Irvine Condo Investment with HOA

[eyephone]

With mortgage rates so low, putting that $200k into it doesn't seem the best use.

Invest it into qwertycalves.com instead.

I would really want to know some good cities to invest in considering all properties are at a very high now, i am not sure if i will opt for mutual stocks/bonds or bluff it all in the dangerous share market where i have zero experience and expertise.

Wait and see approach. It's election time.

 

[lnc]

With mortgage rates so low, putting that $200k into it doesn't seem the best use.

Invest it into qwertycalves.com instead.

I would really want to know some good cities to invest in considering all properties are at a very high now, i am not sure if i will opt for mutual stocks/bonds or bluff it all in the dangerous share market where i have zero experience and expertise.

Johns Creek. 

 

[momopi]

Dream why do you pay both installments of Property Tax + Mello Roos 2 months before the first installment is even due.  Who does that!?  OC treasurer loves you, I'm sure.

Yes i think they sure do love me after i also paid the supplemental tax bill i just got. My reason of doing it is to get rid of all these crazy bills as soon as i can, delaying it is not going to change the amount, will only add to my hassles. I have also made the HOA guys richer by paying them years worth of stuff in advance, so...hoping none of this backfires.

I'd suggest setting up escrow account for property taxes and insurance, then monthly auto pay for mortgage and HOA.

Some earthquake insurance must be paid in full when due and your insurance company cannot allow monthly payments.  But if it's rolled into your mortgage escrow account then you can break it down to monthly payments that way.

I know many people do not recommend this because they prefer to hold on to their cash, but I'm lazy and this is my way of making it simple to calculate monthly cash flow.  Some investors don't even like insurance but I seem to bump into tenants who flood the toilet and cause $4,000 in cleaning/restoration cost.

Irvine is not a good city for cash flow positive investments.  You'd have better luck looking along I-15 and East in CA.  However, prices are volatile there so I'd only buy in RE down cycle.  If it was me, I'd bank the cash and wait for prices to come down.

 

[hello]

Dream16.  I know bangbros calculated 9k loss a year but I recalculated with my spreadsheet because some costs factors that affect NOI were not included.

I use some assumptions which you can see below, which you can adjust for yourself by simply adding or subtracting the difference based on what you feel is appropriate.

Purchase price: 550K
Downpayment: 20% (110K)
30 year fixed at: 3.5%
Monthly Rent: $2750
Vacancy rate: 5% (although it took you over 2 months i set it for 2.5 weeks)
Property taxes: roughly 6k/yr
MR: 8800/yr
Insurance: 600/yr
HOA: 3780/yr
Property management: 8% ( I recall you saying you were out of state)
Cap Ex/Maintenance: 2000/yr

considering the info you provided and some assumptions like vacancy/cap-ex/maintenance, you have a negative cash flow of 16,000 a year.  cash on cash of negative 13.4% and total ROI of negative 6.3%.


These are really really bad numbers and you should STRONGLY consider selling.  Im sure some realtors would be happy to help you...

 

[House_Hunting]

@dream16 - are you sure you want to pay off 200k down in principal with the gift money?  What is your rate on the property? 3.75% - you don't think you can make $7,500 (200k x 3.75%) in one year in the stock market?

Cash is king, you can take that 200k and leverage into another investment property.

I agree, cash is KING. Both the housing market and stock market are overheated. One hiccup in the economy and you will see both home and stock prices falling from their highs. I would gather as much cash as you can and invest wisely when the time comes. In my personal opinion "the time" is not too far off.

 

[YellowFever]

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[eyephone]

My calculations were based on BEST scenario possible.  Although we know that never exists.

Best scenario being:

1) tenant never loses his job, makes all payments on time

2) nothing ever breaks in the house, nothing expensive that is. (stove,water heater, washer/dryer, etc.)

3) home does not depreciate and continues to appreciate

4) landlord does not lose his job



Also, you should recalculate again with 56% LTV ratio.  he plans to drop $200k into the principal paydown to reduce his mortgage payment in hopes of mitigating the loss.  But I think it's still futile at this point. 

Kind of makes me wonder though.  A buddy of mine and his 2 other buddies are renting a larger 2000+ sq ft. SFH in Portola Springs.  So not sure how that owner is coming out on top either.

You have to agree dropping an additional $200k is not a good idea in the 2 bedroom tower @ PS.

 

[zubs]

I thought putting 200,000 into the mortgage only shortens the re-payment period (30 yr mortgage becomes 24 yrs).  It doesn't make the monthly nut any less.

 

[eyephone]

I thought putting 200,000 into the mortgage only shortens the re-payment period (30 yr mortgage becomes 24 yrs).  It doesn't make the monthly nut any less.

You are correct. He would have to refi to get the monthly payment less with the additional $200. But who knows what the interest rate will be for a 30 yr fixed. I'm not sure if he considered an arm.

 

[YellowFever]

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[YellowFever]

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[eyephone]

I thought putting 200,000 into the mortgage only shortens the re-payment period (30 yr mortgage becomes 24 yrs).  It doesn't make the monthly nut any less.

that's what i meant.. i think he will refinance it (another 30 year) dropping the $200k. 

Seems to me PS is such a poor rental investment given its high MR/HOA.  Easier to take that $200k, buy the 4 stocks at $50k a piece: Tesla, Google, Amazon, Apple.  I guarantee after 5 years, he'll still come out on top.  Tesla for the higher risk/reward.  Google for the steady.  Amazon for the growth and stability.  Apple, well that's apple.  That's what I called a diversified portfolio  ;D

You call that diversified? Seems like same sector.

