Question for OC connoisseurs: If you want to invest in a buy-and-hold SFR under $800k and for some reasons (family, personal) you have to either do that in Costa Mesa or Orange, where would you invest for a higher appreciation in a few years? (cap rates are quite similar).
Which of these 2 cities is under-valued and will grow faster, in your opinion?
@Kevin Lefeuvre first of all I would caution you and anyone on a buy and hold strategy here in Orang County. The numbers do not make sense.
However if you are going to buy then buy Costa Mesa. Simply the closer you get to the ocean the more you will pay for the property and the more appreciation you should see.
@Kevin Lefeuvre If you have reasons for not investing elsewhere I might go with Orange, due to the lower price point, which may free up money in the future for investing elsewhere. Also Orange has not seen as much appreciation as Costa Mesa, which means one of two things 1. It will forever lag in terms of percentage behind the coastal OC cities (I think this is unlikely) or 2. It has a bit more room to appreciate. I believe that Orange is also more centrally located and is a better location for most commuters.
The best strategy might just be to look at both cities and buy in whichever city you find the best deal because over the long run they are likely to be fairly similar.
I agree @Aaron Klatt that you will probably get a little more value if you purchase in Orange compared to Costa Mesa. However, if you are looking for long term appreciation then I agree with @Joe Homs . I worked and drive by Costa Mesa quite often, and it has been growing in population and development. It will probably do better than Orange in the long run, but it also depends on where you buy and how people's perspective changes in the next few decades as well. Another good thing another Costa Mesa though, it's much closer to Irvine where most of Orange County high paying jobs are located (where I currently work and have worked close to a decade).
Costa Mesa and I would focus specially on the west side. East side is overpriced and you won’t find any deals. Most of the bigger developers like Taylor Morrison are expanding on the west side as well.
Thanks everyone for the great comments.
@Joe Homs I have never made as much gain anywhere as in OC. If you just look at cash flow you get less than most other places but when you add capital gain, some locations beat all those out of state areas, when combined with appreciation. That said, the challenge is that cash flow is known when you buy, while capital gain is a bet.
@Aaron Klatt that makes a lot of sense. thanks.
@Brittney Johnson 100% agree with the west CM being very under-priced for an almost-coastal city. $350 per sqft for a SFR , 2 miles off the beach is quite rare in SoCal (exceptions are San Pedro and Oxnard, and CM is really not that bad). And yes east CM has airport noise, and is close to the price of Newport Beach back bay, but it's NOT Newport beach. So yes, I was thinking of West CM only.
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