Rental Market in Irvine

[Irvine Seeker]

Doesn't 401k count as reserves?  At least 60% of it that is.

USCTrojanCPA is right that every lender is different.  I don't know if it's comforting to know or should scare me that USCTrojan is also having difficult time getting all of his income counted and writing LOEs left and right.

My case, even with 60% of 401k was well more than 2 year worth of PITI+HOA of what I was trying to get approved and still had tough time convincing the lenders.  The numbers don't lie and it was a simple math but somehow these lenders, primarily the underwriters had hard time understanding the cash reserve calculation.  Fortunately, I got mine finally approved from an independent loan mortgage company which I'll elaborate later after we get the keys and sign all docs.

Unless your loan application is straight forward, very simple, less work and sure profit for the lenders (especially big banks), expect the long delays, multiple requests for same information, disregarding your input and explanation, many many LOEs that don't get read by lenders promptly....

I'm probably not the best example to use as I joke with the my lenders saying...."I hope the underwriters' heads don't explode when they get my file because I'm more complex than 3 borrowers put into 1."  haha  I think it shows how things have changed since the easy days of lending.  Today underwriters are very thorough and it's all about CYA for them because if loans come back they lose their jobs. 

Here was the best LEO I had to provide...it was when they were looking at all my payments going out for unrecorded debt (not on my credit report) and they see a $75 monthly ACH going out of my account to The Force Realty (my broker).  So I explain in a letter than the $75 is to my broker and is a my E&O/hanging license monthly fee which is located on a specific line of my Schedule C in my tax return and to look at the commission ACHs coming in (also from The Force Realty).  The underwriter then requests a letter from my broker that what I said was true and that I do not have any kind of loan to him.  Thankfully my lender spoke to the underwriting manager and made sure the underwriter was good with my explanation and that I didn't need a letter from my broker.

I had to write LOEs for $24.95 monthly payment for my filter water, regular donation to my church, $65 for lawn care that I was paying for my landlord and getting reimbursed, $1000 deposit shown up on my checking and another $2500 deposit randomly...  This is all for getting a jumbo conventional loan...

 

[SoclosetoIrvine]

I know BR (Lake forest) is no Irvine in terms of Rental Market as we don't have the prestigious Irvine Schools, but BR has been doing really well in the Rental Market as well...When I listed my investment property there, we got 5 offers within 3 days, the final $100 over asking price as well as 3 month rent in advance.  The applicants all listed having difficulty obtaining a mortgage as a reason for renting...lots being not having enough reserves. 

I got one of the smaller houses in BR (a 4 bedroom) and I was able to rent it out for $3400-$3500 for reference and it's not even in Irvine.  I net $100/month after everything (p&I/taxes/insurance/home warranty/HOA) so it's been good for far and hope it keeps up until it's paid off

Wow, so you are a rockstar in here, nice to hear your success story, what is "BR"? Since Lake Forest is super close to IR, i might invest there now as well.

Idk about this guy.

I apologize in advance if I came off like I was "showing off" or being a rockstar...People here have been extremely helpful in the past year I've been here so I was just posting about my exact experience in hopes that it would helpful for someone.  I am no means trying to get anyone to "invest" in baker ranch...

$100/month profit in reality is nothing at all (might actually be considered bad by some here).  Most people here have crazy rental portfolio of investment properties (check out USCTrojanCPA, that guy's is insane).  I'm just trying to absorb lots of the info I've received and increase my portfolio one by one...everything is a learning experience

 

[eyephone]

I know BR (Lake forest) is no Irvine in terms of Rental Market as we don't have the prestigious Irvine Schools, but BR has been doing really well in the Rental Market as well...When I listed my investment property there, we got 5 offers within 3 days, the final $100 over asking price as well as 3 month rent in advance.  The applicants all listed having difficulty obtaining a mortgage as a reason for renting...lots being not having enough reserves. 

