Rental Market in Irvine

[dream16]

Another thing I've noticed is how insane the Irvine Company apartment rentals are in terms of rates. In my area of interest, a 2000 sf 4 bedroom house with a driveway and nice backyard is the same rent as a tiny Irvine Company 3 bedroom 1400 sf townhouse with carpet everywhere, I mean, who rents these things, is it just for the small deposit? I understand maybe if you want to live in the middle of the action at The Village or The Park at Spectrum, and have no kids, but even there, I see lots of families with many kids, how do they squeeze in a two bedroom is beyond me.
So to all the private landlords in Irvine, a big thank you, keep buying them, so I can keep renting! I could not afford to buy the type of house I can afford to rent! A $4000 rental costs $1.3 million!!

I think thread went in many directions, but this right here may be the silver lining for those complaining about not being to break even in Irvine rental.  For a 3 bedroom, Irvine company has those 1000-1300 sq foot small apartments for 3200-3400 range right now, mostly in older neighborhoods with no attached garage with old carpet.  Assuming a conservative 2%-3% rate increase a year or around $100/year increase in rent, in about 3-5 years those same apartments will probably rent for 3600-3900/month at which point many of you with Irvine rentals may be able to get close to breaking even or even break even, especially since you can sell the newer communities/better amenities/larger sq foot/more privacy with attached garage at similar pricing as those apartments.  Who knows?  8)  #foreveroptimist

https://www.irvinecompanyapartments.com/search?type=adv&regionId=1&subRegionId=5&zipRadius=5&bedrooms=3&bathrooms=&

That's why I recommend for my clients to focus on 3-bedroom properties, whether they be in Irvine or not.  That is mainly because there are so few 3-bedroom apartments that will compete against your rental and opens you up to a bigger renter pool and buyer pool (down the line when you are looking to sell).

Would you still vouch for a 3 bedroom if the rental size is 1400 sq.ft? I am not sure if everyone would prefer tiny bedrooms, but on paper 3 sounds better than 2. 3 beds start renting around $3100, where-as 2 are capped at $2950 for now.

Example:https://www.zillow.com/homedetails/245-Cultivate-Irvine-CA-92618/2100893570_zpid/

Also, in my experience, having everything on ground floor & a non-tandem garage = win [ i lost on both aspects in my 1st purchase haha ] and bigger square feet [1750+]

 

[potsticker]

Regarding commission, I understand, so on a $4000 rental, 5% is $2400 commission, which is $1200 per agent, so if there is only one agent involved, is the commission more like 3%? That would be $1400. Still a $200 incentive for that dual agent to make all those other applications disappear.
I'm just trying to understand, because I think that especially when purchasing, not involving a second agent makes such a big difference.
What I don't understand is, and no offense to anyone in the field, why do buyers still use a buyer's agent? With today's technology, my middle schooler can figure out how to get in touch with the seller's agent, or how to locate homes for sale, do comps etc. Besides, doesn't the seller's agent have first-hand info on a house, that you wouldn't want to get diluted by passing through a second agent?

Well, its always easy to second-guess someone elses job to be easy and i did try to RENT my rental by myself in the dreams of saving $1600 something in commission, i did find tenants but got BURNT OUT by them as they ran away at the last minute (after providing SSN etc.) and i lost 30 days of rent, lessons learnt: if you are NOT local, there's no point in making your life hell by trying to save agents commission on rentals. I learnt it the hard way

Did you get an up-front payment from your tenant to hold the unit? For my rental, I usually require half the deposit and a signed lease (to start 2, 3, etc weeks from now) to take the property off the market. The reservation fee is non-refundable if they bail - but can be applied to their deposit upon move-in. These terms are written into the lease agreement.

 

[potsticker]

Another thing I've noticed is how insane the Irvine Company apartment rentals are in terms of rates. In my area of interest, a 2000 sf 4 bedroom house with a driveway and nice backyard is the same rent as a tiny Irvine Company 3 bedroom 1400 sf townhouse with carpet everywhere, I mean, who rents these things, is it just for the small deposit? I understand maybe if you want to live in the middle of the action at The Village or The Park at Spectrum, and have no kids, but even there, I see lots of families with many kids, how do they squeeze in a two bedroom is beyond me.
So to all the private landlords in Irvine, a big thank you, keep buying them, so I can keep renting! I could not afford to buy the type of house I can afford to rent! A $4000 rental costs $1.3 million!!