 

[SoclosetoIrvine]

Dream16, you want an investment home?  I'm being serious.  You should buy this unit and sell your portola home now:
https://www.redfin.com/CA/Irvine/96-Golden-Glen-St-92604/unit-4/home/5329753

You will come out on top.  $460k, (you can negotiate it down more) no mello roos.  $92k down payment.  Low tax rate, even with $325 HOA, your monthly will be: $2,351.  It's still a 2 bed/2bath.

PLUS... I guarantee you, this will have ZERO problems renting.  Why?  Because it's next to 99 Ranch Plaza...where all the anchor baby momma's congregate.  Remember, location location location.

Where did you get $2351 from? Just curious
Principal and interest is at $1700 (assuming investment mortgage rate, I low end at 4.25% at 25% down
$456 property tax a month (from Redfin) will be more as selling price is higher than before
325 hoa
$80 forinsurance

= $2560  already

Not including if you wanted any warranty on items or accounting for vacancy

And it's $115k down for 25% investment

I haven't done much research there but will they get $2600/month for 1000 sq feet?

The other negative I don't like is its built in 1970 so it's already almost 46-50 years old already so there's bound to be things breaking down/renovation needed in a few years

 

[collected]

There are a ton of Irvine apartments (From Irvine Company) that are relatively new, have pools, gyms, and tennis courts that go for under $2,000 for a 2 bedroom. 

If you could buy a home and immediately make enough in rent to pay the mortgage, property tax, insurance, and hoa then people would keep buying homes and renting them out until they aren't able to do that anymore.  The real money is made in the future when rents and home prices are higher.  Where will rents and home prices be in 10-20 years?

 

[usctrojancpa]

There are a ton of Irvine apartments (From Irvine Company) that are relatively new, have pools, gyms, and tennis courts that go for under $2,000 for a 2 bedroom. 

If you could buy a home and immediately make enough in rent to pay the mortgage, property tax, insurance, and hoa then people would keep buying homes and renting them out until they aren't able to do that anymore.  The real money is made in the future when rents and home prices are higher.  Where will rents and home prices be in 10-20 years?

No way you are finding a 2 bedroom apartment for rent in Irvine today for under $2,000/mo.  One bedrooms are getting close to $2,000/mo now. 

 

[usctrojancpa]

Dream16, you want an investment home?  I'm being serious.  You should buy this unit and sell your portola home now:
https://www.redfin.com/CA/Irvine/96-Golden-Glen-St-92604/unit-4/home/5329753

You will come out on top.  $460k, (you can negotiate it down more) no mello roos.  $92k down payment.  Low tax rate, even with $325 HOA, your monthly will be: $2,351.  It's still a 2 bed/2bath.

PLUS... I guarantee you, this will have ZERO problems renting.  Why?  Because it's next to 99 Ranch Plaza...where all the anchor baby momma's congregate.  Remember, location location location.

Where did you get $2351 from? Just curious
Principal and interest is at $1700 (assuming investment mortgage rate, I low end at 4.25% at 25% down
$456 property tax a month (from Redfin) will be more as selling price is higher than before
325 hoa
$80 forinsurance

= $2560  already

Not including if you wanted any warranty on items or accounting for vacancy

And it's $115k down for 25% investment

I haven't done much research there but will they get $2600/month for 1000 sq feet?

The other negative I don't like is its built in 1970 so it's already almost 46-50 years old already so there's bound to be things breaking down/renovation needed in a few years

You can get a 3.75% 30-year fixed for an investment property loan today.  And your insurance is way high, I pay $800/year for a 2,500sf detached home.  For an attached condo you'll just need walls-in betterment coverage which should be like $40/mo.  Property tax will be just under $400/mo since there's no Mello Roos on that condo.

The best bet is to buy a 3+ bedroom property to rent so you aren't competing against apartments and opens you up to a bigger rental pool and buyer pool when it's time to sell.

 

[YellowFever]

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[eyephone]

My interest rate for that rental was set at 3.25%.  The assumption is that you own it as primary residence for 1 year (per the agreement of most direct lenders) before you can rent it.  Why would anyone pay 4.75% for rental property these days is absolutely absurd and mind boggling.

Everyone should be taking advantage of the primary residence loan rate like me...then live in it (or atleast pretend to live in it) and then rent it out.  In the case of dream16, that is what he was doing.  It was his principal residence for some time before he moved to GP. 

Come on...there are ways to "muck" with the paper work. 

I thought dream16 lives and works in Silicon Valley. His KB home is an investment property. (Correct me if I'm wrong. There's too many back and forth,  and many threads. Lost in translation may happen)

 

[YellowFever]

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[eyephone]

My interest rate for that rental was set at 3.25%.  The assumption is that you own it as primary residence for 1 year (per the agreement of most direct lenders) before you can rent it.  Why would anyone pay 4.75% for rental property these days is absolutely absurd and mind boggling.

Everyone should be taking advantage of the primary residence loan rate like me...then live in it (or atleast pretend to live in it) and then rent it out.  In the case of dream16, that is what he was doing.  It was his principal residence for some time before he moved to GP. 

Come on...there are ways to "muck" with the paper work. 

I thought dream16 lives and works in Silicon Valley. His KB home is an investment property. (Correct me if I'm wrong. There's too many back and forth,  and many threads. Lost in translation may happen)

Read his first page posts my friend. 

"Also, in my case, it was purchased as a dual intent (both primary with flexibility to rent it out)"

1. You said he moves to GP. When was this?
2. Dual intent? He works in the Bay Area. Unless he can get another job quick as a flick of a switch, this should be considered as an investment property.