Income Properties in Orange County, CA

An income property is a multi-family home consisting of two, three, or four separate units but built as a single dwelling. The units are built either side-by-side, separated by a firewall, or they may be stacked. Duplex, triplex, and fourplex homes are very popular in high-density areas such as older Orange County, California cities or in more expensive beach area communities. Income properties offer the advantage of being able to live in one of the units as an owner/occupant while renting out the others. You will generally get a better loan rate if you intent to occupy one of the units. For many investors, income properties are bought as pure rental properties that may increase in value over time. Search the links below to find a duplex for sale in Orange County, CA, as well as triplex, fourplex (quad), or larger multi-housing units for sale. 

 Income Property Menu - Select a link below to go to the selected home search

Search by Cap Rate!	Search by area and list price	Search by GRM, GSI or NOI - Coming soon!
Duplexes -  By city	Triplexes - By city	Fourplexes - By city
Duplexes -  By price range	Triplexes - By price range	Fourplexes - By price range
Bank owned income properties	Income property terms & definitions	Buying income properties - Some tips

Search by Cap Rate

The Cap Rate (Capitalization Rate) is a ratio commonly used to estimate the value of income producing properties and it is a common profitability index. Cap Rate is calculated by dividing the Net Operating Income (NOI) by the sales price or value of a property. The result is expressed as a percentage and the higher the percentage, the better. The search below is divided into three Orange County areas.  

Note: Not all agents publish Cap Rates with their listings, as they may not aware of the required numbers. There may be many other listings available for sale with similar, but unpublished cap rates, so it is always advisable to search for income properties using multiple search methods.  

^ Back to Top

Search by area and list price

I've created the following search links for buyers who simply want to search by OC area and list price. The links are divided into three areas, Orange County beach and coastal cities, plus North and South inland cities. Number of units include two and up.

^ Back to Top

Duplexes  - Orange County, CA

Duplexes by city

Duplexes may be the most popular of the multi-unit housing properties because of their affordability, versatility, and ease of renting the second unit. While popular with investors, they are also popular with owners who wish to live in one unit while renting out the other and with extended families who may enjoy living in adjoining units. You may search for Orange County, CA duplexes by city or by price below. Are you looking for properties in a different city? Just e-mail me and I'll send you MLS listings in the city or area of your choice.

^ Back to Top

Duplexes by price

^ Back to Top

Triplexes - Orange County, CA

Triplexes by city

You can search below for 3 unit (Triplex) income properties in major Orange County cites. These include Anaheim, Brea, Costa Mesa, Dana Point, Fullerton, Huntington Beach, Laguna Beach, Newport Beach, Orange, San Clemente, San Juan Capistrano, and Tustin. All units are listed in price sequence (low to high).

^ Back to Top

Triplexes by price

^ Back to Top

Fourplexes

Fourplexes by city

"Fourplex" (also know as a "quad") is short for a 4 unit complex. While the four rentable units definitely give the investor the highest "bang for the buck", there is also a higher cost of maintenance and greater occupant turnover than with duplexes or triplexes. Search for fourplexes in Anaheim, Brea, Costa Mesa, Dana Point, Fullerton, Huntington Beach, Laguna Beach, Newport Beach, Orange, San Clemente, San Juan Capistrano, or Tustin, in Orange County, CA.,

^ Back to Top

Fourplexes by price

^ Back to Top

Bank Owned Income Properties

Bank Owned or REO properties are homes that were taken back by the lender after a foreclosure. They may be a good bargain, as lenders often price these units to sell. The links for bank owned units below include 2, 3, and 4 unit complexes in major cities of Orange County, CA

^ Back to Top 

Income property terms & definitions

There are several terms you will need to become familiar with when searching for income properties. Two of the most popular terms are Cap Rate and Gross Rent Multiplier (GRM). There are several other terms which you may see on MLS listings for income properties and it is important to know them also. 

Cap Rate - Capitalization rate (or "cap rate") is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or alternatively its current market value. The rate is calculated in a simple fashion as follows: cap rate = annual net operating income / cost. For example, if a building is purchased for $1,000,000 sale price and it produces $100,000 in positive net operating income (the amount left over after fixed costs and variable costs are subtracted from gross lease income) during one year, then: $100,000 / $1,000,000 = 0.10 = 10% ( the asset's capitalization rate is ten percent). The lower the selling price the higher the cap rate. The higher the selling price, the lower the cap rate. In summary, from an investor's or buyer's perspective, the higher the Cap rate, the better.

Gross Rent Multiplier - Gross Rent Multiplier or "GRM" is the ratio of the price of a real estate investment to its annual rental income before expenses: Gross Rent Multiplier (GRM) = Sale Price / Potential Gross Income. Only two pieces of financial information are required to calculate the Gross Rent Multiplier for a property, the sales price and the total gross rents possible. The GRM is useful for comparing and selecting investment properties where operating costs can be expected to be uniform across properties. In this case, a property value may be estimated using the following related formula: Sale Price = Gross Rent Multiplier x Potential Gross Income. For GRM, the lower the number, the better.

Gross Scheduled Income - GSI is the maximum amount of annual rent you would collect if the property were 100% occupied all year and all tenants paid their rent. However, realistically owners experience vacancies and uncollected rents as well as generate other income outside of rents. Example: Ten Unit Property, 5 units rented at $1000 a month and 5 units rented at $1200 a month. GSI = Monthly Rents (5) X ($1000) + (5) X ($1200) = $11,000 monthly. $11,000 X 12 Months = $132,000 Annual Gross Scheduled Income.

