Invest in OC, Ca. Is it a good idea?

Question

Hi everyone,

I’ve been looking to buy a property in Orange County to invest in short and long term. I saw a lot of listings on MLS that are short sales and REO.  Is this a good way to buy?  I plan to down 20% with a conventional loan and rent it out for 2 years and sell it.  Still I have to put in $200-$400 each month on the property after rent, insurance, property tax, and property management.  Is this a good strategy or is there a better way to invest in OC?  Thank you for your ideas and inputs.

Account Closed · Answer

Be very careful that you do not purchase a property that falls under rent control.

Learn the values in your area and be very careful to buy a property that has a lot of instant  equity.  If you get enough equity, you will still be covered if prices are falling in 2 years when you want to sell.

Be very thorough about investigating expenses so you are accurate about how much negative the property will be. It's fine of you can afford $400 a month. It's not so fine if you have budgeted $400 a month and discover after you buy that the real expenses are actually negative $850 a month.

I would not count on much appreciation in California in the next 2 years, so you want to make your money by buying a lot of equity. Maybe you'll get lucky and get the appreciation. I don't think values will fall to much. The population is too big and it's growing. But at this point in the real estate cycle, appreciation isn't guaranteed.

I don't see anything about repairs or vacancies in your calculations. You want to be very accurate about your costs or you can get yourself into a bind.

Bamboo Root · Answer

Thank you PNW for your informations.  I definitely consider vacancy and maintenance and other misc expense in my equation.  Where can I call to check if a property is under rent control? Thanks.