Ron Denhaan, Realtor (949) 290-3263. Orange County real estate specialist.

Investment homes, properties, and real estate in Orange County, CA | Investor resources, short sales, foreclosures, REOs, bank owned properties

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Investor homes and real estate in Orange County, CA   

Investment homes and real estate in Orange County, CA

Investment property in Orange County, CA. OC is becoming very popular with real estate investors due to the excellent home prices, great financing, and quality of homes. Many investors are purchasing homes or multi-unit properties to use as rentals, for their children, or for retirement. An investor may choose among many wonderful areas with excellent fundamentals, including schools, shopping, freeway access, employment, recreational opportunities and more. There is ample inventory, including condos, town homes, lots, land, single family homes, income properties and custom estate properties. Prices are great, due to an abundance of motivated sellers, short sales, foreclosures, REOs, and bank owned homes and properties. Home financing and mortgage rates are at their lowest in many years. Home leases and rental properties are in demand in Orange County, CA. Monthly rental prices are excellent and there are many qualified tenants looking for a quality home to lease.

All of this adds up to some great opportunities for the real estate investor. I will be happy to send you sale or lease/rental comparables (comps), current home listings, tax, Mello Roos, or HOA (Home Owners Association) costs, days on market, price reductions, current deals, and information for homes anywhere in Orange County, CA. I can also give you referrals to lenders who will help you qualify for a loan and get you pre-approved -- an essential step to purchasing investment properties.

Orange County, CA home and real estate search pages

Home in foreclosure Use the following home search and informational links to find Orange County, CA bank owned homes, foreclosures, homes with owner financing, lots & land, homes with no Mello Roos, and information on Short Sales. I will happy to provide you with the information you are looking for. For home searches, there are a number of web pages on my site, by city, area, or a general home search page. I can also set up an automatic home search for you that will e-mail you whenever a new property comes on the market, or when a home has a price reduction.  This can be set up with your personal home search criteria, including price, location, bank owned, short sale, etc. New If you are handy and looking for a bargain, I have a new link for fixer-upper homes below. If you are interested in investment property, or real estate investing in Orange County, CA, call me to discuss! 

E-mail me if you are interested in receiving current MLS listings of bank owned, foreclosure, or short sale properties!

E-mail me if you would like property tax, Mello Roos, or HOA cost information on any property!


Real Estate Investment Fundamentals

Real estate investing You always hear about people who made their fortunes investing in the stock market and you also hear about other investors who lost their shirts playing the same game. But you hardly ever hear about real-estate investors who go bankrupt, and that's because it doesn't happen often. That's right, those individuals who invested wisely in real estate many years ago are living a very comfortable lifestyle. Investing in Real Estate wisely can garner lots of money, so if you're just getting started, or have considered investing in real estate, the information that follows is invaluable

Investing in real estate requires entrepreneurial skills and a vision, which is why not everyone is jumping on the real estate bandwagon. Not everyone is willing to take the additional risk that real-estate investing entails. And these are the same people or renters that will make you rich. The little secret is that there are hundreds of individuals who choose to procrastinate for every one individual who has a vision and chooses to take the risk with investing in real-estate.

Investing in real estate requires a lot of time; you need to deal with a vast array of tenants -- good ones as well as bad. Just like a business, you also have to deal with operating and fixed expenses -- such as heating and electrical bills, as well as renovation costs. On the other hand, the rents keep ticking away 24 hours a day, 7 days a week, whether I'm on the job or not. And those loans keep amortizing.  Aside from being your own boss, having the freedom to travel while earning profits, increasing your net worth, and having a place of your own to call home, there are greater benefits of investing in real estate:

1. Cash Flow
Cash is the difference between your income and your expenses on a piece of property. You can have a positive or negative cash flow. Obviously, you'll feel a lot better if the cash flow is positive. Some people prefer to reduce debt as quickly as possible and sacrifice a little, and keep a negative or zero cash flow. My advice on cash flow is this: Never use all of your positive cash flow with rapid debt reduction. You will be walking a thin line. By keeping a strong positive cash flow, you will have more options and space to maneuver.

