CW,
I agree L/Os might work in this market. There must be a lot of people desperate to buy something and their credit is a little messed up. Finding a motivated seller could be little difficult though.
If someone bought a house a year ago, they already have at least 20% equity. That means they could sell through a realtor and walk away with at least 10% in their pocket.
Of course, that takes time. If you could find someone who needs to sell fast, maybe you could buy 10% below the retail price. But you would probably need to be able to pay all cash. That means at least $300,000 for a low-end property, right?
Then, what happens if the market drops 20% before your tenant/buyer cashes you out? You would have to wait a long time to be able to sell the place and even break even. And you would have a lot of negative cash flow if you put a mortgage on it.
So, yeah, I agree with you on investing somewhere else for now.
Just curious if anyone from So. Cal. has attended the Orange County Real Estate group that meets in Irvine. I am eager to participate in this group, but would like input from others who have attended. I am looking to enhance my knowledge of creative RE investing, as well as network with people who have done the wholesale, sub2, L/O kind of deals. I attended an investment seminar this weekend where the speaker encouraged everyone to buy retail, and if need be to overbid by 5% of the asking price just to get a property. This speaker went on to say that it is okay to carry a negative cash flow for 4-5 years because the property will certainly appreciate and you will be rich. Some may agree with that idea, but I sure don’t. Needless to say I left the seminar a little early. I’m asking about this OCRE forum because I just found out that this speaker often speaks at this investment club. I just don’t want to bother attending the club meetings if all I will hear is buy retail and hold. Any input would be greatly appreciated.
There are two R.E. groups in Irvine,CA - Posted by Kazuko(CO)
Posted by Kazuko(CO) on March 18, 2004 at 24:58:57:
CW,
I have been a realtor in O.C. until last September and have known Dr. Marshall Reddick more than ten years.
There are two R.E. groups in Irvine and another one in Anaheim.
Marshall Reddick R.E. Network
They have weekend seminers all over so.Cal. and free monthly meeting at Lakeview Senior Center in Irvine on the 3rd Monday of the month. Their strategy is buy(at retail)-and-hold. Dr. Reddick was influenced by Dr. David Schumacher, the auther of “Buy and Hold”. Dr. Schumacher says, “If you puerchsed a house to hold for 20-30 years and it became $1M, it does not matter if you purchased it for $51K or $49K.” This may be true in a highly appliciated area. As Dr. Reddick’s major was economics, he analyzes a lot of data to find the area which will appliciate most in the U.S. in the next 3-4 years. He is very good at this. His network is for the people with good job, good income, some cash and want to get benefited from investing in real estste instead of stocks, etc. but don’t want to spend their time for R.E. It is just armchair investing, not creative at all. If you would like to buy and hold not in California but in other states for less expensive property with good projected appliciation, the information from his network might be helpful.
Orange County Real Estate (OCRE) Club
They used to meet at Chicago Tiyle near airport but I heard now their meeting is at Doubletree Hotel in Irvine Spectrum. Fee is around $20 per person. They used to disscuss L/O, Sub2… This is for investors who want to be creative and local. Contact # is 949-726-8446 or e-mail: jkinvest@pacbell.net.
Commonwealth Real Estate Club
This is the R.E. club by Mr. Jack Fullerton whom Mr. Bronchick mentioned. They used to meet at Radisson Inn in Anaheim on first Wednesday. The contact # is 714-557-3118.
Just outside O.C., there is Real estate investment Cluf of Los Angeles (R.E.I.C.of L.A., #310-205-8410) which Mr. Bronchick’s mother is leading and also San Diego Creative investors Association (619-497-4480).
If you need more info, please e-mail me or call me. I live in Colorado but my cellular # is 714-292-2862, so it will be a local call for you.
There are two R.E. groups in Irvine,CA - Posted by Kazuko(CO)
Posted by Kazuko(CO) on March 18, 2004 at 24:58:24:
CW,
I have been a realtor in O.C. until last September and have known Dr. Marshall Reddick more than ten years.
There are two R.E. groups in Irvine and another one in Anaheim.
Marshall Reddick R.E. Network
They have weekend seminers all over so.Cal. and free monthly meeting at Lakeview Senior Center in Irvine on the 3rd Monday of the month. Their strategy is buy(at retail)-and-hold. Dr. Reddick was influenced by Dr. David Schumacher, the auther of “Buy and Hold”. Dr. Schumacher says, “If you puerchsed a house to hold for 20-30 years and it became $1M, it does not matter if you purchased it for $51K or $49K.” This may be true in a highly appliciated area. As Dr. Reddick’s major was economics, he analyzes a lot of data to find the area which will appliciate most in the U.S. in the next 3-4 years. He is very good at this. His network is for the people with good job, good income, some cash and want to get benefited from investing in real estste instead of stocks, etc. but don’t want to spend their time for R.E. It is just armchair investing, not creative at all. If you would like to buy and hold not in California but in other states for less expensive property with good projected appliciation, the information from his network might be helpful.
