INVESTMENT: Would you buy two 150k properties with higher rents in Tustin, or one 300k property in Irvine?

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[quote author="SoCal78" date=1251792463]I looked up about half of them from his list and didn't have any trouble except with some when trying to search unit numbers. </blockquote>


Those are exactly the ones that made me throw my hands up because they DON'T EXIST. If they did, they'd show up on Redfin or Zillow because they would have a tax record on file with the county.
 
[quote author="no_vaseline" date=1251789645][quote author="Geotpf" date=1251778778]I've mentioned this before-the Riverside house I now live in cost me $150k and I am positive I could get $1,500 a month or more if I rented it out. And I don't even live very close to the real rental property cash cow here, UCR. The rent to purchase price ratio is even better than that close to the university.</blockquote>


With three months of vacancy a year? I bet you can get $1500 too.



If you can't post a link with an address, from now on it doesn't exist. Back up your work people. I went to school more than 20 years ago, and if you want to prove a data point, please show a cite.



I said please. If you make a point going forward without a cite, you'll get pictures. You don't want pictures from me.



Virtually none of Newport Renter's cites are valid. So far, I have no results for



15500 Tustin Village Way 65

1550 Tustin Village Way 19

15500 Tustin Village Way 113



and incomplete results for:



15500 Tustin Village Way 10



on his list of cites, I come up 100% bullshit so far - therefore, he is either 1. crazy 2. lying 3. trolling.



You pick.</blockquote>


I'd rather remain semi-anonymous, so I won't post my address. I also believe I got an above-average deal on the house-I lucked out a bit. But a quick flip through Craigslist shows that people are asking up to $2,350 a month for four bedroom houses in Riverside, with prices between $1,500-2,000 being common. Now, those are asking prices, of course, and some of it is neighborhood-dependent. But there are 36 non-short sale, non-under contract 4 bedroom houses for sale on Redfin in Riverside right now for less than $200k, and 14 less than $150k.



It's very doable, IMHO, but you have to do it right. A four bedroom house for $200k or less near UCR (not a very big neighborhood) would be a great rental. I see five near UCR that sold for less than that in the last six months:



<a href="http://www.redfin.com/CA/Riverside/640-Highlander-Dr-92507/home/5035379">640 Highlander</a>

<a href="http://www.redfin.com/CA/Riverside/1020-Minerva-Ct-92507/home/5033833">1020 Minerva</a>

<a href="http://www.redfin.com/CA/Riverside/3346-Santa-Cruz-Dr-92507/home/5036889">3346 Santa Cruz</a>

<a href="http://www.redfin.com/CA/Riverside/3410-Bahia-Pl-92507/home/5036794">3410 Bahia</a>

<a href="http://www.redfin.com/CA/Riverside/866-Spruce-St-92507/home/5035013">866 Spruce</a>



Now, Redfin treats a bank taking back a property as a sale, so I'm not 100% positive these aren't those. The Minerva one looks like a real sale, judging from the MLS history. The Santa Cruz property was listed on the MLS although the recorded sale might still just be the bank taking it back because the sale was recorded so quickly. The Highlander house wasn't listed on the MLS, so it might just be the bank taking it back, or a non-hands off transaction. The Bahia and Spruce houses look like real sales, plus both are five bedrooms and would rent for more.
 
[quote author="FairEconomist" date=1251844335]The HOA on the Redfin link was $240, which is reasonable for a old condo, although a substantial part of the rent (about 20%).</blockquote>


Properties with HOAs (or Mello Roos or other special taxes) do eat up quite a bit of the profit. The Riverside houses I listed don't have HOA fees and are old enough that they probably don't have Mello Roos or the like either.
 
[quote author="Geotpf" date=1251845556][quote author="FairEconomist" date=1251844335]The HOA on the Redfin link was $240, which is reasonable for a old condo, although a substantial part of the rent (about 20%).</blockquote>


Properties with HOAs (or Mello Roos or other special taxes) do eat up quite a bit of the profit. The Riverside houses I listed don't have HOA fees and are old enough that they probably don't have Mello Roos or the like either.</blockquote>


Since you mention UCR, do you think you would rent to college students? Have you ever been a landlord, and if you have, have you ever rented to college students?
 
[quote author="SoCal78" date=1251792463]I don't get why it's so surprising to see 40+ year old condos in that part of Tustin go for under $150k. I've been there... I'm not surprised.</blockquote>The ones on Lyon are even cheaper. And IIRC teens would attend Foothill High School with an API of 834.
 
[quote author="graphrix" date=1251855191][quote author="Geotpf" date=1251845556][quote author="FairEconomist" date=1251844335]The HOA on the Redfin link was $240, which is reasonable for a old condo, although a substantial part of the rent (about 20%).</blockquote>


Properties with HOAs (or Mello Roos or other special taxes) do eat up quite a bit of the profit. The Riverside houses I listed don't have HOA fees and are old enough that they probably don't have Mello Roos or the like either.</blockquote>


Since you mention UCR, do you think you would rent to college students? Have you ever been a landlord, and if you have, have you ever rented to college students?</blockquote>
I don't rent a condo to students (which according to NewSkip, has little to no maintenance)... but I rent a small home to them and cleaning, re-painting, steaming the carpets and fixing all the little nicks is a HUGE pain.



No matter how old or new or what type of home it is... dirt, wear and tear has a cost to remedy too.



So I would be hesitant to rent TWO places to college students... ONE is already way too much of a headache for me.
 
[quote author="no_vaseline" date=1251873369]Have you considered doing your Riverside SFR as a weekly vacation rental? You know, we're pretty close to Disneyland.</blockquote>


No way! Sought after vacation rentals are in Fullerton.
 
