) “working class” neighborhood, just like the ones you are shopping in. Why?? Because they’re offering a 1% to 1.1% annual interest rate on $50K + deposits.

Dude … ANY reasonably priced property situated in a CA coastal county (read: having a “captive” rental audience) will yield FAR MORE than 1% … and, unlike the stock market lottery, the OWNER has the control of the asset!

There is a LOT of cash chasing yield right now and every day, another few thousand Californians withdraw a matured CD and/or turn 59.5 years old. They’re not necessarily “well-educated,” chasing school scores, or “rich,” but as we all know, money talks and BS walks. And they don’t mind at all investing in that 50+ yo house that you’ve been shunning. You are outnumbered so you shouldn’t waste another minute sitting on your hands trying to overthink your strategy, IMO.

Get out there, kev, and start making offers and keep the Piggs posted on your progress!