Net Operating Income - NOI is equal to a property's yearly gross income less operating expenses. This number is a key number in evaluating multifamily investments, because it is used to determine value, profitability, and overall strength of the multifamily unit.

Operating Expenses - are costs associated with the operation and maintenance of an income producing property. These costs can include repairs, utilities, insurance, advertising, property taxes, realtor commissions, and other costs. it does not include 1) capital expenses such as improvements to the home, 2) income or capital gains taxes, or 3) mortgage interest. 

Vacancy Allowance - This is an estimate of the amount of rent lost due to unoccupied units. This figure is rarely stated for income property listings, yet you should make an effort to estimate annual vacancy in order to calculate net profitability of your investment. 

.^ Back to Top

Buying income properties - Some tips

Showing multi-unit / multi-family properties

If a property that you are interested in has a unit that is vacant, we will typically be allowed to visit and inspect that unit. You may be surprised to learn however, that many of the income producing properties for sale are not immediately show able and are frequently listed as "drive by only - subject to inspection". The reason for this is that many properties are fully rented and the listing agent (or property owner) does not wish to have all of the tenants disturbed for every showing. Instead, they will usually accommodate a showing of all units only after receiving an accepted offer. While this might seem problematic, the offer is always "subject to inspection" so your offer would not be binding if you did like what you saw, or if an inspection revealed issues that you were not comfortable with. If a property does have one or more a vacant units, I will be happy to arrange a showing for you. If however the property is listed as "drive by only", it is a good idea to go by the units yourself to check out the neighborhood and structure and see if you are interested in taking the next step.

Investing in multi-unit properties

Before you invest in a Duplex, Triplex, or Fourplex, you will need to do your due diligence. Here is some of the criteria for purchasing multi family units:

Step # 1 : First off, work with the right Realtor

Properties with four units or less are considered residential property and you can use the services of a standard residential Realtor to assist you. Properties with greater than four units are considered commercial properties and if you are interested in purchasing one of these, you will need to contact a commercial realty for assistance.

Step #2 : Check out market areas

Where do you want to invest? One of the beach areas? North OC? South OC? Close to business centers? Ask yourself the following:

• What are the local tax rates?
• Is the area close to centers of employment or is it more rural or suburban?
• Do you also want to live there or are you looking at a pure rental unit?
• Is the area growing?

Step #3 : Analyze your finances

Before you search for income property listings, take note of your financials

• Get your credit score
• What is your maximum down payment?
• What are your cash reserves?
• What are your debts and monthly obligations?

You will need to know your credit scores, debits, cash on hand and in reserve, because a lender will use these factors to determine your loan qualifications and purchasing power.  

Step #4 : Consult with a lender and check out mortgage options

Call your lender or ask me for a referral. Income properties are classified as Multi-Family 2 but still considered residential real estate, so financing is similar to a single family home. The major financing difference depends if you are going to be a owner/occupant or a pure landlord. The other variable to ask about is if a lender will take into the consideration the potential rental income on the property.

• If you are a “unseasoned” investor, they may give your potential rental income zero consideration and will simply finance you based on your ability pay the whole mortgage with your current financial means.
• If you are a “seasoned” investor then they may take into consideration a certain percentage of potential rental income. Almost no lender will speculate on 100% occupancy. Most likely it will be somewhere near 75% from a lender’s perspective. What percentage they use also relates to your owner occupancy status on the property.

The down payment on the property is affected by your owner occupancy. For example a lender may allow 10% down if your are buying as a owner occupant and want 20% down if you are a buying as pure investment property.

One thing you will want to ask any lender is what the occupancy period is before you can leave the property as an owner occupant and turn that unit into a rental.  It may be a year, it may be more. Verify this outside of your lender per your state rules.

Step #5 : Create a plan for renting the unit(s)

Once you know your financing options, think about your income property marketing plan. With any investment property, numbers tell the story. Find vacancy and credit lose rates in the area you want to buy. If you experience a high rate of vacancy, will your cash reserve allow you to pay your mortgage? Estimating the vacancy rates are important but so are the local rental rates. This rental income rate should be based on recent history and should be the average rate. I can help you research this by running "comps" (comparables) for you!

Step #6 : Shop for homes and narrow your possibilities

I will help you look at home options that meet your criteria. My income property home searches (above) will help you search for units by, city, price, Cap Rate. or other criteria. Once you have a rough idea of "where" and "how much", we will look at comparable prices and potential rental amounts. I will also be happy to take you out for showings of your final selections. 

Would you like to know the latest income and multi-unit property mortgage rates?

If you interested in knowing the current mortgage loan rates for a duplex, triplex, or fourplex multi-family investor property, call me, or write to me at Ron@rondrealestate.com. I will be glad to provide you with several lender referrals. My contacts are residential multi-unit property mortgage specialists and they will be happy to help you find the right loan with the most competitive interest rate!

^ Back to Top

I will be happy to help you with a duplex, triplex, or fourplex income or investment property in Orange County, CA. If you have specific requirements, just contact me. I will be glad to set up a custom search for you. I can also set up an automated e-mail for you that will alert you to any new listings or price reductions on the MLS. I can also help you with the sale of your multi-family property. Just call or e-mail me at Ron@rondrealestate.com

Ron@rondrealestate.com DRE LIc# 01728866