Will some SoCal investment condos pencil out in 2008?

I've always been a fan of buying average properties in 'adjacent' neighborhoods because their values tend to rise as much or more than the hotter zip codes next door, potentially providing a better return on your investment and a higher Cap Rate. In order to watch the market for these gems, a couple of years ago I signed up with ZipRealty.com to send me daily listings on all two-bedroom/two-bath condos or townhomes priced under $250,000 because at that level rents and holding costs become closer in line with each other. I watched as listings in borderline neighborhoods throughout the San Fernando Valley, Long Beach and the San Gabriel Valley gave way to the occasional age-restricted listing in Santa Clarita or condos in the Antelope Valley (a condo in Lancaster?) throughout 2006 and 2007.

Lately, however, there have been more signs of life for these listings in the northern and western reaches of the San Fernando Valley as well as parts of north Long Beach. And as rents for two-bedroom apartments trend upwards towards the $1,800 to $2,000 level and more, these once-questionable investments might start to make more sense.

I highly recommend that you sign up for your own personalized daily listings from ZipRealty or another service not only for your own potential purposes, but for an interesting way to gauge inventory in what is a truly entry-level market.