BiggerPockets

Hi all,

Just working out my criteria and goals for RE investing and I was wondering if the information below can help members here direct me to good ideas that I'm missing and/or correct any ill conceived plans

I'm 39, have about 10K saved up, and I'm going forward with a buy and hold strategy. A few other points of my investing strategy:

• single family homes
• 175K-250K price range
• Equity position between 20-70%
• Looking for properties that need some work and
• 15-20% under market value

Basically for the first few years I'm trying to stay away from the the higher end market (commercial and multifamily) but somewhere down the road (2-4 years) I'd be interested in these areas.

I believe you need a niche market to focus on, master that niche, and only move out of your niche if you want to work on another niche.

Two books that I'm garnering most of my ideas and plans from: The Millionaire Real Estate Investor -- Gary Keller

I'm also reading William Nickerson's, "How I Turned $1,000 into Three Million...." but since it's a bit out dated I'm just trying to glean whatever I can from this well written guidebook. I find his formula of 100 x gross monthly income for single family homes and buildings with 4 units or more 10 x fixed annual net income to be a good measuring sticks for finding properties -- but is it realistic? Anything anyone could mention about this?

I live in LA and everyone that I talk to here that wants to do RE investing saying -- "California is too hard" and "it won't work here, the LA market is too pricey". What do you think of these statements?

Best regards and please feel free to open up on anything you feel might be of help

Thanks,

Ben Bary

Don't limit yourself to the stringent profiting standards in CA, though it is possible to make out fairly well in some parts of the state.

Have you researched investing out of state? I'd highly consider investing out of state before making any sort of investment in the CA market. Prices are cheaper and rents are higher elsewhere. It may seem a bit frightening to invest in RE hundreds of miles away, but it really isn't that difficult. Many others, especially some of the members on this site, invest out of state quite regularly and are making a killing.

Best of luck to ya!

If your just starting out investing, I am not sure it would be a good idea to start investing over distance until you get your feet wet and build up some cash reserves

I would disagree with that. In fact, my first investments were out of state. What I would recommend is that you have the right team in place and complete your DD Before you invest.

That said, buy and hold is not the only strategy available and as such, CA does offer many other alternatives. I am currently investing here in CA and am doing quite well.

Originally posted by Benjamin Bary

...
I find his formula of 100 x gross monthly income for single family homes and buildings with 4 units or more 10 x fixed annual net income to be a good measuring sticks for finding properties -- but is it realistic? Anything anyone could mention about this?

...

The factor of 100 times income is a "1% rule". If you search the landlord forums, you'll see that a "2% rule" is favored.

Unless you are willing to prop up what could be a possible negative cashflow over the long run.