I just moved to California to be closer to my mom. I have a full time job and so does my mom. We decided that it is time to buy property together. We are going to buy a townhome possibly in the Orange County area because we can not afford a single family home. Moving from Georgia to California is a huge difference in real estate pricing.
We already have an agent and lenders. I have the 5% down payment and closing cost ready. It will be my first investment and I rather invest in a home with someone I trust.
PS: we will be living in it but eventually want to take the equity and put it in another place to rent.
Is buying a second property in California a good idea for a new investor or should I take the equity and put it in Texas or Nevada?
Is buying a townhome or condo a good idea in Orange County or should we wait to get a single family home?
I’m sorry if I’m all over the place but I’m still learning.
Well I wouldn't worry about your second property before dealing with the first. The second property doesn't matter for a while, plus you don't actually know how much or if you'll get that equity to buy it (it doesn't happen overnight). And then for the townhome vs. single-family, that shouldn't be your question. The question should be more geared towards the numbers. What's your plan for profiting from the property you buy? Orange County doesn't offer much, if anything, in the way of cash flow, so you'll be banking solely on appreciation. We're not at all close to the bottom of the market, so how much equity/appreciation are you planning on happening? I only say all those things to put a reality check out there. My question would be if I were helping you decide what to do--what's your ultimate goal? What are you hoping to achieve with a property investment? Side note- I'm from Atlanta and all my properties are in GA :) Welcome to BP and California!
@Brtittany Smith - I agree with Ali. Planning for how to execute on Step 2 prior to Step 1 is premature. Given you're looking to owner-occupy - cashflow is obvi not your primary concern. It should however be considered depending on your Step 1 exit strategy (ie: if you're going to keep the 1st property and use the equity to buy the 2nd property, does the 1st property cashflow?? Likely not for quite some time with such a minimal deposit). Consider purchasing a small multifamily property that needs a little bit of work. You can buy 2-4 units with the same financing options you're looking at with your condo, townhome, or single family home. Additionally, you'll be in a much better position to reduce your net payment (your portion of mortgage, taxes, insurance after accounting for rents received). You're essentially buying a condo or townhouse in a small development/building which you own entirely. Have your realtor run the numbers for you - you'll find quickly that there are numerous options out there which are "net net" cheaper that an owner-occupied condo/townhome/sfr. Additional benefits of such strategy are greater tax benefits, a property that will likely cashlow much quicker than any single unit option, quicker capital appreciation (you're starting from a bigger basis usually), and a robust rental market with seemingly no slowdown in sight...
Welcome to So Cal, BP, and good luck out there! I