I got one of the smaller houses in BR (a 4 bedroom) and I was able to rent it out for $3400-$3500 for reference and it's not even in Irvine.  I net $100/month after everything (p&I/taxes/insurance/home warranty/HOA) so it's been good for far and hope it keeps up until it's paid off

Wow, so you are a rockstar in here, nice to hear your success story, what is "BR"? Since Lake Forest is super close to IR, i might invest there now as well.

Idk about this guy.

I apologize in advance if I came off like I was "showing off" or being a rockstar...People here have been extremely helpful in the past year I've been here so I was just posting about my exact experience in hopes that it would helpful for someone.  I am no means trying to get anyone to "invest" in baker ranch...

$100/month profit in reality is nothing at all (might actually be considered bad by some here).  Most people here have crazy rental portfolio of investment properties (check out USCTrojanCPA, that guy's is insane).  I'm just trying to absorb lots of the info I've received and increase my portfolio one by one...everything is a learning experience

Right now your a rockstar. I can imagine if you said you had several hundred in profits, he might call you a Real Estate Tycoon. 

 

[dream16]

I know BR (Lake forest) is no Irvine in terms of Rental Market as we don't have the prestigious Irvine Schools, but BR has been doing really well in the Rental Market as well...When I listed my investment property there, we got 5 offers within 3 days, the final $100 over asking price as well as 3 month rent in advance.  The applicants all listed having difficulty obtaining a mortgage as a reason for renting...lots being not having enough reserves. 

I got one of the smaller houses in BR (a 4 bedroom) and I was able to rent it out for $3400-$3500 for reference and it's not even in Irvine.  I net $100/month after everything (p&I/taxes/insurance/home warranty/HOA) so it's been good for far and hope it keeps up until it's paid off

Wow, so you are a rockstar in here, nice to hear your success story, what is "BR"? Since Lake Forest is super close to IR, i might invest there now as well.

Idk about this guy.

I apologize in advance if I came off like I was "showing off" or being a rockstar...People here have been extremely helpful in the past year I've been here so I was just posting about my exact experience in hopes that it would helpful for someone.  I am no means trying to get anyone to "invest" in baker ranch...

$100/month profit in reality is nothing at all (might actually be considered bad by some here).  Most people here have crazy rental portfolio of investment properties (check out USCTrojanCPA, that guy's is insane).  I'm just trying to absorb lots of the info I've received and increase my portfolio one by one...everything is a learning experience

Well, i am not trying to judge anyone by what they are investing in ? To each his own i guess, i am in my late 20s, so i am still trying to cope up with the MR & HOA shocks (did all my due diligence as much as i could before buying - running all the numbers & what not - 5 year records - rental months/seasons/days to rent etc.) I do have international investments where i have made quite the bang for the buck (sold for three times the price etc.)  by teaming it up with my parents, so i have no qualms in admitting that i am a rookie investor in the US Real Estate, but i have learnt my lessons from the very 1st investment and will try and improve upon my next move...and thank you all for the wonderful insights and points.

 

[eyephone]

I know BR (Lake forest) is no Irvine in terms of Rental Market as we don't have the prestigious Irvine Schools, but BR has been doing really well in the Rental Market as well...When I listed my investment property there, we got 5 offers within 3 days, the final $100 over asking price as well as 3 month rent in advance.  The applicants all listed having difficulty obtaining a mortgage as a reason for renting...lots being not having enough reserves. 

I got one of the smaller houses in BR (a 4 bedroom) and I was able to rent it out for $3400-$3500 for reference and it's not even in Irvine.  I net $100/month after everything (p&I/taxes/insurance/home warranty/HOA) so it's been good for far and hope it keeps up until it's paid off

Wow, so you are a rockstar in here, nice to hear your success story, what is "BR"? Since Lake Forest is super close to IR, i might invest there now as well.

Idk about this guy.