I think thread went in many directions, but this right here may be the silver lining for those complaining about not being to break even in Irvine rental.  For a 3 bedroom, Irvine company has those 1000-1300 sq foot small apartments for 3200-3400 range right now, mostly in older neighborhoods with no attached garage with old carpet.  Assuming a conservative 2%-3% rate increase a year or around $100/year increase in rent, in about 3-5 years those same apartments will probably rent for 3600-3900/month at which point many of you with Irvine rentals may be able to get close to breaking even or even break even, especially since you can sell the newer communities/better amenities/larger sq foot/more privacy with attached garage at similar pricing as those apartments.  Who knows?  8)  #foreveroptimist

https://www.irvinecompanyapartments.com/search?type=adv&regionId=1&subRegionId=5&zipRadius=5&bedrooms=3&bathrooms=&

That's why I recommend for my clients to focus on 3-bedroom properties, whether they be in Irvine or not.  That is mainly because there are so few 3-bedroom apartments that will compete against your rental and opens you up to a bigger renter pool and buyer pool (down the line when you are looking to sell).

Would you still vouch for a 3 bedroom if the rental size is 1400 sq.ft? I am not sure if everyone would prefer tiny bedrooms, but on paper 3 sounds better than 2. 3 beds start renting around $3100, where-as 2 are capped at $2950 for now.

Example:https://www.zillow.com/homedetails/245-Cultivate-Irvine-CA-92618/2100893570_zpid/

Also, in my experience, having everything on ground floor & a non-tandem garage = win [ i lost on both aspects in my 1st purchase haha ] and bigger square feet [1750+]

This sold for $640k this month. You'd still lose your shirt though...MR and HOA are ridiculous in Beacon Park.

 

[dream16]

Regarding commission, I understand, so on a $4000 rental, 5% is $2400 commission, which is $1200 per agent, so if there is only one agent involved, is the commission more like 3%? That would be $1400. Still a $200 incentive for that dual agent to make all those other applications disappear.
I'm just trying to understand, because I think that especially when purchasing, not involving a second agent makes such a big difference.
What I don't understand is, and no offense to anyone in the field, why do buyers still use a buyer's agent? With today's technology, my middle schooler can figure out how to get in touch with the seller's agent, or how to locate homes for sale, do comps etc. Besides, doesn't the seller's agent have first-hand info on a house, that you wouldn't want to get diluted by passing through a second agent?

Well, its always easy to second-guess someone elses job to be easy and i did try to RENT my rental by myself in the dreams of saving $1600 something in commission, i did find tenants but got BURNT OUT by them as they ran away at the last minute (after providing SSN etc.) and i lost 30 days of rent, lessons learnt: if you are NOT local, there's no point in making your life hell by trying to save agents commission on rentals. I learnt it the hard way

Did you get an up-front payment from your tenant to hold the unit? For my rental, I usually require half the deposit and a signed lease (to start 2, 3, etc weeks from now) to take the property off the market. The reservation fee is non-refundable if they bail - but can be applied to their deposit upon move-in. These terms are written into the lease agreement.

No, i went on with their face value and blindly trusted them, hence got burnt out, so its lesson learnt in my rental 101 now lol

 

[eyephone]

Rental property is not for everyone.

 

[SoclosetoIrvine]

