The Hemet - San Jacinto Valley has recently been hit very hard with foreclosures and as a result there are some great REO properties available for the savvy investor to buy in Hemet CA.
I have been blessed, because I have been able to attract multiple investors from outside our area to find me to help them find the best real estate deals in all of Hemet.
When I initially interview my prospective new real estate investor clients, I of course want to find out their motivation, their exit strategy and of course their opinions of what makes a great investment property.
It appears that the one common theme every investor in today's market wants is the nice home in a nice neighborhood. Although there is nothing wrong with nice homes or nice neighborhoods, I do not believe they always make the best choice for rental investment properties.
In my often outside the box opinion, I believe the BEST investment opportunities are available in the older parts of town that have already started to turn into a not so nice neighborhood.
In both Hemet and San Jacinto, the older areas of town - near the down town municipal areas are the parts of town that have become the least desirable, with all of the new construction our area has seen in the past several years.
For one, I can tell you the older homes are typically much better built than the 'assembly line' homes that have been built here in Hemet and San Jacinto over the past 30 years.
Another advantage to buying in the older and rougher part of Hemet and San Jacinto is that you no longer have to lose sleep that the neighborhood is going downhill - ‘cause it's already there!
We all know that a good neighborhood can turn into a worse neighborhood and by the same argument a bad neighborhood can get better. When buying Hemet investment property in a bad neighborhood, the price will reflect the current market conditions so knowing that there is room for improvement is a good thing. (If you buy multiple homes in the same bad neighborhood then you can have even more of a positive impact in turning the neighborhood around.)
Bad neighborhood rental units usually get better cash flow than the nice home in the nice neighborhood. There is a larger pool of renters in the poorer neighborhoods and they will typically stay in the property for a longer period of time. Those who rent in the nice neighborhoods will usually not stay in the same place as long and of course there are fewer families looking to rent in the nice neighborhoods - if they can afford your rent they can probably afford to buy.
If you are a consciences landlord who takes good care of your rental units then it will be easy for you to keep your place looking better than anything else in the neighborhood. Most investors in the older parts of Hemet or San Jacinto do not take care of the appearance of their units. This will only make you and your units look that much better.. If you continue to maintain your units your units will be much easier to rent and you should even be able to rent them for a bit more than the competition, which you will leave in the dust.
The property tax rate in the older sections of town will always be the lowest, with rates hovering around 1.03% while new construction tracts typically have a 2% property tax, when combined with the Mello-Roos and other Special Assessments.
Another huge advantage to buying the older, smaller and less expensive units in the rougher parts of Hemet and San Jacinto is that you can get more units for your money and not have all of your eggs in one basket.
If you have $500,000 to invest in the Hemet rental market, you may end up with one or two nice homes in the nice neighborhoods...or you might end up with 3 or 4 homes in the older part of Hemet. One vacancy out of four is no where near as upsetting to your cash flow and financial plans as one vacancy our of one - that must be rented for more money to a prospect from a smaller pool of eligible renters. Drive around the nice neighborhoods and see how many ‘For Rent' signs are there month after month...now drive around the older parts of town and see how long those signs stay in place.
There are of course some excellent real estate investment opportunities in the newer tracts of Hemet and San Jacinto; it's just that if you are serious about long-term investment opportunities it just may be worth your while to allow me to show you some of the gems we have in old home inventory.
Until Next Time, Have a Blessed Day,
John Occhi, Hemet CA REALTOR®
Mission Grove Realty
Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner please call (951-443-6259) for your free copy.
This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.
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