Should I buy rental property in Irvine/Tustin?

Asked by Sunny Patel, Tustin, CA Sun Jul 24, 2011

I am first time home buyer and presently renting in Tustin. I work as a consultant and keep moving every couple of years to different locations. I was wondering whether buying a 2-bed house/condo for staying for a couple of yearshere and then renting would be a good proposition. Would that be a positive cash flow and worth the hassle?

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Kathy Buck’s answer
Kathy Buck, Both Buyer And Seller, Irvine, CA
Sun Jul 24, 2011
I recommend purchasing a large 2br with a versatile floor plan that you can make into a three bedroom (possibly with a den). The best rental areas are close to the UCI Campus, Irvine College or Concordia College. I work with many investors and have a background as a residential appraiser. Depending on your downpayment, the numbers can work in your favor both now, and in the future.

Feel free to contact me with your questions or visit my website below.

Kathy Buck, Broker
Beyond Realty and Investments
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Anthony Nitz, Agent, Santa Ana, CA
Sun Jul 24, 2011
So the main question is the debate between Irvine or Tustin. People who live in Tustin Love to live in Tustin. The same holds true for Irvine. Therefore choosing a city for choice sake is a matter of preference. Irvine historically does tend to hold it's value better than Tustin because of the planned community, lower crime rate and high ranking schools.

You mentioned 2 bedrooms. If possible buy a 3+ bedroom property since they are easier to rent and resell to families and larger groups. If you get a two bedroom you're limiting to a very small family or possibly a single parent, couple or single person situation. All are good and well but I've known single people purchase 4 and 5 bedroom homes. However I don't ever recall working with a family intentionally downsizing with their two or three kids to a two bedroom home.

It's been said and proven a billion times that the people who have the greatest wealth in this and other nations are the people who own the land. If you are considering buying, consider using or at least learning about creative methods of financing to maximize your investment. Traditional lending as you may be aware is very restrictive (as it should have been all along) but most people don't realize how many transactions are completed outside the confines of a loan application. These techniques are the one's the truly wealthy investors have used for ages.
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Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Sun Jul 24, 2011

You are probably not going to find a condo cheap enough to receive a positive cash-flow in Irvine or Tustin.

Best wishes, Rudi
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Sun Jul 24, 2011
You'd have to compare what your housing payment would be vs. what you could pull in for rent. Deduct 15% of the annual rental amount for expenses/vacancies, etc. and figure that into your cash flow calculations. For conservative figures, assume rental rates stay the same and your HOA fees (if you buy a condo) increase. You'll probably have to put a nice sized down payment in order to cash-flow a 1-unit property, I'd estimate 20% or more.

You'll also want to consider if the condo (if you are buying a condo) permits renters, or limits it to a certain amount of renters, as you could find yourself moving out and then having to put your condo on a waiting list to be able to be rented out. If you are buying a house, that wouldn't be a concern.

Another idea is to buy a multi-unit property (2-4 units), live in the biggest unit and rent out the others, then you'll get your landlord experience under your belt while you are there on site, rather than learning while you are away. With FHA financing you can put as little as 3.5% down payment 1-4 unit properties, 3-4 unit properties require a self-sufficiency test however, details at… or with using conventional financing there isn't a self-sufficiency test.

There are other items to consider I'm sure, I am not a landlord and in my opinion you'll definitely want to get opinions from one or many. You can also attend local real estate investing club meetings to talk to other people who are actively in the business. meets in Tustin. I'm sure you have much more advice coming.
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Shawna Puma, Home Buyer, Laguna Beach, CA
Sun Jul 24, 2011
Hi Sunny
Certain area of Tustin/irvine would be a great long term investment. There are great schools in both locations for great resale value and they are both popular areas that have a solid market. It's a great time to buy due to the lower rates and lower cost of homes. Although we don't have a crystal ball, the market seems to be at a hault with the cost of homes for now. The rental market is doing very well right now and owners seem to be renting their homes out at a higher price than a few years
ago. Email me or call if you have any other questions

Shawna Puma
Coldwell Banker
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Joe Homs, Agent, Laguna Hills, CA
Sun Jul 24, 2011

I would answer "Absolutley Yes," as your situation brings to mind the good old days of military personnel buying homes whereever they were stationed and using the equity at the end of thier careers as an additional retirement plan. I would also say that you should only buy something that will "Positive Cash Flow" for you right away. This will provide you with extra protection when you do decide to move away. If you would like my e-book on "Real Estate Investing" just send me an email. If you want to see some great deals you can log into my listingbook account at , or just give me a call.


Joe Homs
Realty World
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Derek Nelson, Agent, Laguna Beach, CA
Sun Jul 24, 2011
Good morning, I dont think that anyone can efficiently and effectively answer that question within 5000 characters. It really depends on a myriad of circumstances, how risk averse you are and what your short and long term objectives are. After gaining the details as to these (and other items) you will have a keen understanding of the approach you should deploy.

I would recommend seeking out a highly skilled and experienced professional that will take the time necessary to get you to where you want to be. In looking at my profile, if you feel that I may be that person for you, please do not hesitate to contact me.

Good luck in your endeavors. So long as they are well thought out and strategized, you will be succesful!!
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