Like I posted before, always have an experienced agent help you with finding a tenant.  They know the in's and out's of these contracts and let's be honest...the contract can make or break you.  My first cypress village investment, I had a family friend who had a full time job in the tech world part time sometimes as a realtor to get commissions.  Thought I could trust her since she was a family friend and she didn't want money to help us find a tenant (she had already gotten commission for signing the card when we purchased).  She didn't have access to MLS so we had to use Zillow/postlets/craigslist to find tenants.  We got burned once by someone who committed to renting it then backed out with no deposit so we lost a few days of showing there.  Even though we eventually found a good tenant, the contract itself had holes.  This time around we had a realtor do it and post it on MLS.  Worlds different.  They were great showing the home and negotiating for me and required the tenant to first make a non refundable deposit on the property to hold it, and required 3 months advance rent wired into account before move in.  Typically it's 5-6% of the total rent received and I think it's worth it.  I mentioned the contract having holes, for example 1 year contract vs a few days less than 1 year = different notice required to move out/change contract.  Our realtor put it at 2-3 days less than a year which lets us each party give 30 day notice only before move out.  Before my non agent friend put it at a year and thus we needed to give like 60-90 day notice.  That timing almost screwed up my 1031.  But yes, like "eyephone" said, rental property isn't for everyone and I like to think I've become a better landlord over time. 

 

[dream16]

Like I posted before, always have an experienced agent help you with finding a tenant.  They know the in's and out's of these contracts and let's be honest...the contract can make or break you.  My first cypress village investment, I had a family friend who had a full time job in the tech world part time sometimes as a realtor to get commissions.  Thought I could trust her since she was a family friend and she didn't want money to help us find a tenant (she had already gotten commission for signing the card when we purchased).  She didn't have access to MLS so we had to use Zillow/postlets/craigslist to find tenants.  We got burned once by someone who committed to renting it then backed out with no deposit so we lost a few days of showing there.  Even though we eventually found a good tenant, the contract itself had holes.  This time around we had a realtor do it and post it on MLS.  Worlds different.  They were great showing the home and negotiating for me and required the tenant to first make a non refundable deposit on the property to hold it, and required 3 months advance rent wired into account before move in.  Typically it's 5-6% of the total rent received and I think it's worth it.  I mentioned the contract having holes, for example 1 year contract vs a few days less than 1 year = different notice required to move out/change contract.  Our realtor put it at 2-3 days less than a year which lets us each party give 30 day notice only before move out.  Before my non agent friend put it at a year and thus we needed to give like 60-90 day notice.  That timing almost screwed up my 1031.  But yes, like "eyephone" said, rental property isn't for everyone and I like to think I've become a better landlord over time.

3 months rent in advance? Are you kidding me? This is not a third world country where it is a norm to ask for 3-6 months of advance rent, good for you that you got it. All my agent did was : put it up in MLS, did multiple showings, secured the contract - security deposit of 1 month - as a standard and that's it.

Now i will myself do a 1 page addendum, extending the same lease for another year to my tenants - hoping to increase the rent by 5%

Thanks about that 1031 point to keep the lease agreement for 2-3 days <1 year, however i wonder where in the contract or lease does it state that either the landlord or tenant can give a 30 day notice to evacuate the property? As per my understanding, once you are in a 1 year lease and you want to break it, there are consequences such as :

1. giving notice period
2. rental agent taking some portions of commission from tenant to rent it out again

 

[SoclosetoIrvine]

3 months rent in advance? Are you kidding me? This is not a third world country where it is a norm to ask for 3-6 months of advance rent, good for you that you got it. All my agent did was : put it up in MLS, did multiple showings, secured the contract - security deposit of 1 month - as a standard and that's it.

Now i will myself do a 1 page addendum, extending the same lease for another year to my tenants - hoping to increase the rent by 5%

Thanks about that 1031 point to keep the lease agreement for 2-3 days <1 year, however i wonder where in the contract or lease does it state that either the landlord or tenant can give a 30 day notice to evacuate the property? As per my understanding, once you are in a 1 year lease and you want to break it, there are consequences such as :

1. giving notice period
2. rental agent taking some portions of commission from tenant to rent it out again

Yes, from my experience.  Once you are in a 1 year lease or longer, it is a major hassle in California.  Typically, you are expected to fulfill your end of the lease unless you can prove some kind of negligence.  Also giving notice, since my original lease was a year or more, I was required to give 60 day notice at minimum and even so, I had a cut a deal with the tenant with a few days of free rent to get her approval to void the original contract.  When you sign a contract for a few days less than a year, California sees that as a month to month contract where either party can leave giving 30 day notice.  I would've saved a lot of hassle with that 60 day notice had I known better.  Your second point about realtor commission ... I've never heard of yet.