2. Appreciation
Appreciation is the increase in value of a property. There are 2 kinds of appreciation. The first is from economic conditions beyond your control, such as inflation. But you wouldn't gain much from this type of appreciation since the gain is offset by the higher cost of living. The second kind of appreciation is market appreciation. This kind of appreciation, you can control . When you improve a property (through renovation), you are, in effect, forcing its value higher. You can purchase a piece of property in need of repairs and bring it back up to neighborhood standards or slightly higher. This will give you a property that is much higher in value.

3. Leverage
Leverage is the ability to borrow a percentage of the value of a piece of property. Real estate, in comparison to other investments offers a very high degree of leverage. In some cases a couple buying a single-family home can obtain 95% financing. This allows individuals to purchase real estate with little, if any, of their own money. What other investments offer such a high degree of leverage?

4. Amortization
With leverage, or the use of other people's money, comes a repayment schedule. Your outstanding balance is being reduced with every payment you make. Part of each payment goes to interest (applied first), and part of your payment goes to principal. The principal reduction is called amortization -- reducing debt Hence, amortization can make you wealthy -- slowly and steadily.

5. Tax Advantages
Owning real estate with the goal of making profit allows you to deduct interest payments and other expenses come tax time. But, don't be fooled into buying real estate for the tax advantages; buy real estate because it makes economic sense to do so.

Owning your own real-estate business is a great way to achieve your financial freedom, but to achieve these goals, an individual needs to understand the fundamentals of real-estate investing. Probably the most important aspect of real-estate investment is the notion of time. A seasoned investor knows that in the real-estate game, there is no "quick buck." Everything comes with time.

Time, not money

The secret isn't money, it's time

Real estate, like a business, is a great form of investing, but it takes a lot of work and time on your part. Especially if, to begin with, your resources are limited. But that's okay because you're going to build your wealth one brick at a time. The first thing you need to spend time on is developing a vision. You need to be specific about what things you want for you and your family. Then you need to ensure that you act on your vision by motivating yourself. What do you want Real Estate to do for you? Spend some time thinking about it because money really isn't enough.

The desire to make a million dollars won't get you going. It is things such as new cars, vacations, improved health, improved housing, and upgrading your lifestyle that will motivate an individual to succeed. The worst thing that you can do -- especially while planning -- is surround yourself with negative people who will trample all over your vision. Once your vision is established, you'll need a game plan to help you reach it effectively.

Have a game plan

Once you realize that unlike the stock market, investing in Real Estate is for the long haul, you can begin to develop your plan of action. Here is a list of the important things that you should consider:

1. Get a good support team
Don't wait until you have a deal in the works to find a supporting team. The idea is to get the competent professionals on your side. And by bringing them repeat business, you can bargain for better prices. You need to get the following players on your team:

  • Mentor -- Someone who's been in the business for some time now and knows how to smooth out the rough spots, or who can give you wise advice for sticky situations. Maybe even a potential partner.
  • An attorney or pre-paid legal service-- Ones that specialize in real-estate deals are best.
  • Title or Escrow Co -- Don't deal with big-name companies; find one that specializes with real-estate investors. Make sure they understand double closings and land contracts.
  • Insurance Agent -- Just like the Escrow Co, find one who specializes in real-estate investors and who understands land contracts, landlords, and so on.
  • Contractors -- Always needed for the more complicated fixer-upper properties. Aim to establish a good base of reliable contractors.
  • Mortgage Broker -- Find one who is creative, savvy and experienced in dealing with real-estate investors.
  • CPA (Certified Public Accountant) -- Look for an aggressive individual who preferably owns investment real estate himself.

2. Be persistent
Very few deals are made on the first attempt. Most deals are actually booked by persistent individuals who follow up with a fifth and sixth attempt. If the deal is too good to pass up, have a follow-up system (schedule follow-ups and keep a running history of conversations). Eventually, you'll come to an agreement and close the deal.

3. Stay informed
You can lose a lot of money thanks to an investment mistake. Ignorance can cost you more than what it would cost to stay informed on new developments within the real-estate market. Consider attending seminars every year. You can usually learn something that either increases your income or prevents you from landing in trouble.