I apologize in advance if I came off like I was "showing off" or being a rockstar...People here have been extremely helpful in the past year I've been here so I was just posting about my exact experience in hopes that it would helpful for someone.  I am no means trying to get anyone to "invest" in baker ranch...

$100/month profit in reality is nothing at all (might actually be considered bad by some here).  Most people here have crazy rental portfolio of investment properties (check out USCTrojanCPA, that guy's is insane).  I'm just trying to absorb lots of the info I've received and increase my portfolio one by one...everything is a learning experience

Well, i am not trying to judge anyone by what they are investing in ? To each his own i guess, i am in my late 20s, so i am still trying to cope up with the MR & HOA shocks (did all my due diligence as much as i could before buying - running all the numbers & what not - 5 year records - rental months/seasons/days to rent etc.) I do have international investments where i have made quite the bang for the buck (sold for three times the price etc.)  by teaming it up with my parents, so i have no qualms in admitting that i am a rookie investor in the US Real Estate, but i have learnt my lessons from the very 1st investment and will try and improve upon my next move...and thank you all for the wonderful insights and points.

Also, I would like to point out: you should of found your tenant by yourself, instead out using an agent.

(Keep more money in your pocket)

#beGreedy

 

[dream16]

I know BR (Lake forest) is no Irvine in terms of Rental Market as we don't have the prestigious Irvine Schools, but BR has been doing really well in the Rental Market as well...When I listed my investment property there, we got 5 offers within 3 days, the final $100 over asking price as well as 3 month rent in advance.  The applicants all listed having difficulty obtaining a mortgage as a reason for renting...lots being not having enough reserves. 

I got one of the smaller houses in BR (a 4 bedroom) and I was able to rent it out for $3400-$3500 for reference and it's not even in Irvine.  I net $100/month after everything (p&I/taxes/insurance/home warranty/HOA) so it's been good for far and hope it keeps up until it's paid off

Wow, so you are a rockstar in here, nice to hear your success story, what is "BR"? Since Lake Forest is super close to IR, i might invest there now as well.

Idk about this guy.

I apologize in advance if I came off like I was "showing off" or being a rockstar...People here have been extremely helpful in the past year I've been here so I was just posting about my exact experience in hopes that it would helpful for someone.  I am no means trying to get anyone to "invest" in baker ranch...

$100/month profit in reality is nothing at all (might actually be considered bad by some here).  Most people here have crazy rental portfolio of investment properties (check out USCTrojanCPA, that guy's is insane).  I'm just trying to absorb lots of the info I've received and increase my portfolio one by one...everything is a learning experience

Well, i am not trying to judge anyone by what they are investing in ? To each his own i guess, i am in my late 20s, so i am still trying to cope up with the MR & HOA shocks (did all my due diligence as much as i could before buying - running all the numbers & what not - 5 year records - rental months/seasons/days to rent etc.) I do have international investments where i have made quite the bang for the buck (sold for three times the price etc.)  by teaming it up with my parents, so i have no qualms in admitting that i am a rookie investor in the US Real Estate, but i have learnt my lessons from the very 1st investment and will try and improve upon my next move...and thank you all for the wonderful insights and points.

Also, I would like to point out: you should of found your tenant by yourself, instead out using an agent.

(Keep more money in your pocket)

#beGreedy

I did do that and the potential tenant after giving his SSN and everything backed out at the last minute and as a result, i lost a month's rent and eventually i had to move out of OC and it was impossible for me to take a flight to show off my property every weekend, the lesson learnt the hard way is: to rather pay 5% than have a 2 month vacancy if you are not local

 

[hello]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

 

[usctrojancpa]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.  They may end up moving back to Irvine so they want to keep the home even if there's small cash flows losses due to vacancy and/or R&M.

 

[hello]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

 

[eyephone]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

His example seems like not a new home. So it doesn't meet the criteria of your question.

 

[hello]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

His example seems like not a new home. So it doesn't meet the criteria of your question.