 

[peppy]

3 months rent in advance? Are you kidding me? This is not a third world country where it is a norm to ask for 3-6 months of advance rent, good for you that you got it. All my agent did was : put it up in MLS, did multiple showings, secured the contract - security deposit of 1 month - as a standard and that's it.

Now i will myself do a 1 page addendum, extending the same lease for another year to my tenants - hoping to increase the rent by 5%

Thanks about that 1031 point to keep the lease agreement for 2-3 days <1 year, however i wonder where in the contract or lease does it state that either the landlord or tenant can give a 30 day notice to evacuate the property? As per my understanding, once you are in a 1 year lease and you want to break it, there are consequences such as :

1. giving notice period
2. rental agent taking some portions of commission from tenant to rent it out again

Yes, from my experience.  Once you are in a 1 year lease or longer, it is a major hassle in California.  Typically, you are expected to fulfill your end of the lease unless you can prove some kind of negligence.  Also giving notice, since my original lease was a year or more, I was required to give 60 day notice at minimum and even so, I had a cut a deal with the tenant with a few days of free rent to get her approval to void the original contract.  When you sign a contract for a few days less than a year, California sees that as a month to month contract where either party can leave giving 30 day notice.  I would've saved a lot of hassle with that 60 day notice had I known better.  Your second point about realtor commission ... I've never heard of yet.

All that matters is length of stay. If you are on a month to month and stay longer than 1 years, the 1 year rules kick in (and you'll have to give 60 days notice; unless you are trying to sell the house then a different set of rules apply).

 

[SoclosetoIrvine]

3 months rent in advance? Are you kidding me? This is not a third world country where it is a norm to ask for 3-6 months of advance rent, good for you that you got it. All my agent did was : put it up in MLS, did multiple showings, secured the contract - security deposit of 1 month - as a standard and that's it.

Now i will myself do a 1 page addendum, extending the same lease for another year to my tenants - hoping to increase the rent by 5%

Thanks about that 1031 point to keep the lease agreement for 2-3 days <1 year, however i wonder where in the contract or lease does it state that either the landlord or tenant can give a 30 day notice to evacuate the property? As per my understanding, once you are in a 1 year lease and you want to break it, there are consequences such as :

1. giving notice period
2. rental agent taking some portions of commission from tenant to rent it out again

Yes, from my experience.  Once you are in a 1 year lease or longer, it is a major hassle in California.  Typically, you are expected to fulfill your end of the lease unless you can prove some kind of negligence.  Also giving notice, since my original lease was a year or more, I was required to give 60 day notice at minimum and even so, I had a cut a deal with the tenant with a few days of free rent to get her approval to void the original contract.  When you sign a contract for a few days less than a year, California sees that as a month to month contract where either party can leave giving 30 day notice.  I would've saved a lot of hassle with that 60 day notice had I known better.  Your second point about realtor commission ... I've never heard of yet.

All that matters is length of stay. If you are on a month to month and stay longer than 1 years, the 1 year rules kick in (and you'll have to give 60 days notice; unless you are trying to sell the house then a different set of rules apply).

This is great info.  So if you sign a month to month lease with a tenant and you are pass the 1 year rule (say the lease was over a few months ago), you still need 60 day notice to tenant everytime?  Does it go both ways that tenant needs to give you 60 day notice to move out too? Do you have any links that specifically mention that? 

Haven't been in that situation yet but would like to know in case our tenant stays over a year

 

[peppy]

3 months rent in advance? Are you kidding me? This is not a third world country where it is a norm to ask for 3-6 months of advance rent, good for you that you got it. All my agent did was : put it up in MLS, did multiple showings, secured the contract - security deposit of 1 month - as a standard and that's it.