4. Treat this as a business
Real-estate investing is a business like any other. It takes a long time to develop customers, associates, partners, and so on. You need to be disciplined and professional, and with much effort -- and of course some time -- it will flourish into a profitable business.

Where do you start?

I personally recommend that a new real-estate investor begin with condos or single-family houses. Why? Because they have the two biggest players in the market. Whereas apartments only have investors playing in the market, single-family homes and condos have both investors and owner-occupants. For this reason, financial institutions feel more comfortable lending a higher percentage of value on the property. Call Me!

Home Investment Strategies

Following are two strategies used by many investors who deal in the single-family home or condominium market. The idea is to take on one at a time and eventually combine several strategies with your investment plan.

1. Buy and Hold Strategy: The starting point for most investors. The goal is to purchase the house with the sole intent of renting it. For this method to be successful, you must purchase under some set price and terms that allow for a healthy, positive cash flow. The rent has to be higher than the mortgage payment.

2. Buy Low-Sell High Strategy (AKA, "Flipping"): Purchase a home located in a neighborhood with high sales activity. Make the necessary cosmetic and structural repairs and then sell the house for a higher price than what you paid. Keep in mind that the purchase price must be low enough to allow room to cover your repair costs, holding costs and resale costs... plus, leave room for a healthy profit. With experience, you may want to seek greater profits by going after properties in foreclosure or REOs (bank owned).

Finally, stop procrastinating and "get in the game"

Don't expect to go through real-estate investing without making any mistakes. Like most businesses there is a learning curve. You will only learn the real-estate game by being active and understanding the buying process. To be successful, you need to learn the market, how to locate property, inspect property, negotiate your deal, contract to buy, finance the purchase, and close the transaction. You can't possible learn all this at once; the only way you'll ever be ready to understand, is by actually going through the motions.

The "1031" tax-deferred exchange. One of your best investor tools!

How would you like to be able to defer paying capital gains taxes on your investment properties and keep the money rolling into new investments? You can do this through the 1031 exchange. A 1031 exchange, also known as a Starker exchange or a tax-deferred exchange, allows you to sell investment property and to defer capital gains and depreciation recapture taxes. This assumes reinvestment of 100% of the equity into "like-kind" property (or a combination of properties) of equal or greater value. Any property held for investment purposes or for productive use in a trade or business generally qualifies as "like kind" property for 1031 exchange purposes.

1031 exchange rules require an investor to identify up to three potential "replacement investment properties within 45 days of the close of escrow on their relinquished property. The acquisition of the replacement investment property (or properties) must be successfully completed within 180 days of close of the relinquished property.

Benefits of a tax-deferred exchange

A 1031 tax-deferred exchange offers strong benefits that translate into investment savings.

  • You can defer Taxes

A 1031 exchange enables you to defer capital gains and depreciation recapture taxes. You can also harvest dormant equity at predictable time intervals with a 1031 exchange to maximize the inherent benefits of your real estate investments.

  • You can Potentially Increase Cash Flow

The tax dollars saved may be maximized to increase cash flow and overall net worth. The compounding effects of leveraging the equity in investment properties over several holding periods can potentially produce higher actual dollar returns, new depreciation schedules to tax shelter cash flow, and accelerate equity accumulation.

Ron Denhaan I'll be glad to discuss any questions you may have on Real Estate investing. I will happy to keep you updated on homes in Orange County, including setting up an automated home search for you, using your personal search criteria. I am a specialist in short sales,  bank owned homes, multi-unit properties, condominiums, foreclosures,  and real estate in this area. I serve all areas of Orange County, California, including Rancho Santa Margarita, Mission Viejo, Laguna Niguel, San Juan Capistrano, Orange, Anaheim, Fullerton, Yorba Linda, Brea, Laguna Beach, San Clemente, Coto de Caza, Ladera Ranch, Lake Forest, Tustin, Irvine, North County cities, gated communities, beach communities, canyon communities, and more. I can offer investor assistance. Please give me a call!

Ron Denhaan, Realtor   

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