[quote author="irvine_home_owner" date=1251856219][quote author="graphrix" date=1251855191][quote author="Geotpf" date=1251845556][quote author="FairEconomist" date=1251844335]The HOA on the Redfin link was $240, which is reasonable for a old condo, although a substantial part of the rent (about 20%).</blockquote>


Properties with HOAs (or Mello Roos or other special taxes) do eat up quite a bit of the profit. The Riverside houses I listed don't have HOA fees and are old enough that they probably don't have Mello Roos or the like either.</blockquote>


Since you mention UCR, do you think you would rent to college students? Have you ever been a landlord, and if you have, have you ever rented to college students?</blockquote>
I don't rent a condo to students (which according to NewSkip, has little to no maintenance)... but I rent a small home to them and cleaning, re-painting, steaming the carpets and fixing all the little nicks is a HUGE pain.



No matter how old or new or what type of home it is... dirt, wear and tear has a cost to remedy too.



So I would be hesitant to rent TWO places to college students... ONE is already way too much of a headache for me.</blockquote>


I can imagine how that college rentals have more maintenance (and vacancies) than long term, stable tenants. It's likely that rentals in college areas have higher GRMs to make up for that, however.
 
[quote author="Geotpf" date=1251928565]I can imagine how that college rentals have more maintenance (and vacancies) than long term, stable tenants. It's likely that rentals in college areas have higher GRMs to make up for that, however.</blockquote>


The GRMs do not make up for it... EVER! This is why I asked you if you have ever been a landlord, because you would know that renting to college kids in a college town is about as smart as investing in pets.com. The GRMs never make up for the 3 months of vacancies you have per year plus the clean up costs. A good RE investor knows that the value of the GRM is nothing compared to the value of a quality long term tenant.
 
Renting to college students is fine as long as you know what is involved with the before/after. Knowing that they are not around during the summer, and the fact that homeowners dont really like to rent to college students, they can also pay a bit more. Just remember that they look at a unit based on the # and size of bedrooms more so than the size of common area such as living room.



Back to the subject, my relatives have a home in a nicer part of riverside near the airbase... 4BR SFR ~1900sqft, today's value ~$250k. The prior tenants paid $1800 after paying for lawn care. They have a management company looking for new tenant at the moment, and depending on what kind of leads they get and how fast it takes to get this home leased, it might be a good idea to look at riverside as investment potential...
 
One myth about renting to college students I would like to address:



There is no summer vacancy issue.



A 1-year lease is a 1-year lease and if they aren't around in the summer, they still have to pay the rent. For the 3 sets of students I've rented to in the past years, all of them were 1 or more year leases and at most, I've had a 15-day vacancy between them due to having to clean and prep the house. The one problem is that during the summer, if you happen to visit, you'll see people "living" there that weren't on the original lease but sometimes it's better to ignore that breach in order to get paid.



The biggest issue to me is that the house really does get trashed because 1. They don't clean and 2. They don't maintain.



It's easy enough to find student renters in a college town... just dealing with the headaches/issues/neighbor complaints makes it less desireable.
 
[quote author="irvine_home_owner" date=1252538597]One myth about renting to college students I would like to address:



There is no summer vacancy issue.



A 1-year lease is a 1-year lease and if they aren't around in the summer, they still have to pay the rent. For the 3 sets of students I've rented to in the past years, all of them were 1 or more year leases and at most, I've had a 15-day vacancy between them due to having to clean and prep the house. The one problem is that during the summer, if you happen to visit, you'll see people "living" there that weren't on the original lease but sometimes it's better to ignore that breach in order to get paid.



The biggest issue to me is that the house really does get trashed because 1. They don't clean and 2. They don't maintain.



It's easy enough to find student renters in a college town... just dealing with the headaches/issues/neighbor complaints makes it less desireable.</blockquote>


Loaded questions (but not pointed at you because I think you will see where I am going with this): You have had 3 sets of students over the past few years. How many years? What is the turnover like with students? How often do they renew the lease? How many years have you had your rental, and how many different tenants have you had? By what percentage have you increased the lease by when you have needed a new tenant (if you want to give specifics that would be awesome, but I understand if you don't)? What is the typical cost to clean up after a tenant leaves?



Let me know if I am getting too [strike]panda[/strike] personal on you, but I think you see how I am going to make a point here.
 
2 were 1-year leases and 1 was a 2-year lease.



Each year was at least 5% higher than the previous, but this year would be lower based on comparables (which goes to my opinion that rents are softening).



Clean-up costs varied but minimum was at least $400 for carpet cleaning, cleaning service, paint and maintenance issues. One particular group lost their entire deposit because they ruined flooring in an area of the house.



I always hated the in-between tenants because I would spend days/weeks getting the place ready for show. Luckily, one of the transitions was fairly quick as they rented right after the previous tenant but they seemed to be a bit on the shady side since they were so rushed to take the place. They always paid but after the move-out, it was evident that they didn't take care of the place very well and the neighbors had more complaints about them than any of the other groups.



I'll probably talk more about this later but I've grown tired of being a landlord... at least to students.
 
You would definitely need the resources to have these turned around quick after move out. Searching and coordinating contractors/cleaning/painters is a huge pain, as is coming on the weekend and volunteering your time to do your own work...
 
[quote author="USCTrojanCPA" date=1253532429]



Wow, even spammers don't think it's a hot idea renting to college kids. haha</blockquote>


They get better all the time don't they? Edit your post and pull that link out.
 
[quote author="USCTrojanCPA" date=1253532429]If I ever quote a spammer with a link in the post again, the next time graph sees me I give him permission to kick me in my nuts as hard as he can.</blockquote>


Quoted for posterity.
 
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