Now i will myself do a 1 page addendum, extending the same lease for another year to my tenants - hoping to increase the rent by 5%

Thanks about that 1031 point to keep the lease agreement for 2-3 days <1 year, however i wonder where in the contract or lease does it state that either the landlord or tenant can give a 30 day notice to evacuate the property? As per my understanding, once you are in a 1 year lease and you want to break it, there are consequences such as :

1. giving notice period
2. rental agent taking some portions of commission from tenant to rent it out again

Yes, from my experience.  Once you are in a 1 year lease or longer, it is a major hassle in California.  Typically, you are expected to fulfill your end of the lease unless you can prove some kind of negligence.  Also giving notice, since my original lease was a year or more, I was required to give 60 day notice at minimum and even so, I had a cut a deal with the tenant with a few days of free rent to get her approval to void the original contract.  When you sign a contract for a few days less than a year, California sees that as a month to month contract where either party can leave giving 30 day notice.  I would've saved a lot of hassle with that 60 day notice had I known better.  Your second point about realtor commission ... I've never heard of yet.

All that matters is length of stay. If you are on a month to month and stay longer than 1 years, the 1 year rules kick in (and you'll have to give 60 days notice; unless you are trying to sell the house then a different set of rules apply).

This is great info.  So if you sign a month to month lease with a tenant and you are pass the 1 year rule (say the lease was over a few months ago), you still need 60 day notice to tenant everytime?  Does it go both ways that tenant needs to give you 60 day notice to move out too? Do you have any links that specifically mention that? 

Haven't been in that situation yet but would like to know in case our tenant stays over a year

Yes. Once they stay over a year landlord needs to give 60 days. Tenant needs to only give 30 days.

* Your landlord must give you 60 days advance written notice that the tenancy will end if you and every other tenant or resident have lived in the rental unit for a year or more

* You must give the landlord the same amount of notice as there are days between rent payments

http://www.dca.ca.gov/publications/landlordbook/moving-out.shtml

http://www.dca.ca.gov/publications/landlordbook/terminations.shtml

 

[rkp]

I am surprised that an agent advised a lease short a few days of a year.  It really is meaningless as peppy has noted. 

Also, your agent family friend should have used the standard CAR agreement.  If you don't have access to that, use the first tuesday free forms.  Both are very good lease documents.

Regarding the notice, 60 days is the law but the tenant can choose to move out earlier.  You might have to offer some compensation or they might do it out of the relationship that you have with them.  We send our tenants gifts during xmas, send a handyman for a few hours every year to help them with anything or do small paint updates, etc. 

 

[woodburyowner]

She didn't have access to MLS so we had to use Zillow/postlets/craigslist to find tenants. 

This is the biggest red flag ever.  The biggest advantage of using an agent is to get access to MLS. 

required 3 months advance rent wired into account before move in.

I would say in a normal situation, this is a bad strategy since most renters would run away from a deal like this. 

for example 1 year contract vs a few days less than 1 year = different notice required to move out/change contract.  Our realtor put it at 2-3 days less than a year which lets us each party give 30 day notice only before move out. 

This is not correct and peppy explained why.

That timing almost screwed up my 1031.

If you are selling the property, there is an exception to the 1 year/60 day rule so I don't think your 1031 would have been affected.

 

[shahshah]

Can anyone comment on the current rental market for 3 and 4 bed SFR this spring with regard to finding a place and rental costs I should expect in Irvine? With a family of 4, I'm thinking about buying but gotta rent again.

 

[usctrojancpa]

Can anyone comment on the current rental market for 3 and 4 bed SFR this spring with regard to finding a place and rental costs I should expect in Irvine? With a family of 4, I'm thinking about buying but gotta rent again.

The rental market definitely softens up a bit as you move to $3,500/mo and up on the lease payment.  Most renters (especially ones looking to buy in 1-2 years) will opt to rent a slightly smaller property than what they would ideally want in a home that they buy to save on rent.  That being said, if these larger 3-4 bedroom homes are priced right they will also rent out quickly. 

 

[shahshah]

Can anyone comment on the current rental market for 3 and 4 bed SFR this spring with regard to finding a place and rental costs I should expect in Irvine? With a family of 4, I'm thinking about buying but gotta rent again.

The rental market definitely softens up a bit as you move to $3,500/mo and up on the lease payment.  Most renters (especially ones looking to buy in 1-2 years) will opt to rent a slightly smaller property than what they would ideally want in a home that they buy to save on rent.  That being said, if these larger 3-4 bedroom homes are priced right they will also rent out quickly.

