Any thoughts from long time professional realtors on the mid-term outlook (5-7 years) for condos in downtown Long Beach?

Asked by Larry Hilliard, Georgetown, TX Fri Jun 4, 2010

Is buying a condo in a place like the Willmore (at almost rock bottom price) a good investment for the mid term (5-7 years)?

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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Fri Jun 4, 2010
BEST ANSWER
Larry:

When buying for investment, the pundits say, "the profit must be made at the time of purchase". This means that if the property has to appreciate for it to be a good investment, then it is NOT a good investment. Therefore, make your decision based on these essential items:
1. Does it cash flow positive?
2. What is your return on investment assuming 0% appreciation? Is it greater than your other investment portfolios are earning?
3. Will the rents retire the mortgage debt in 7 - 10 years?

If you like the answer to the above questions then this is a great investment. Buy as many as you can that give you three YES answers.

That being said - here is my prediction about the market for downtown Long Beach Condos. Prices are NOT going up in the near future. In fact, we may see some price decreases if, or when, some of the HOAs have to declare bankruptcy or issue large assessments to get themselves back on track. This flat market will probably last at least through 2011, maybe even longer. Out about three years, you will probably start to see a general, although very gradual increase in prices. If interest rates rise into the 7 & 8% range (even though these are still very reasonable rates), the increase may be delayed, but certainly will be even more gradual. If you are looking to make a killing on this property based on a 5-7 year timeline on appreciation alone, you might be disappointed. Will you make a profit at sale? Probably, but not a killing.

Just remember, appreciation is not necessary to make a good investment good. Appreciation is like the icing on the cake, it will make the cake tastier, but a good cake can stand on its own. Make sure that you make investment decisions based on sound business principles and you will always come out a winner. Dare to Dream.

Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
0 votes
Sandy Carroll, Agent, Seal Beach, CA
Tue Jun 15, 2010
There is only so much ocean-close property. There is only so much good-climate property. Over time those closer to the ocean and those properties in milder climates are going to appreciate more than others.

Sandy Carroll
First Team Real Estate
562 494 6760
sandycarroll@verizon.net
0 votes
Jason H. Gom…, , Beaverton, OR
Fri Jun 4, 2010
I don't live in California, but I do pay attention to macro economics. In the general sense the real estate market in Oregon is heavily influenced by both Washington and California. Historically WA was the highest rate of influx for relocating residents, but in the last few years with the arrival some of the major job producers intel and the like, more people are relocating from California. California's real estate market is generally about 18 months ahead of Oregon.
What does all this mean? It means that we should start to see some more positive numbers in So Cal by the end of 2011, and in Oregon by 2013.
We wont be seeing any kind of explosive growth but I believe we will be seeing some low to moderate appreciation rates, at least until interest rates clime.
0 votes
Rich Nichols, Agent, Seal Beach, CA
Fri Jun 4, 2010
You should be OK if you purchased it at a rock bottom price and your at least breaking even every month. One of the biggest concerns is the stability of the HOA.

Good Luck!

Rich Nichols
REO Broker Assoc.
Main Street Realtors
0 votes
Rich Nichols, Agent, Seal Beach, CA
Fri Jun 4, 2010
You should be OK if you purchased it at a rock bottom price and your at least breaking even every month. One of the biggest concerns is the stability of the HOA.

Good Luck!

Rich Nichols
REO Broker Assoc.
Main Street Realtors
0 votes
TheRECoach, , Orange County, CA
Fri Jun 4, 2010
Sure, especially if you have cash flow on the rental. I know there have been some really low prices in there, but the building has it flaws too. High HOAs, parking that you have to rent, that kind of thing, old plumbing. But if you get it at the right price.....

Best of Luck!

Stay Blogging my Friends!

@CBRELongBeach
Web Reference:  http://CoastalAlliance.net
0 votes
Peter Solomon, Agent, Los Alamitos, CA
Fri Jun 4, 2010
I think we have basically been at the bottom of the market, although I think the bottom will last thru this year at least. Investing in a property partly should be based on is it something perfect for you to live in and will this condo maybe be a good long term investment, and is it something that could be a rental later on? It's hard to predict what will happen 5 to 7 years from now. If it were not for the fact that the current administration in the white house is causing great financial uncertainty which will always affect the housing market. I think 5 to 7 years is an ideal time frame, it will be interesting to see if the market makes a come back soon. Congratulations on becoming a homeowner.
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