Home › Forums › Closed Forums › Buying and Selling RE › Where would you invest $500k in real estate?
- This topic has 19 replies, 11 voices, and was last updated 12 years, 3 months ago by
kcal09.
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March 2, 2012 at 4:52 PM #739176March 2, 2012 at 11:15 PM #739187
flyer
ParticipantOur immediate and extended family has owned investment properties in CA (San Diego, etc.) and other locations for 50+ years, but when I look at the numbers for friends, etc., who want to get into the game now, it really concerns me.
There are lots of good suggestions here, and to add my two cents, I’d suggest talking to someone you trust who is a pro, to get their take on your various options, and have them pencil things out for you.
I’d also be very, very careful–whatever you decide to do. Don’t jump into anything unless you are sure it will work for you long-term.
March 2, 2012 at 11:56 PM #739191Jazzman
ParticipantSo you are a cash buyer looking for good returns with some long term appreciation, and a retirement home? Cap rates in California are generally lower than many other parts of the country due to higher home values. Investors in the past relied on appreciating values, but the prognosis for that does not look good over the short to medium term. Managing rentals is a headache so if you want passive income you need to look for reputable property managers first, and decide on the demographic you feel comfortable with. That will determine your investment type, risk and returns. A simple rule of thumb is you want $1 in rent for every $100 invested. So you should be looking to achieve rental income of $5000 per month on your $500k invested. Then expect to pay away 50% of gross income on expenses. Single family homes in the $100k price range can just about achieve this but you will not find many in San Diego. Even multi units will be a challenge, unless you look in south central LA, Rialto, or places like Modesto. Single tenant triple net commercial RE offers good hassle free returns, but they come with a bigger price tag. Not sure the land suggestions above are serious.
March 3, 2012 at 8:23 AM #739218sdrealtor
ParticipantAgree with jazzman’s advice if you are looking solely for an investment. However, if you are looking for a future retirement home the numbers change. If you can find the right house at the right price today there are additional returns (joy of living in the right house and modest appreciation) that are difficult to quantify yet very real.
March 3, 2012 at 9:48 PM #739265kcal09
ParticipantWe are looking for a retirement home that can be rented out until we retire (in about 15 years). We like Scripps Ranch and La Jolla/UTC.
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