I wanted to buy in the next few years but renting makes the most sense at the moment. I could squeeze it together sooner but it would be a pain. Everything I've read is pointing to inventory in my range under $1m to be more limited overall then ever before (why?). How does that look in the next year or 2-3 years? If I'm aiming to put 20% down for a house in the <1m will I need to really consider budgeting more in the future or can the housing in the sub <1m remain sub <1m?

 

[usctrojancpa]

Can anyone comment on the current rental market for 3 and 4 bed SFR this spring with regard to finding a place and rental costs I should expect in Irvine? With a family of 4, I'm thinking about buying but gotta rent again.

The rental market definitely softens up a bit as you move to $3,500/mo and up on the lease payment.  Most renters (especially ones looking to buy in 1-2 years) will opt to rent a slightly smaller property than what they would ideally want in a home that they buy to save on rent.  That being said, if these larger 3-4 bedroom homes are priced right they will also rent out quickly.

I wanted to buy in the next few years but renting makes the most sense at the moment. I could squeeze it together sooner but it would be a pain. Everything I've read is pointing to inventory in my range under $1m to be more limited overall then ever before (why?). How does that look in the next year or 2-3 years? If I'm aiming to put 20% down for a house in the <1m will I need to really consider budgeting more in the future or can the housing in the sub <1m remain sub <1m?

Prices continue to grind higher in the sub $1m market because of the low inventory and strong demand.  Unless we get into a recession, prices will continue to grind higher.  Many move-up buyers are holding onto their homes and renting them instead of selling them so that is one of the things that is limiting inventory today.

 

[irvinebullhousing]

The property tax advantage of Prop 13 encourages many owners to hold on to their existing house if they can do it if they purchased a decade ago. The property tax and HOA of any newer community call for some serious dough to cough up monthly. Does HOA fee worth it, to me, it doesn't, but it does provide advantages of regulating the overall neighborhood looks and feel. I can speak for all on here that all taxpayer don't adore MR, AD Bond taxes, but on the same token Irvine is known for good public education. If I can't buy in Irvine, for sure I will rent here because of my kids.

That is why Irvine Renter advocates for the renting in Irvine. I missed his daily writing on the OCHOUSINGNEWS. Someday he will be back. I hope.

 

[shahshah]

Can anyone comment on the current rental market for 3 and 4 bed SFR this spring with regard to finding a place and rental costs I should expect in Irvine? With a family of 4, I'm thinking about buying but gotta rent again.

The rental market definitely softens up a bit as you move to $3,500/mo and up on the lease payment.  Most renters (especially ones looking to buy in 1-2 years) will opt to rent a slightly smaller property than what they would ideally want in a home that they buy to save on rent.  That being said, if these larger 3-4 bedroom homes are priced right they will also rent out quickly.

I wanted to buy in the next few years but renting makes the most sense at the moment. I could squeeze it together sooner but it would be a pain. Everything I've read is pointing to inventory in my range under $1m to be more limited overall then ever before (why?). How does that look in the next year or 2-3 years? If I'm aiming to put 20% down for a house in the <1m will I need to really consider budgeting more in the future or can the housing in the sub <1m remain sub <1m?

Prices continue to grind higher in the sub $1m market because of the low inventory and strong demand.  Unless we get into a recession, prices will continue to grind higher.  Many move-up buyers are holding onto their homes and renting them instead of selling them so that is one of the things that is limiting inventory today.

Based on what you said and compressed-village mentioned, I have been trying to lean towards looking at communities the older areas to rent and then maybe eventually to buy. This way I can keep the costs down instead of the new developments. Would love to be in the newer areas but cost and ongoing cost is just too high. Do you feel the older communities will be the least likely to appreciate compared to the new communities over the next 3-5 years?

 

[pricedoutJay]

The rental market definitely softens up a bit as you move to $3,500/mo and up on the lease payment.  Most renters (especially ones looking to buy in 1-2 years) will opt to rent a slightly smaller property than what they would ideally want in a home that they buy to save on rent.  That being said, if these larger 3-4 bedroom homes are priced right they will also rent out quickly.

I agree with USCTrojanCPA on this 100% and that's what we did before we bought our place last year...

Only thing is that many RE agents didn't think we were good enough to be their client but things worked out for me somehow.