Coastal SoCal buy/sell numbers for positive cash flow

4 Replies

I see on most of the forums the 70% rule, 1% rule on rentals, etc. etc.

My observations have also seen most of these posts and numbers talk about places in the midwest or middle america. I live in SoCal and would love to see numbers and percentages for cash posivtive operations where the housing prices are much higher and rent margins are not as large.

How are the margins for buy and hold, flippers, and investors in Coastal SoCal.

Greg

In socal it is totally different  socal is a appreciation play on average of 30%, however with that said the 70% percent rule is needed to be able to do flips. In socal many flippers are now working in a high end million dollar homes and fixing and updating them. This though takes a extreme amount of capital to be able to manage and complete these kind of flips. the 1% rule occurred in socal during in 2009. Many investors in socal for rentals look to cover insurance, mortgage, taxes,  which can be found, but can be difficult to find. In multi families you can create force appreciation. You have to look as a long term hedge in socal i know quite a few that invested in multifamilies 10+ years ago, and they would pay off a complex refinance the mortgage to 50% the value and purchase another with the refinance money.  At that the mortgages were covered by the rentals and now they had two properties and they would just continue to expand their portfolio. In addition another method is to purchase a fixer upper in a desirable area and fix it up while you live there and sale usually at a higher value rate.  

You'll have to hear from the appreciation players and flippers if you want to hear about positive cash flow here. Straight buy and holds don't work for positive cash flow here. 

Definitely not likely to find very much cash flow on the MLS. Throw in coastal and it is a needle in 100 hay stacks. However, if you expand the search from San Diego to Oxnard you can bet there is one cash flow deal going each day. But that is out of 20 million population so your odds are 1 in 20 million population wise.. Like the Dumb and Dumber original movie. There is a chance:)

Timing, luck, hard work. Yeah thats socal. And even the flippers can work less than the 70% ARV because the prices are higher. My last socal deal was a year and a half ago. 200k purchase, 20k rehab, currently rented at 2k month, appraisal 4 months ago was 350k.

70% on a 100k property vs a 500k-1m.  My uncle used to work San Fransisco.  Buy a 300k property, tear down to one wall, put in 300-500k and sell for 1.5m.

So the numbers can work in a way, but the usual socal appreciation can also be found on the FHFA website.

If you want the coastal numbers  I would talk to @Karen Margrave

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