Is it possible to start out in Southern California with $35k?
Lender · Redlands, CA · Member since 2017 · 30 posts · 16 votes
Is it possible to start out in Southern California with $35k?
Most Popular Reply
Bay area, CA · Member since 2021 · 383 posts · 306 votes
3yI am from California and after facing the same issue of not being able to afford good deals, I decided to invest out of state and it's been going great.
Message me and we can connect. I will share my insights/experience.
31 Replies
- Real Estate Agent · Miramar Beach, FL · Member since 2016 · 285 posts · 245 votes3y
@Harrison Colunga It won't get you real far unless you're able to use a low-down first-time homebuyer loan like maybe an FHA loan or similar. If that was something you wanted to consider, it would be smart to look for something that would allow you to have roommates to help offset your costs. Remember though, even out of state investing will likely require 20% down so you'll likely need a bit more than $35K to make sure you have enough for the down payment, closing costs, rehab costs, a starter reserve account, etc., if you want to buy in a solid market and not one that has been stagnant the last 20 years and has little prospect for growth. However, with that said, do you have family/friends in any other out-of-state markets that could at least serve as a starting point to eventually start looking? Connections can always be made but it will just be a matter of putting in the time to develop relationships with folks in those areas.
If you're looking for your first deal, just remember that taking your time to ready yourself is equally important as finding a deal. Continue saving as much as you can, build your credit, keep your cost of living low, and continue to educate yourself through BP, podcasts, and books. Everyone is nervous when they are first starting out, that is normal and nothing to be embarrassed about. Do things at the pace in which you feel personally comfortable with.
- Rental Property Investor · Milwaukee · Member since 2020 · 30 posts · 13 votes3y
Hi Harrison - if I were in your position, I would use part of your $35k in a marketing campaign and another chunk for networking and education. If you can market and find yourself with a great deal on your hands (no matter the price point), you can leverage your network and find people who will want to fund the property for you. Finding and putting a deal together is a lot of work, and people will be willing to give you that money (assuming you know what you're doing) as long as they can expect good returns.
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes3y
Househack fix it and flip it
@Harrison Colunga why don't you list some of your strengths and try to make connections? What can you offer other investors?
Your post lists all negative qualities: "$35k is not a lot," "I have 0 connections," "analysis paralysis," "nervous to start..." This won't take you very far.
- Bay area, CA · Member since 2021 · 383 posts · 306 votes3y
I am from California and after facing the same issue of not being able to afford good deals, I decided to invest out of state and it's been going great.
Message me and we can connect. I will share my insights/experience.
- Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes3y
@Harrison Colunga You have the option to house hack! 5% down on a SFH and rent the rooms out! You can live for free in this area. I do the same thing in Redlands and now just got 2 people to do the same in Moval!
- Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes3y
@Harrison Colunga
I would be cautious investing in CA or any other tenant friendly state. I normally would be an advocate for house hacking a small multi-family where you live. I personally was in your position 8years ago and bought a duplex in Riverside, CA and scaled from there. With the way the state government is behaving, including still having rent moratoriums from the pandemic and the cost of the property it is not worth it. Right now, I have all of my RE outside of CA paying all my bills in CA. I rent for $2,700 a month and to buy a house in the same track it would cost $180k and $5,600/mo. That is ridiculously overpriced. Stay with fundamentals and the goal if you house hack is to minimize your expenses or if you buy a rental to be CF+. - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
The first thing you need is a shift in mindset. All I hear are excuses for why you can't buy. You should be asking "how can I...?"
You can purchase with 5% down, sometimes less. Find an off-market property for below market prices. Find someone with money to partner with you. Do a house hack.
Instead of spending four hours watching TV every night, playing Fortnite, or partying with friends, read books, listen to podcasts, attend networking events, study the market, walk neighborhoods talking to people and looking for deals, etc. Instead of complaining about the lack of funds, get a second job, educate yourself for a better-paying job, ask your boss for a raise, find side hustles, sell your car, etc.
People that find success are people that do things different than the majority of society. They work harder, sacrifice, display strong financial discipline, and spend more time self-educating than entertaining.
