Riverside/Corona multi family?

24 Replies

Hi Everyone,

I live in OC and I am considering using an FHA loan to purchase a multi family (probably duplex in Riverside or Corona) I plan to live in one and then rent out the other.

I have seen some decent returns on a lot of the duplexes but I wanted to get a sense from people who may be investing in Riverside as to what the market is like for multi familys in the area. I know in OC it is almost non existent but as I said I am seeing some potential opportunities in Riverside and surrounds. 

Any insight or advice would be greatly appreciated.

Thanks in advance

David

I would suggest being open minded to Moreno Valley. So much growth there, and it’s just past Riverside. There are parts of town that are pretty nice and there are parts of town that are war zones. I drive from Irvine to Joshua Tree almost every weekend, as I invest in JT, but I’m starting to look at deals in Moreno Valley and Beaumont since I see so many good factors in those submarkets. I’m aware of a lot of new development planned for these areas as my primary job is land brokerage.

@Bryant Brislin Moreno Valley is good for single family, but from what I've seen most of the multifamily inventory there is in the not so great areas, as opposed to Riverside where you can find multifamily in relatively good areas near downtown.

@Aaron K. Moreno Valley has some great retail though. I'm very impressed.  Those retailers wouldn't be there if MoVal was a total dump.  But there are certainly some rough parts of town.

San Bernardino county you can cash flow but you have some of the worst tenants in Southern California. The gem of San Bernardino county is Redlands. If you haven’t heard of Redlands it’s because it’s sort of the best kept secret of the IE. The city is separated by a freeway. Above the freeway is bad part of town below is good. Also east of the college campus within a mile is good.

I have a marketing campaign going for multi family in this area. Most landlords own multiply of these tri’s and quads throughout Redlands. Every landlord I’ve talked to so far has a portfolio of at least three properties all in Redlands. People who live there love the city. Everyone else just hasn’t heard of it lol

For me personally I believe in Downtown Riverside. Rent growth is pretty amazing over the last year and there are several landlords that just haven’t keep up. I am in escrow on a triplex now. The current landlord has each unit under market rent by at least 25%, it’s insane. I will be cash flow negative with my fha loan but I am highly leveraged on this bad boy. My cash is less then 25k so it’s sort of low risk high reward. This is also a house hack deal for me so I preferred a premier location over a $50 of cash flow.

@Patrick Fraire I feel like this is a very closed off view of San Bernardino County. Redlands is nice, but there are many other cities in the San Bernardino with strong job centers like Ontario, Upland, Rancho Cucamonga. Also, I guarantee you, your returns are lower than someone who invests in up and coming areas. Redlands is a known place at this point. The appreciation % over the long term isn’t going to appeal to value-add investors. If you are looking for something easy for the same return that you can get in the stock market, Redlands is your place.

@davidfreidman
I’m on mobile so it doesn’t actually tag you but hope you see this. Thanks for your reply. Here are my thoughts

I went to school at Cal Poly Pomona. I love Pomona and have been analyzing deals there for about a year. Other investors I talk to don’t love Pomona. I think going to a university makes you biased to the city it is in. With this said, I think San Bernardino is having the same effect on you.

I’d emplore you to look at statistics on San Bernardino county vs Riverside and LA county.

The numbers are significantly worse for employment and crime. Arguably the two most important factors for long term investments you mentioned.

Now you said my returns are worse than someone investing in “up and coming areas” .
In my post I mentioned I am a proponent for Redlands and downtown riverside. To me these are two up and coming areas. Now the term up and coming is subjective. For me the “up” means established. I look for the one of the best neighborhoods in a city. The “coming” is directly correlated with job growth and population growth and potential for rent increase. This is why I believe in downtown riverside. Rents are going up and the neighborhood is established. Upland and Ontario are not established to be. There are rural areas where developers can increase inventory significantly if demand warrants it. Downtown riverside will not allow large multi family apartments to develop. The city plan is strict on preserving the existing historic feel to the city.

I will give you Rancho it is a lot better than other cities in San Bernadino County. But Rancho is mostly suburbs where a lot of upper middle class families live. Not really up and coming. Just up.

