[quote=clearfund]SDSURFER – SFRs were never meant to be cash flow vehicles and thus rarely cash flow decently. You are competing with 90% owner/users who have bid the price structure up to a zero return.[/quote]
clearfund, I can appreciate your bias to comm’l RE and large multifamily complexes. However, not everyone has the capital to purchase these properties or multiple REITs or the know-how and contacts to form managing partnerships that work for them. Not every area in SD county has SFR’s which are 90% owner-occupied, which are bid up in price to zero return. Many SFR’s (often fixers or near-fixers) languish on the market or are good properties to buy as an equity purchaser PRIOR to being foreclosed on (if they are not over-encumbered). Sometimes, an owner just has to move to be near family and can’t make the necessary repairs to compete in today’s sales market (where deep-pocketed owner-lenders are fixing-up properties reverting back to them at trustees sales prior to marketing them).
There are MANY areas of the county where a first-time individual investor can buy an SFR for $175K to $275K and the cash-flow numbers work out from day one if he/she manages it himself. These houses, in primarily “working class” areas are 40-75 years old and typically rent for $1350 to $1800 mo (avg rent $1650). Given the ultra-low interest rate climate of today and the fact that many condos can’t be financed due to low owner-occupancy of the complex or pending litigation, I believe that from now through the next 3-4 years (if mtg interest rates stay stable) is a very OPPORTUNE time to scoop up SFR investments (using a mtg), especially those on or close to public transportation. Remember, EVERYONE has to live somewhere.
