June 2015 – The Investment Real Estate Top 10
Last night at our general membership meeting at the Apartment Association of Orange County, I was able to pay homage to an entertainment legend and update our members on the real estate market through a Top 10 list of my own. And while I will share with you the list, I will also share with you some of the key market statistics I was able to keep our members apprised of.
First off, Orange County is again in the running for the title of “Most Overvalued Housing Market” in the United States. And while we are second only to Austin, Texas, you might recall that we held the title in 2013 before losing it to Austin in 2014. Not to worry, Los Angeles and the Inland Empire are not far behind. The funny thing is, today’s market is not unlike 04-06. As someone currently active and looking for investment opportunities in the So Cal marketplace, I am seeing the same phenomenon: multiple offers, offer prices far exceeding the most reasonable comparable sales data and worse yet, the flipper who bought from the bank in 11 and is expecting 100% – 200% appreciation in just under four years. Yeah, sure. Prices were up 6% year-over-year and 14% over Q4 2014. But how your property doubled in value as you did absolutely nothing to it is another story entirely.
Of course, the good news in all of this for property owners is that buyers will remain priced out of the for sale market and that will continue to drive occupancy and that will continue to drive rents. Even as we begin to see interest rates creep up (they are already), the rental outlook in Southern California is strong as can be. Great for owners, but tough for investors looking to acquire reasonably priced value-add deals with upside potential. Sky’s the limit and you’d better be prepared to pay for it.
And now, without further ado, the June 2015 Investment Real Estate Top 10:
10. That triplex costs how much?
9. So, 2% cash-on-cash is good today’s market?
8. The broker says “forget your toolbox, for a deal, bring your bullet proof vest.”
7. Of course you only want all-cash offers, the property will not appraise for that price.
6. That triplex costs how much?
5. Prop 13, again? Remind me why I own property in California?
4. That cost per unit is more than I paid for my house 20 years ago.
3. If there aren’t multiple offers, then it’s probably overpriced.
2. My occupancy is above 97%, my rents must be too low!
1. I took advantage of today’s low rates and all I did was overpay!