Even if its not a new home, I doubt his numbers still add up.  If you notice, he later added a sentence to the end of his response saying "They may end up moving back to Irvine so they want to keep the home even if there's small cash flows losses due to vacancy and/or R&M." 
This is exactly what Im talking about.  People dont calculate vacancy and cap ex and maintenance.  Unfortunately these costs are usually not small.  One month vacancy in this case is $3750.  A new HVAC is several thousands of dollars.  These should be considered in rentals as investments. 

 

[woodburyowner]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

His example seems like not a new home. So it doesn't meet the criteria of your question.

Even if its not a new home, I doubt his numbers still add up.  If you notice, he later added a sentence to the end of his response saying "They may end up moving back to Irvine so they want to keep the home even if there's small cash flows losses due to vacancy and/or R&M." 
This is exactly what Im talking about.  People dont calculate vacancy and cap ex and maintenance.  Unfortunately these costs are usually not small.  One month vacancy in this case is $3750.  A new HVAC is several thousands of dollars.  These should be considered in rentals as investments. 

The other problem with this example is the loan was taken out as a primary residence loan and it was an ARM.  I would use a standard 30 yr fixed and an investment loan to do the comparison.

 

[usctrojancpa]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

Here you go...

$2,811.55 per month for mortgage
$58.33 per for insurance
$0 HOA
$812.50

Which is $3,682/mo and they are collecting $3,750/mo in rent.  Probably could have gotten $3,800/mo since I got them 5 applications within 1 week.

 

[usctrojancpa]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

His example seems like not a new home. So it doesn't meet the criteria of your question.

Even if its not a new home, I doubt his numbers still add up.  If you notice, he later added a sentence to the end of his response saying "They may end up moving back to Irvine so they want to keep the home even if there's small cash flows losses due to vacancy and/or R&M." 
This is exactly what Im talking about.  People dont calculate vacancy and cap ex and maintenance.  Unfortunately these costs are usually not small.  One month vacancy in this case is $3750.  A new HVAC is several thousands of dollars.  These should be considered in rentals as investments. 

The other problem with this example is the loan was taken out as a primary residence loan and it was an ARM.  I would use a standard 30 yr fixed and an investment loan to do the comparison.

Again, their intent was to occupy the home as a primary residence until a new job opportunity came up literally a few days after closing.  But you can see how just putting down 20% and their cost to own is below the rent price.  The home was fully renovated inside recently so there shouldn't be much R&M for a bit. 

 

[hello]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

Here you go...

$2,811.55 per month for mortgage
$58.33 per for insurance
$0 HOA
$812.50

Which is $3,682/mo and they are collecting $3,750/mo in rent.  Probably could have gotten $3,800/mo since I got them 5 applications within 1 week.

Exactly!  You prove my point once again.  Where are your costs for vacancies?  What about Cap Ex costs?  What about maintenance.  Many seasoned investors would even consider calculating a PM fee into this as well. 

When a rental income only covers PITI, you really cant say it cash flows no matter how hard you spin it. 

 

[usctrojancpa]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

Here you go...

$2,811.55 per month for mortgage
$58.33 per for insurance
$0 HOA
$812.50

Which is $3,682/mo and they are collecting $3,750/mo in rent.  Probably could have gotten $3,800/mo since I got them 5 applications within 1 week.

Exactly!  You prove my point once again.  Where are your costs for vacancies?  What about Cap Ex costs?  What about maintenance.  Many seasoned investors would even consider calculating a PM fee into this as well. 

When a rental income only covers PITI, you really cant say it cash flows no matter how hard you spin it. 