The DIY Landlord Book4.7247 Reviews - Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes3y
$35,000 is enough for a down payment on a starter home. Try to find something in San Bernardino near CSUSB or near Loma Linda or Redlands University so you can house hack. Find a 4 bedroom and live in the master bedroom yourself. Rent out the other rooms at a slight premium. Or you could try to find a duplex as your primary home and rent out the duplex if you can't house hack. I currently live in Redlands and have a duplex in my backyard. Rent to some amazing tenants and I'm profiting off of my personal home. Great situation as long as you screen your tenants properly.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
You can start in any market with no money, just have to structure the deal correctly. Seller finance $0 down
- Rental Property Investor · Rancho Cucamonga, CA · Member since 2020 · 60 posts · 23 votes3y
Quote from @Nathan Gesner:
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
The first thing you need is a shift in mindset. All I hear are excuses for why you can't buy. You should be asking "how can I...?"
You can purchase with 5% down, sometimes less. Find an off-market property for below market prices. Find someone with money to partner with you. Do a house hack.
Instead of spending four hours watching TV every night, playing Fortnite, or partying with friends, read books, listen to podcasts, attend networking events, study the market, walk neighborhoods talking to people and looking for deals, etc. Instead of complaining about the lack of funds, get a second job, educate yourself for a better-paying job, ask your boss for a raise, find side hustles, sell your car, etc.
People that find success are people that do things different than the majority of society. They work harder, sacrifice, display strong financial discipline, and spend more time self-educating than entertaining.
Excellent advice. I needed to hear that too. Thank you. - Investor · Riverside, CA · Member since 2013 · 25 posts · 10 votes3y
I started with a SFH in 2012 and then another in 2015.... then nothing until last year. Since last year I purchased 7 units in 3 different states without ever seeing the properties in person. Not to brag, but to simply show that it can be done. I know there are people out there doing way more deals and volume then I have. It really is not that difficult and 35K goes a long way in the mid-west (even now). Just take action!
My last triplex was closed in October. Purchased for 140K and appraised for an ARV of 294K based on structure and 386K by the income approach. To be clear, this appraisal was conducted as if my scope of work was already completed, so it's all subject to change. However, those numbers gave me confidence to move forward. Rehab starts full swing in about two weeks.
I had no contacts in the market whatsoever. I googled agents in the city and called a few. Got a good vibe from one of them and decided to go with her. As she sent me properties and I evaluated them I also reached out to property managers (found on google) until I found one that passed my interview process. We talked about the area, what to expect for rents, and how we would conduct the rehab. I told him I wasn't paying his 20% maintenance fee for a complete rehab and he agreed. From there I found a contractor and got estimates and signed the contract to complete the scope of work. I also found a good RE lawyer who helped me create an LLC for $400 in a single day. That easy. Now it already brings in $2275 per month with $1000 per month payment (interest only hard money at 9.35% interest). Once rehab is complete I will refinance and do it again.
If you want to talk then PM me. I am extremely busy, but if you reach out we can find some time to chat. However, I would not blow 35K on educational materials, etc. There is plenty of free information out there on BP and other pages. Even TicToc has a lot of people who explain how they do real estate deals. Obviously a lot of the info is vague, and the only way to learn is to do it yourself. You don't need to see the entire road in front of you. Just have to be able to see one step in front of you at a time (two, three, or four is better though). Just like driving through fog. You can't see the road a half mile in front of you, but as you drive closer you can see further and further. Cheesy, but true. Good luck!
- Investor · Riverside, CA · Member since 2013 · 25 posts · 10 votes3y
@Harrison Colunga By the way. I'm from Riverside, CA as well. That's how I found your post. I am currently in escrow on both those SFH's that I mentioned I bought in 2012 and 2015. The net profit from those properties is going towards $2M (40 units) in the same area as the triplex I mentioned. It started out extremely slow as I was simply passive and doing everything without other investors. I started with an 11K down payment on that first property and that was almost half of all my liquid savings. Your 35K is a lot more than I had when I started.
- Investor · Redlands, CA · Member since 2016 · 7 posts · 3 votes3y
I’m selling my primary residence. The first floor is a 2 bedroom apartment separate from the main house. 1365 Monterey street in redlands if you wanna check it out.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes3y
Quote from @Matthew Martin:
I started with a SFH in 2012 and then another in 2015.... then nothing until last year. Since last year I purchased 7 units in 3 different states without ever seeing the properties in person. Not to brag, but to simply show that it can be done. I know there are people out there doing way more deals and volume then I have. It really is not that difficult and 35K goes a long way in the mid-west (even now). Just take action!
