The investor phone calls we get each week show that most don’t understand the local Santa Clarita Valley real estate market.
We have the same lacking real estate inventory as the rest of the state. We have home sellers that are excited to sell and will able to demand a premium for their homes with doing little in the way of repairs.
The local market has some of the ‘potential’ home sellers pausing and renting out their properties, having saved enough over the years to buy the next one with 20% down.
Some are doing this because they know the Santa Clarita rental market is hot. It’s even hotter than the Santa Clarita resale market.
These investors are looking for that home that would sell for under market value that needs work. They’d come in and pay 75k less than fair market value compared to a renovated/remodeled one, put 10k into it and then have us sell it.
Deals such as these in the Santa Clarita real estate market are non-existent in the current market.
While I don’t see any proverbial bubble bursting, prices are close to peak as we experienced back in 2007 and some are a bit over the peak.
With flipping on a nationwide scale up, what is a local Santa Clarita real estate investor to do if they want to make money investing in the local Santa Clarita real estate market?
As is some of our investor’s plan – they buy, hold and rent. As I stated the Santa Clarita real estate rental market is hot. In a lot of cases, the properties can be bought and rented to cash flow. Not HUGE, but cash flow just the same. The strategy is to hold until the market climbs in value, then selling and making a profit.
Another strategy that has started as of late, which has been “humming” in the background being taken advantage by the savviest investors is New Housing and New Builder, Homes.
Buying a new home as an investment strategy is not old. We saw a lot of money from overseas hitting the local Santa Clarita Valley with the built out of Tesoro Del Valle. We also noticed a lot of “buying to hold” during the first few phases of most new home construction/builder sites in the SCV.
Where some of those “investors” have gotten into trouble is underestimating the mello roos and special assessments when considering the gain and resale amounts. They found out the hard way that most of the home buyers in the current market for SCV real estate are not interested in purchasing homes with high mello roos. In fact, most of the home buyers don’t want to buy real estate with mello roos at all. Unless those homes have been priced accordingly with their competition related to home without mello roos.
At this time, 06/07/2018, there is a lot of new construction in and around of the Santa Clarita Valley. Suggestions are always to have your own representative and find out when the new phase releases are. Do they require 50% sold of the current phase of 75% etc? Then ask how many phases, calculate the estimated number of homes per phase, and then find out how much the past price increases have been since the start. You will also want to know how often the new “pricing sheet” is generated from the corporate office within that specific new home tract or builder community.
Then there are the rules. The rules pertaining to if the New Home Homeowners association allows for investor purchases or if there is a minimum time the buyer has to live in the residence before renting/selling. There could be penalties if your strategy is to buy a new home during the first few phases, if the increases make sense, then turning around and flipping it when the buildout is complete.
Some of our investors ask if there are “teeth” to these rules. I state you signed that you agreed when buying the new home. A lawyer would have to figure if the HOA has an enforceable action against you. And the HOA would have to file suit as a violation of the Covenants, Conditions, and Restrictions (CC&R).
When you are ready to approach the new home centers in and around the Santa Clarita – Valencia CA areas, I will be your guide and walk you through the “I just want to buy a new home to live in” and or the “I want to buy a new home to flip as an investor” strategies.
I’m Connor with HONOR MacIvor and I’m glad to be at your service related to the purchasing of investment properties. Of course, our mainstay of business comes from those regular folks that want to buy to live or sell to move 🙂 Talk soon and thank you for having a read of the latest Santa Clarita investment strategies for real estate. When you are ready to discuss this investment strategy further – I’m here.