Buy & hold rentals – what type of property would you be buying and where?

[ctr70]

If you lived in San Diego and wanted to buy some more rentals for your portfolio, what type of property would you be buying and where would you be buying it?

-low priced condo’s in SD?
-SFR’s in Vegas/Phoenix/FL – maybe parts of Riverside Co.?
-2-4 unit properties in SD?

Also, how many people think the *low end* of the market in SoCal has passed it’s bottom? I’m talking the cheapest condo’s and houses that work good as rentals. I personally think it may have, and we may never see those dirt cheap prices again. I’ve studied comps on the MLS and that period from summer 2008 to summer 2009 where they dumped REO’s to cash investors created prices we are not even seeing anything close to right now. In some cases REO condo’s that were bought for $60k from mid 2008 to mid 2009 are now selling for $120k to first time home buyers.

However on the flip side, there are a TON of upside down owners still on many new condo projects & conversions that sold from ’04-’07. The amazing thing is that many of these projects have only turned over 10% of the units to the “new buyers” at the new post 2008 prices. While 90% of the owners are still out there owing $350k on 2 bed condo’s now going for $150k!!! They are all on their way to eventually be short sales or foreclosures as increased inventory.

[svelte]

Well, one of the reasons I don’t own rentals today is that I helped my dad manage his – which means I got to clean up when deadbeat tenants moved out.

He eventually had enough and sold his rentals, and the lesson he said he learned: next time, buy nicer properties in nicer areas for rentals. People who can afford to pay those kinds of rents tend to give you fewer problems. Not always but usually.

Would love to hear other/opposing thoughts…

[svelte]

Well, one of the reasons I don’t own rentals today is that I helped my dad manage his – which means I got to clean up when deadbeat tenants moved out.

He eventually had enough and sold his rentals, and the lesson he said he learned: next time, buy nicer properties in nicer areas for rentals. People who can afford to pay those kinds of rents tend to give you fewer problems. Not always but usually.

Would love to hear other/opposing thoughts…

[svelte]

Well, one of the reasons I don’t own rentals today is that I helped my dad manage his – which means I got to clean up when deadbeat tenants moved out.

He eventually had enough and sold his rentals, and the lesson he said he learned: next time, buy nicer properties in nicer areas for rentals. People who can afford to pay those kinds of rents tend to give you fewer problems. Not always but usually.

Would love to hear other/opposing thoughts…

[svelte]

Well, one of the reasons I don’t own rentals today is that I helped my dad manage his – which means I got to clean up when deadbeat tenants moved out.

He eventually had enough and sold his rentals, and the lesson he said he learned: next time, buy nicer properties in nicer areas for rentals. People who can afford to pay those kinds of rents tend to give you fewer problems. Not always but usually.

Would love to hear other/opposing thoughts…

[svelte]

Well, one of the reasons I don’t own rentals today is that I helped my dad manage his – which means I got to clean up when deadbeat tenants moved out.

He eventually had enough and sold his rentals, and the lesson he said he learned: next time, buy nicer properties in nicer areas for rentals. People who can afford to pay those kinds of rents tend to give you fewer problems. Not always but usually.

Would love to hear other/opposing thoughts…

[garysears]

I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.

On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.

It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.

I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.

Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!

[garysears]

I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.

On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.

It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.

I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.

Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!

[garysears]

I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.

On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.

It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.

I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.

Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!

[garysears]

I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.

On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.

It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.

I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.

Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!

[garysears]

I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.

On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.

It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.

I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.

Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!

[NotCranky]

Nothing is a sure thing at this point. I won’t buy outside of the county.

I like SFR’s because rehabbing/adding on and trying to optimize cash flow is something I like to do.Incidental third parties that come with condos are a worry, and I don’t see the sweat equity potential as much, but it is not out of the question. They could certainly be easier to get going both on initial cost, work and maintenance than detached fixers.

I am thinking about one of these scenarios or a combination of them:

1) The next most likely step will be a condo or fixer house with an eye towards renting them out for 15-20 years and then either,letting my kids use it, have it, or buy it from me… or moving into at some distant future time.

2) Also might buy a house closer to town to live in sooner rather than later and rent one of the houses here in the boonies out and keep the smaller one for part-time living.

3)Maybe go in with a partner and build a small collection of rehabs, then hold and split it some years in the future.

[NotCranky]

Nothing is a sure thing at this point. I won’t buy outside of the county.

I like SFR’s because rehabbing/adding on and trying to optimize cash flow is something I like to do.Incidental third parties that come with condos are a worry, and I don’t see the sweat equity potential as much, but it is not out of the question. They could certainly be easier to get going both on initial cost, work and maintenance than detached fixers.

I am thinking about one of these scenarios or a combination of them:

1) The next most likely step will be a condo or fixer house with an eye towards renting them out for 15-20 years and then either,letting my kids use it, have it, or buy it from me… or moving into at some distant future time.

2) Also might buy a house closer to town to live in sooner rather than later and rent one of the houses here in the boonies out and keep the smaller one for part-time living.

3)Maybe go in with a partner and build a small collection of rehabs, then hold and split it some years in the future.

[NotCranky]

Nothing is a sure thing at this point. I won’t buy outside of the county.

I like SFR’s because rehabbing/adding on and trying to optimize cash flow is something I like to do.Incidental third parties that come with condos are a worry, and I don’t see the sweat equity potential as much, but it is not out of the question. They could certainly be easier to get going both on initial cost, work and maintenance than detached fixers.

I am thinking about one of these scenarios or a combination of them:

1) The next most likely step will be a condo or fixer house with an eye towards renting them out for 15-20 years and then either,letting my kids use it, have it, or buy it from me… or moving into at some distant future time.

2) Also might buy a house closer to town to live in sooner rather than later and rent one of the houses here in the boonies out and keep the smaller one for part-time living.

3)Maybe go in with a partner and build a small collection of rehabs, then hold and split it some years in the future.

[NotCranky]

Nothing is a sure thing at this point. I won’t buy outside of the county.

I like SFR’s because rehabbing/adding on and trying to optimize cash flow is something I like to do.Incidental third parties that come with condos are a worry, and I don’t see the sweat equity potential as much, but it is not out of the question. They could certainly be easier to get going both on initial cost, work and maintenance than detached fixers.

I am thinking about one of these scenarios or a combination of them:

1) The next most likely step will be a condo or fixer house with an eye towards renting them out for 15-20 years and then either,letting my kids use it, have it, or buy it from me… or moving into at some distant future time.

2) Also might buy a house closer to town to live in sooner rather than later and rent one of the houses here in the boonies out and keep the smaller one for part-time living.

3)Maybe go in with a partner and build a small collection of rehabs, then hold and split it some years in the future.

[Author]

Posts