Thanks every one for the great comments! And especially Temecula Guy, thanks for your very helpful input!
Couple of random comments:
1. I feel pretty comfortable when I can buy a SFR BELOW construction costs. If I can buy it for FAR less than they can build it, if they EVER build a house again in Riverside Co. I’ll be in the money. Some of these houses just have to get back to construction costs and you will have decent equity. And I think they will get back there and I don’t think it will take 10 yrs. They have not built hardly anything in the Inland Empire (or the entire state of CA for that matter) in 3 years, they won’t build much in 2011, so that is 4 yrs with NO new homes being built (or multifamily). Eventually the existing inventory will get absorbed and I don’t think it will take 10 yrs. That could also push rents up.
2. I think when you can get an asset below construction costs, 60% below peak price, finance with a 5% 30 year fixed rate, and the tenant can pay that asset off for you in 15 years, it’s hard to see how that is a bad investment.
3. I do worry about the effect of gas prices on rents and values especially in the far flung regions of Riverside Co. Esp if they get up to $5-$6 a gallon. This fear favors buying close in SD condos.
What do investors think of condos in San Diego vs. SFR’s in Riverside Co.? Obviously San Diego is a much better rental market and more premium location than Riverside Co., but SFR’s are a more desirable asset b/c NO HOA risks. The cash flow numbers work for a lot of condos in SD County, and in good locations. The numbers do not work great for SFR’s in SD, even SFR’s in rougher neighs.
Personally I would only go SFR’s in Riverside. If I’m going to buy a condo I would go SD over Riverside in a heartbeat.
Any thoughts on Vegas and Phoenix? I know both are hurting bad. But like Riverside Co. you can buy way below construction costs and get new built SFR’s that cash flow. Yes I know there are crappy areas in both cities, but if you are careful you can pick the better areas. I hear they do rent up if you are very, very careful on neighborhood selection.
My personal goal is to get 6-10 houses paid off in 15 years as my personal pension plan. I have the down payments and can get 8 more conventional loans (I have 2 rentals already). I’m 40 yrs old right now. My plan is 20%-25% down on each and get them paid off in 15 years. Just need to choose where and what to buy!!
