advice re potenial beach condo purchase

[temeculaguy]

Part of it was my narrow definition of the word “investor,” I was thinking of those with money to invest as opposed to those working a strategy and leveraging, you are right, both groups exist. In your example, the 1996 investor wins because they start with 135x and could have refi’d to below 100x, the buyer at 4.75 is kinda stuck at their level. When both sell, 1996 wins again, the profit from the increased equity is more than double. Neither are stupid but an investor today should walk past the 190x opportunity because they can find better rent multipliers elsewhere with the same interest rate. Your example is still a decent investment, but in 2009, as long as you are not investing in S.D., you can find that 1996 scenario.

A few weeks ago I posted on another thread a bunch of 1k rentals for 100k, I just found a 900 rental for 60k. At todays rates, they start out cash flowing far better than the MM example, if you find a 50x example in Florida, you’d buy that before my 65x example. There are a bunch of post bubble busted places seeing intense investor activity, often times money coming from outside the area or state that the property is in. When that MM place hits 225k, investors will scoop them up by the dozens and provide a price floor, but at 325k, just locals will be there, it will still support prices but not in the same furious way that sub 150x will.

I am making this stuff up as I go along, but a few months ago, when my area began to regularly see 100x, buyers poured in, Forbes ran a story and declared Murietta and Temecula as the #1 and #3 hottest markets in the country, I tried to figure out why, and I think that when the rent multiplier gets so low, money shows up. If they ran that story today, it probably moved to whatever area that just hit that rent multiplier, perhaps florida or northern/central cal will be next. As prices fall in S.D., there will come a point that the sideliners will need to buy before the investors show up in large order, that range will vary between 100 and 150x

[an]

tg, I totally agree with you the investor who bough in 1996 is in a much better position than the one who bought in 2009. Although, like you said, both are still decent investments. I definitely don’t think MM is in the same league as TV in term of investment. I don’t think TV is in the same league as Fresno in term of investment either. I know people who have been buying some for about 6-12 months now. The price point was around 60-70k and the rents were around 850-1000. So, you’re right, there are much more lucrative areas out there. I just don’t think some are will ever be a good investment area. Considering even at the bottom of the last cycle, MM only got as low as ~130x. I’m sure more coastal (more desired) areas was even higher.

[an]

tg, I totally agree with you the investor who bough in 1996 is in a much better position than the one who bought in 2009. Although, like you said, both are still decent investments. I definitely don’t think MM is in the same league as TV in term of investment. I don’t think TV is in the same league as Fresno in term of investment either. I know people who have been buying some for about 6-12 months now. The price point was around 60-70k and the rents were around 850-1000. So, you’re right, there are much more lucrative areas out there. I just don’t think some are will ever be a good investment area. Considering even at the bottom of the last cycle, MM only got as low as ~130x. I’m sure more coastal (more desired) areas was even higher.

[an]

tg, I totally agree with you the investor who bough in 1996 is in a much better position than the one who bought in 2009. Although, like you said, both are still decent investments. I definitely don’t think MM is in the same league as TV in term of investment. I don’t think TV is in the same league as Fresno in term of investment either. I know people who have been buying some for about 6-12 months now. The price point was around 60-70k and the rents were around 850-1000. So, you’re right, there are much more lucrative areas out there. I just don’t think some are will ever be a good investment area. Considering even at the bottom of the last cycle, MM only got as low as ~130x. I’m sure more coastal (more desired) areas was even higher.

[an]

tg, I totally agree with you the investor who bough in 1996 is in a much better position than the one who bought in 2009. Although, like you said, both are still decent investments. I definitely don’t think MM is in the same league as TV in term of investment. I don’t think TV is in the same league as Fresno in term of investment either. I know people who have been buying some for about 6-12 months now. The price point was around 60-70k and the rents were around 850-1000. So, you’re right, there are much more lucrative areas out there. I just don’t think some are will ever be a good investment area. Considering even at the bottom of the last cycle, MM only got as low as ~130x. I’m sure more coastal (more desired) areas was even higher.

[an]

tg, I totally agree with you the investor who bough in 1996 is in a much better position than the one who bought in 2009. Although, like you said, both are still decent investments. I definitely don’t think MM is in the same league as TV in term of investment. I don’t think TV is in the same league as Fresno in term of investment either. I know people who have been buying some for about 6-12 months now. The price point was around 60-70k and the rents were around 850-1000. So, you’re right, there are much more lucrative areas out there. I just don’t think some are will ever be a good investment area. Considering even at the bottom of the last cycle, MM only got as low as ~130x. I’m sure more coastal (more desired) areas was even higher.