Well they did get a tenant that wanted a 2-year lease and like I said the home was fully renovated in the past few years so I doubt they'll have any material R&M expenses in the near term (plus the home was built in 2000).  PMs are a waste of money (IMHO) if you live within an hour's drive to the property.  Their intent was to never rent it out, but things changed and now they'll be having someone paying down their mortgage at a good clip since their rate is so low.  Their carry costs are pretty much fixed for 7 years while rents will increase at least 3% per year.  Through the purchase they got a 1-year home warranty and it's likely that they might re-new it (around $600/yr). 

 

[hello]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

Here you go...

$2,811.55 per month for mortgage
$58.33 per for insurance
$0 HOA
$812.50

Which is $3,682/mo and they are collecting $3,750/mo in rent.  Probably could have gotten $3,800/mo since I got them 5 applications within 1 week.

Exactly!  You prove my point once again.  Where are your costs for vacancies?  What about Cap Ex costs?  What about maintenance.  Many seasoned investors would even consider calculating a PM fee into this as well. 

When a rental income only covers PITI, you really cant say it cash flows no matter how hard you spin it. 

Well they did get a tenant that wanted a 2-year lease and like I said the home was fully renovated in the past few years so I doubt they'll have any material R&M expenses in the near term (plus the home was built in 2000).  PMs are a waste of money (IMHO) if you live within an hour's drive to the property.  Their intent was to never rent it out, but things changed and now they'll be having someone paying down their mortgage at a good clip since their rate is so low.  Their carry costs are pretty much fixed for 7 years while rents will increase at least 3% per year.  Through the purchase they got a 1-year home warranty and it's likely that they might re-new it (around $600/yr).

Like I said before, most people think they can cash flow because they dont consider significant costs that affect their NOI.  It appears you are in that camp.  Your own numbers have shown that the cost of owning this house barely covers just the PITI and yet you are still trying to convince people this makes sense as a rental.  I think you will lose much credibility in this kind of thinking with anyone that knows better.

 

[eyephone]

This is entertaining.

#RentalDebate

 

[notTHEoc]

Many investors would consider the P paydown as part of their income, not counting as an expense against their returns. It looks better in that light. But agree you need to hold a rental long enough that transaction costs don't take away too much of your gains.

 

[shawnanicole]

If anyone is buying or recently has bought a new house for rental in Irvine, I am 100% sure they are not cash flowing well.  A lot of people can claim they cash flow because they put down big down payments, which we all know is a pointless as an real estate investment.  Sometimes people will claim good cash flow with 20-25% down because they do not calculate true costs of all expenses.  Its like these turnkey investments that people are selling all over the place now.  Almost none of them will properly calculate vacancy rates or Cap-Ex or other maintenance costs into their pro forma.  Anyone who has had rentals for some period of time will know that these are what truly eat into your NOI. 

I said this before and I will say it again, buying rentals in Irvine DO NOT make sense right now.  They did 4-5 years ago, but not now.  If you are buying "rentals" in Irvine right now, your only game is appreciation.  Good luck with that.

Not necessarily true...I recently rented out the West Irvine home that I sold to my client (they were going to occupy it but an employment opportunity came up and things changed) for $3,750/mo.  They put 20% with a 7-year ARM at 2.625% ($700k loan) and are slightly cash flow positive.  It helps that the home has no HOA and Mello Roos of only $1000/year.

I would love to see the exact numbers on that if you dont mind sharing...

Here you go...

$2,811.55 per month for mortgage
$58.33 per for insurance
$0 HOA
$812.50

Which is $3,682/mo and they are collecting $3,750/mo in rent.  Probably could have gotten $3,800/mo since I got them 5 applications within 1 week.

Exactly!  You prove my point once again.  Where are your costs for vacancies?  What about Cap Ex costs?  What about maintenance.  Many seasoned investors would even consider calculating a PM fee into this as well. 

When a rental income only covers PITI, you really cant say it cash flows no matter how hard you spin it.

What about the tax write off each year? The investor is having someone else pay down their principal while the property appreciates all while bringing tax write off benefits.  Sure it's a gamble with the tenant and repairs that may come up but such is life...