Just a few years ago during the "Bigger Fool" era of 2005/2006 ... do-it-yourself investors were picking up condos for $400,000 and renting them for $1,650 a month. We call it the "Bigger Fool" strategy because it only makes sense if some other "Bigger Fool" will pay you more than $400,000 you paid for a bad cash flow deal.
But finally, the numbers work in Orange County and its the reason investors are scooping up all the properties, while the first time homebuyer wonders why they can't get a house despite placing 10 full price offers.
Here's a great example. The Hills complex of Yorba Linda has about a dozen short sale listings. Despite the headache, short sales are a great option for the patient buyer.
The median price for a 2 bedroom condo is $230,000. The median rents for the same condo this year are $1,650. The tax rate is 1.3%, HOA dues are $305. Based on my calculations, this investment not only positive cash flows, but also has a return on investment of 8.1% BEFORE appreciation.
Let's assume a 3% annual appreciation rate ... in 20 years, this investment will be worth $415,406. Not interested in paying taxes on your gain? Keep it, exchange it or move into it for 2 years ... there are many tax savings strategies.
If you've been thinking about investing, it's time.
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCBankDeals.com
Direct: 714 276-7006
Fax: 714 917-2293
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Wow Nancy this is a great blog!! Very informative. I wish I had some extra cash to purchase one of these myself. I guess I need to work harder. :) Thank you for sharing this info. I have a lot of friends in Orange County now I know who I can contact when they need real estate help.