My last triplex was closed in October. Purchased for 140K and appraised for an ARV of 294K based on structure and 386K by the income approach. To be clear, this appraisal was conducted as if my scope of work was already completed, so it's all subject to change. However, those numbers gave me confidence to move forward. Rehab starts full swing in about two weeks.
I had no contacts in the market whatsoever. I googled agents in the city and called a few. Got a good vibe from one of them and decided to go with her. As she sent me properties and I evaluated them I also reached out to property managers (found on google) until I found one that passed my interview process. We talked about the area, what to expect for rents, and how we would conduct the rehab. I told him I wasn't paying his 20% maintenance fee for a complete rehab and he agreed. From there I found a contractor and got estimates and signed the contract to complete the scope of work. I also found a good RE lawyer who helped me create an LLC for $400 in a single day. That easy. Now it already brings in $2275 per month with $1000 per month payment (interest only hard money at 9.35% interest). Once rehab is complete I will refinance and do it again.
If you want to talk then PM me. I am extremely busy, but if you reach out we can find some time to chat. However, I would not blow 35K on educational materials, etc. There is plenty of free information out there on BP and other pages. Even TicToc has a lot of people who explain how they do real estate deals. Obviously a lot of the info is vague, and the only way to learn is to do it yourself. You don't need to see the entire road in front of you. Just have to be able to see one step in front of you at a time (two, three, or four is better though). Just like driving through fog. You can't see the road a half mile in front of you, but as you drive closer you can see further and further. Cheesy, but true. Good luck!
I completely agree with the last part. Don't spend $35,000 on educational materials or "how to become a real estate investor" or "how to BRRRR" courses/programs. I attended free webinars or watched their videos on social media (mostly Instagram) and at the end the person is trying to sell me a mentorship program or additional courses. They range from $500 to more than $35,000. The last one was ridiculous, asking the potential investor/buyer to put up all the down payment but the mentor would help find the property, obtain property management and have access to his world class team of financial experts. Then sell the house 3 to 5 years later to find a better performing rental and you only get 50% of the proceeds. I told the guy if I have an extra $18,000 to $35,000 I would use it towards a down payment on a rental not on your program. Not sure if I should put out his name but everyone is now a real estate guru. I found YouTube video and the webinars on Bigger Pockets good resources - all free.
Like some of the others have commented, house hacking is good place to start. And network but be cautious - not everyone is out looking for your best interests and they will try to take advantage of newbies.
I started out by renting out my primary residence in the Midwest instead of selling it when I moved to California(SF Bay Area). Good luck!
- Investor · Kansas City, MO · Member since 2017 · 96 posts · 82 votes3yI live just outside of Kansas City and find deals fairly often. I purchased 3 properties this year and could easily make something happen in this market with $35k. I own rentals and also own a handyman/construction company. If you want connections my door is wide open and am passionate about helping new investors out. I help a lot of out of state investors. Feel free to message me.
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
- Real Estate Consultant · Glendora, CA · Member since 2019 · 314 posts · 95 votes3y
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
@Harrison Colunga It's doable. My client opened escrow on a condo in Upland. His cash to close was under $30k.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes3y
Quote from @Brandon Carlson:
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
@Harrison Colunga It's doable. My client opened escrow on a condo in Upland. His cash to close was under $30k.
@Brandon Carlson Did your client buy the condo strictly as an investment property or primary residence and house hacking (i.e. roommate to pay rent)? I just sold a condo in the Bay Area less than 6 months ago. I'm not a fan of condos because of the ever increasing HOA fees and special assessments, which the owner has no control over - my lender even pointed this out when I was selling it and said that buying SFH or multi-family are better investments. I don't know about the LA area but the HOA fees in the Bay Area are high, $400 to $700 a month is common.
I decided to cut my losses and will buy more in the Midwest. I have a SFH there and my property manager does most of the work. There are some markets I could get a turnkey SFH with $30,000 to $35,000 (20% down). If I buy something that needs work, it would less than $100,000 but I would need to pay for rehab but I benefit from the forced appreciation once the renovation is done.
- Rental Property Investor · Oregon City, OR · Member since 2020 · 324 posts · 780 votes3y
Buy an out-of-state turnkey. Closed with about 15k out of pocket in 2020 and the place is now about to cash flow $650 a month after a couple of years.
