Why I Like California Real Estate Investing

As a Real Estate investor you have so many choices to make especially at the beginning.  You know am I a "Flipper" or am I a "Buy and Hold Investor" or do I just want a "Deal" with no idea what a deal is? Also do I buy in my backyard or a quick drive away or do I try out of state?

I strongly believe every real estate investor has to come to their own conclusions as they will be the ones living with the results either good or bad.  It is on this thread that I want to pull and highlight why I particularly like California Real Estate Investing.

After 15 years of investing it has become painful clear to me that California Real Estate investing is not for the weak at heart.  I remember 2001, the build up to 2007, the crash and the moment the hedge funds showed up to change the market forever (Darn those guys).  

In addition I have a feel for where the market is going or at least that is what I tell myself late at night when I am beating myself asking if I should buy more, sell some or sit on my hands.  I want to be clear on this point. No one has a crystal ball and no one can predict the future but experience is at least useful and better than guessing.

Okay back to why California Real Estate at least for me.  The fact that is never boring, has peaks and valleys and trends that you should never fight as the market can remain insane a lot longer than anyone person can remain liquid is exactly why I love California Real Estate Investing.

Now I know this high volatility is not for everyone and for many investors I will admit it is 100% the wrong thing as some folks need the seemingly straight line of low single digit appreciation and that is okay.

I however enjoy the high volatility as it marries well with my belief that real estate buying and selling is inefficient and if you do it long enough you can capitalize on the inefficiencies of the market.

Let me give you just one example from a few years ago to highlight my point.  I am a Buy and Hold investor as I like the cash flow and long term wealth creation of Real Estate.  But something odd or inefficient happened about 6 years ago just after I bought a great Buy and Hold Property.  

About a week or so after closing on a great buy and hold property the government announced an 8K kicker to owner occupant buyers as I recall.  It has been a long time but 8K seems to stick in my mind.  The other catch was this 8K had a clock on it meaning buyers had to close by a certain date or lose the money.

Well I had a great house that was just about to be put up for rent as I was completing the Make Ready activities that every house needed during this part of the cycle.  That is when the inefficient market hit me like a ton of bricks.  

Apparently the 8K kicker was like a sugar rush to kids and buyers were everywhere in my market. I had no intention of selling but then a buyer came along and wanted to essentially had us tens of thousands of dollars in short term profit and we said why not as the market bump was artificial, we wouldn't buy the property at the price we were offered so we took the offer and sold the property.

This is just one example of the inefficient market helping us build our wealth and we are happy every time we use it to our advantage.  It should be noted that when the market goes against you assuming you bought right you just sit on you hands and do nothing as some of the best investments you will make will be the ones you don't if you catch my drift.

Keep learning as you will never know everything and please never get cocky or a big ego as Real Estate Investing has a nasty habit of crushing people who think they know it all.

Good Investing

Z