Originally posted by @Bryant Brislin :

I would suggest being open minded to Moreno Valley. So much growth there, and it’s just past Riverside. There are parts of town that are pretty nice and there are parts of town that are war zones. I drive from Irvine to Joshua Tree almost every weekend, as I invest in JT, but I’m starting to look at deals in Moreno Valley and Beaumont since I see so many good factors in those submarkets. I’m aware of a lot of new development planned for these areas as my primary job is land brokerage.

 I have 10 presidential lots in 29 Palms not too far from Utah trail entrance to Joshua Tree National Park if you know anyone.

@Patrick Fraire I am definitely biased! I grew up in Yucaipa and went to Redlands High School. Graduated from CSUSB. Go Yotes!

While I agree with you on your theory of established, but up and coming, I consider up and coming to be more C and B class neighborhoods. My age and propensity to deal with those neighborhoods for a high risk, high return reward is one factor. The second factor for me is the amount of money you can pump into a neighborhood to turn it around. Redlands is established and thus, buying a 4 unit there will cost you $600-800,000. I can buy 8-10 units in San Bernardino for that price. My strategy, is to buy enough of those units in one area to have more control of the area and the tenants.

I respect anybody that can find a niche and do well in real estate, so props to you for finding a strategy that makes you money. In the end I mean no disrespect. Just a sharing of minds.

David I’m in Panera drive through right now so I apologize for brevity. I’m enjoying this convo. I think your numbers are way off in Redlands. Check out this 4 unit for less than 500k.

https://www.redfin.com/CA/Redlands/521-E-Brockton-Ave-92374/home/3201538?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

This is the best deal I’ve seen on the market in the last 6 months however most senior owner operators value their four unit properties at about 500k in Redlands. This is just an example.

Go Yotes!

I hear you regarding being young and willing to own C class. IMO I see San Bernadino as D class but I am looking at it as a whole and making assumption. I don’t know the neighborhoods or even the area around the university. You might be onto something because a lot of investors might be closed minded to it like I am and missing out on opportunities. Can you elaborate on what you mean by pumping money into a neighborhood? Are you buying multiple properties near each other and rehabbing?

@Aaron K. @Bryant Brislin I agree about Moreno Valley being much more of a single family home city.  I grew up there and its pretty surprising the lack of multi in the city.  Good rule of thumb for Moreno valley (but not law) is north of the freeway is good (but not perfect), south of the freeway is rough (but not all).  Sorry to be so broad, but Moreno valley is pretty rough still in my opinion.  This is just an example, I work construction and we are digging up the streets in one of the bigger intersections of Moreno valley off Perris Blvd and Elder ave.  We have jobs all over southern California, some are in some of the worst spots you can imagine I.E: Watts, Compton, Huntington Park, and many more.. and we have never had a job site been robbed more times than the Moreno valley job.  By far the harshest jobsite we've had in regards to robberies.  Sad because I grew up there and its really slipped throughout the years. 

@Todd Fithian I actually think Moreno Valley is on the upswing, it used to be North good South bad but it has transitioned more to the outer rim being good and the inner core being a bit rougher because there is a lot of newer and nice developments especially in the Southeast.  Elder and Perris is pretty much in the middle of the city, and I would say it is likely you are being robbed by the same person over and over again.  If you look at the crime statistics they have dropped significantly over the last 15 years or so almost 40% and are significantly lower than Huntington Park (City-data.com).

@David Rutledge

Hey David, I know this is an older post but I wanted to see what move you ended up making. My cousin and I are currently in a very similar situation. We both are agents with Redfin and live in Irvine. Finding a multi for under 500k in the OC is unheard of so we have been looking in Pomona, Corona, Chino Hills, Ontario, etc. Personally I am still newer to SoCal and am still learning the area's. Our strategy is to do a FHA with California Grant program that our lender talked to us about where they cover the down payment and closing costs. We are also considering house hacking a SFR and occupying it for a year (FHA regulation) because the mortgage payment would still be cheaper than our rent here in Irvine.

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