[Ren]

If you talk to experienced investor/landlords, many will tell you that they go by the 50% rule (or 40% if they don’t use a property manager). Simply put, they allocate 40% of a property’s gross rent for long-term operating expenses NOT including the mortgage, HOA, and property taxes. This number apparently ends up being very accurate when you’re talking about decades.

There are 100x properties in Temecula right now, and on the face of it they cash flow $500+/month with 30% down. However, applying the 40% rule, in reality, they BARELY cash flow over the very long term and are actually in the negative if you pay someone to manage them for you. In my opinion that is why it’s so important to buy close to the bottom of an area, and the reason buying on the coast as an “investment” at current prices is such a big mistake. Worst case, you’ll never see most of your down payment again, and expenses will eat away the rest of your wallet over the years.

[Ren]

If you talk to experienced investor/landlords, many will tell you that they go by the 50% rule (or 40% if they don’t use a property manager). Simply put, they allocate 40% of a property’s gross rent for long-term operating expenses NOT including the mortgage, HOA, and property taxes. This number apparently ends up being very accurate when you’re talking about decades.

There are 100x properties in Temecula right now, and on the face of it they cash flow $500+/month with 30% down. However, applying the 40% rule, in reality, they BARELY cash flow over the very long term and are actually in the negative if you pay someone to manage them for you. In my opinion that is why it’s so important to buy close to the bottom of an area, and the reason buying on the coast as an “investment” at current prices is such a big mistake. Worst case, you’ll never see most of your down payment again, and expenses will eat away the rest of your wallet over the years.

[Ren]

If you talk to experienced investor/landlords, many will tell you that they go by the 50% rule (or 40% if they don’t use a property manager). Simply put, they allocate 40% of a property’s gross rent for long-term operating expenses NOT including the mortgage, HOA, and property taxes. This number apparently ends up being very accurate when you’re talking about decades.

There are 100x properties in Temecula right now, and on the face of it they cash flow $500+/month with 30% down. However, applying the 40% rule, in reality, they BARELY cash flow over the very long term and are actually in the negative if you pay someone to manage them for you. In my opinion that is why it’s so important to buy close to the bottom of an area, and the reason buying on the coast as an “investment” at current prices is such a big mistake. Worst case, you’ll never see most of your down payment again, and expenses will eat away the rest of your wallet over the years.

[Ren]

If you talk to experienced investor/landlords, many will tell you that they go by the 50% rule (or 40% if they don’t use a property manager). Simply put, they allocate 40% of a property’s gross rent for long-term operating expenses NOT including the mortgage, HOA, and property taxes. This number apparently ends up being very accurate when you’re talking about decades.

There are 100x properties in Temecula right now, and on the face of it they cash flow $500+/month with 30% down. However, applying the 40% rule, in reality, they BARELY cash flow over the very long term and are actually in the negative if you pay someone to manage them for you. In my opinion that is why it’s so important to buy close to the bottom of an area, and the reason buying on the coast as an “investment” at current prices is such a big mistake. Worst case, you’ll never see most of your down payment again, and expenses will eat away the rest of your wallet over the years.

[Ren]

If you talk to experienced investor/landlords, many will tell you that they go by the 50% rule (or 40% if they don’t use a property manager). Simply put, they allocate 40% of a property’s gross rent for long-term operating expenses NOT including the mortgage, HOA, and property taxes. This number apparently ends up being very accurate when you’re talking about decades.

There are 100x properties in Temecula right now, and on the face of it they cash flow $500+/month with 30% down. However, applying the 40% rule, in reality, they BARELY cash flow over the very long term and are actually in the negative if you pay someone to manage them for you. In my opinion that is why it’s so important to buy close to the bottom of an area, and the reason buying on the coast as an “investment” at current prices is such a big mistake. Worst case, you’ll never see most of your down payment again, and expenses will eat away the rest of your wallet over the years.

[an]

Ren, it wouldn’t surprise me if the coastal areas never was and never will be a good place to buy an investment property based on those criterias.

[an]

Ren, it wouldn’t surprise me if the coastal areas never was and never will be a good place to buy an investment property based on those criterias.

[an]

Ren, it wouldn’t surprise me if the coastal areas never was and never will be a good place to buy an investment property based on those criterias.

[an]

Ren, it wouldn’t surprise me if the coastal areas never was and never will be a good place to buy an investment property based on those criterias.

[Author]

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