I've been OOS investing for a couple years and have had many ups and downs. Feel free to reach out and connect if you want some help.
- Real Estate Consultant · Glendora, CA · Member since 2019 · 314 posts · 95 votes3y
Quote from @Becca F.:
My client purchased it as a primary but plans on house hacking. HOA's wasn't terrible, $345 but it includes trash, water, pest control, landscape. What market in the Midwest? I've done a few investments in Missouri.
Quote from @Brandon Carlson:
Quote from @Harrison Colunga:
I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions?
@Harrison Colunga It's doable. My client opened escrow on a condo in Upland. His cash to close was under $30k.
@Brandon Carlson Did your client buy the condo strictly as an investment property or primary residence and house hacking (i.e. roommate to pay rent)? I just sold a condo in the Bay Area less than 6 months ago. I'm not a fan of condos because of the ever increasing HOA fees and special assessments, which the owner has no control over - my lender even pointed this out when I was selling it and said that buying SFH or multi-family are better investments. I don't know about the LA area but the HOA fees in the Bay Area are high, $400 to $700 a month is common.
I decided to cut my losses and will buy more in the Midwest. I have a SFH there and my property manager does most of the work. There are some markets I could get a turnkey SFH with $30,000 to $35,000 (20% down). If I buy something that needs work, it would less than $100,000 but I would need to pay for rehab but I benefit from the forced appreciation once the renovation is done.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes3y
I'm looking in Ohio (Cincinnati, Cleveland) and Indiana. I know the Indianapolis metro area pretty well - I have a SFH rental there. I've heard good things about Kansas City, Missouri and the turnkey company I talked with said the Detroit area (outside downtown) is coming back. I'm not sure if I'd buy in Detroit. Memphis is also possibility.
The multiple replies within a thread was giving me a headache lol
- Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes3y
@Harrison Colunga your $35k is almost meaningless in California. I sold my house in Lake Elsinore five years ago and moved to the Mississippi Gulf Coast so that I could actually afford to live and invest. I have helped many people from other states and in particular, California find properties in my area that are affordable. At present, I have a client in Norway who is looking at a property valued at less than $100k. It's in good condition. There are many properties in this market that are priced at less than $150k and will rent well.
Sorry, I did not actually intend to provide advertising. Something you should consider is finding others with $35,000 to invest. Create an LLC with multiple investors. Build a bank account and go after properties outside of California. I have put together several investor groups who have put in as little as $5,000. They own a portion of 100% based on what they invest.
If you want to finance a property, someone has to be on the mortgage, it's possible to put multiple people on a mortgage but the interest rate will be based on the lowest score. I am on a few notes where I am an investor.
I would agree not to spend all of your money taking courses but you should take a course or learn by experience. Experience is great but it comes with mistakes. Try KEYLADDER.COM there is a $500 course, a very small investment in doing it right. This forum is good for general advice but you are the only one who knows your own circumstances. Applying the course tools to your specific situation will help you make better decisions. Keep coming back to the forum to fill in the gaps.
- Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes3y
Maybe Kern County. Can't think of anyplace else in Southern California.
- 3ySam McCormackBusiness MemberReal Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
Quote from @Becca F.:
I'm looking in Ohio (Cincinnati, Cleveland) and Indiana. I know the Indianapolis metro area pretty well - I have a SFH rental there. I've heard good things about Kansas City, Missouri and the turnkey company I talked with said the Detroit area (outside downtown) is coming back. I'm not sure if I'd buy in Detroit. Memphis is also possibility.
The multiple replies within a thread was giving me a headache lol
Hi Becca, i'm going to add to those multiple replies, I am sorry for the future headache, lol. I couldn't help but notice you are looking in Cincinnati. I sent you a DM, check it out!
Sam McCormack Realtor - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes3y
Quote from @Becca F.:
I'm looking in Ohio (Cincinnati, Cleveland) and Indiana. I know the Indianapolis metro area pretty well - I have a SFH rental there. I've heard good things about Kansas City, Missouri and the turnkey company I talked with said the Detroit area (outside downtown) is coming back. I'm not sure if I'd buy in Detroit. Memphis is also possibility.
The multiple replies within a thread was giving me a headache lol
You can probably get a couple deals in most of those markets using the $35k as a DP. I know it can be done in Cleveland for sure.
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