Orange County Real Estate (OCRE) Club
They used to meet at Chicago Tiyle near airport but I heard now their meeting is at Doubletree Hotel in Irvine Spectrum. Fee is around $20 per person. They used to disscuss L/O, Sub2… This is for investors who want to be creative and local. Contact # is 949-726-8446 or e-mail: jkinvest@pacbell.net.
Commonwealth Real Estate Club
This is the R.E. club by Mr. Jack Fullerton whom Mr. Bronchick mentioned. They used to meet at Radisson Inn in Anaheim on first Wednesday. The contact # is 714-557-3118.
Just outside O.C., there is Real estate investment Cluf of Los Angeles (R.E.I.C.of L.A., #310-205-8410) which Mr. Bronchick’s mother is leading and also San Diego Creative investors Association (619-497-4480).
If you need more info, please e-mail me or call me. I live in Colorado but my cellular # is 714-292-2862, so it will be a local call for you.
I don’t know if this is the same group that Jack Fullerton runs, but if it is, you should consider giving it another look. Jack is a veteran in Southern Cal. Ditto for Marshall.
California is a different market than many others, and cash flow on rentals is very difficult. A majority of long term successful investors in Southern Cal get VERY wealthy buying and holding, even with negative cash flow. This isn’t the only way to do it, but in a rapidly appreciating market like Southern Cal, it is very effective.
If you are looking for a more “creative” club, try the Real Estate Investors Club of Los Angles - www.realestateclub-la.com. My Mom runs the group.
I only attended a couple meetings and it was a complete waste of time. I paid $30 for my wife and myself and it was just a two-hour commercial for the speakers.
Reddick was the featured speaker at the first meeting and Cleo Katz was featured at the second and last one for me. They were just selling their programs. Very little useful information was conveyed and absolutely nothing creative.
I got there a little late both times, so I may have missed some networking opportunity. But I did not see any networking going on. I think the crowd was too big for networking. Probably 200 people.
There may be more there than I saw, but that was enough to turn me off.
Kazuko,
Thank you so much for the great information. I will be in contact with each of these clubs. Thanks again to everyone who offered their opinions, it has been very helpful.
William,
Thank you very much for your reply. I believe this club is run by Norm Rockmael. He is the contact for the club, that may or may not mean he is the one who heads it. I’m not sure. There is no doubt that California is a different market. As Randy mentioned in his reply, the OC Register stated the RE market was up 23.7% from last year. That is a great ROI. I have concerns that the rate of appreciation will not last for more than a couple of years. Granted we may not see the level of depreciation seen in the late 80’s, but that fear is still very much alive. Obviously there is no crystal ball and we can not predict how long this rate of appreciation will last. Buy and hold is a good strategy, but I have a hard time getting in at a retail price of $500,000 for a house I know isn’t worth that much. It’s a tough pill to swallow.
Thank you for recommending the Los Angeles club, it appears to be more like what I am looking for. Do you attend the meetings regularly? Thanks again for your input.
Randy,
That is too funny, you hit the nail right on the head. Marshall Reddick was the speaker and I couldn’t believe some of the things he was saying. Thank you very much for your input on this club. I had a feeling that I would not want to attend their meetings after finding out that Mr. Reddick often spoke there. Have you found any clubs in the So. Cal. area that have a more creative investor following? Thanks again for the valuable input.
CW,
No, that was the only one I know of in my area.
You may want to give it a shot and see what you think. My experience may not be representative.
You can get on their email list and they will send you an email every month showing the speakers and topics. That way, if you see something you think may be useful to you, you could go and see.
You do not need to be a member or make reservations. Just go and pay the $20 or $30 (for a couple).
Are you going to invest in OC? I have not even tried. I think it would be very difficult to buy anything below market here. I am sure there are many big money pros buying up the few foreclosure deals that may be around.
I have been investing in OH. I have not even heard of someone getting a below market deal in OC. Have you? Of course, if you would have bought something at full price 12 months ago, you would be up 23.7% by now, according to the front page of today’s OC REGISTER.
Randy,
I may consider getting on their mailing list. It is possible that Mr. Reddick is the exception to the group.
I have not considered investing in OC yet. I am currently looking at property in Nevada (Reno in particular). I may consider doing L/O in OC because it seems like the perfect market (for about a year or so) to do so. I did see the Register article this morning, and I can’t help but wonder when a correction will happen. It’s bound to happen in another couple of years, and that leaves me reluctant to invest in OC. Prices are just too high. I saw an article on the news the other night addressing concerns about pending foreclosures due to over inflated prices and ARM’s. For now I will play it safe and look for investments out of California.
What type of investments do you look for? Well good luck to you, and thanks again for your input. Please let me know if you would be interested in keeping in touch. It certainly wouldn’t hurt to network with others in OC. Take care and good luck to you.