Future Investor wants to buy this year

San Diego, California
Starting Out
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Future Investor wants to buy this year

Laurin Wilson
Member since 2022 · 1 post · 3 votes

Hello all!

My name is Laurin and I am a Future Investor! I started my journey about a year ago, taking on extra work and saving my a$$ off, diligently. I've been keeping my eye on the market and trying to educate myself as much as possible. My dream is to eventually have a huge portfolio, be a real estate tycoon, and have $10,000 in cashflow a month.

To make a long story short, I inherited some money and combined with my savings I will have $100,000 total in about 2 months. I have already applied with a lender, and the results were pretty disheartening. I always heard it was impossible to buy in San Diego, but I couldn't help but try to be optimistic. All my hard work will pay off! I got this!     In reality, the results were that I would need to make $6000 more a month in order to afford a $650,000 property, which I've never seen anywhere on Zillow in the San Diego area! Never! And since I don't have any blood relatives any more ( single lady over here) I would need to partner up in order to really find something out here. Which bums me out because I wanted to do this on my own. 

But I'm keeping an open mind! 

So, my question is, should I try to find a partnership here in San Diego some how? Or should I put energy into finding an investment property within my means out of state? I am aware that within the perimeters of using the first time home buyers loan, I would need to live in the property for at least 6 months to a year before I rent the whole space out, which at that time I would want to continue buying properties and expand my portfolio. And I am open to that! House hacking is the strategy of choice for this scenario. I would like to dive into airbnb, eventually,  if I find the right property or do mid term rentals to traveling nurses or doctors. 

Thank you for your time and consideration! I appreciate any and all input in regards to my dreams! 

Be well,

Laurin

P.S.

Any book recommendations for newbies such as myself are also appreciated. <3

3Reply
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Most Popular Reply

Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y

There's a lot to comment on here.  I'll touch on just a few things:

1 - If you can't afford to invest in an area/market/etc..., then don't.  The USA is pretty large.  What you need to do is to first learn how to analyze markets...based on dollars, NOT percentages of anything.

2 - Partners are great, but they must fill a specific purpose...and if that partner involves money (cash &/or credit), they will always want 50% of the take.  Don't do it.

3 - The two most important books you should read, and become VERY familiar with are: Geometry and Algebra...and I'm dead serious. I don't mean a glancing education on it, like you may have had in High School. You need to actually learn it. You need to learn it and be able to do story problems with no problem. REI is nothing but mathe with dollar signs in front,...which is just a very specific type of story problem.

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  • Tim Johnson
    Real Estate Agent · Skagit Valley, WA · Member since 2021 · 256 posts · 283 votes
    3y

    As I often tell my buyers -  "you can't buy your dream home on your first outing......that's not how it works." How flexible are you? Are you willing to move? How fast would you like to become that real estate tycoon? We can't see your details from here.....so won't have specific advice..... but most investors would not consider using all of your capital to purchase a first property in San Diego as prudent. You may want to consider out of state options, teaming up with other RE investors (at least for information if not funds). Your plan to save diligently, work hard, and househack are all the right first moves. Stick with those. Does your work allow you to move out of state?

    2Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y

    There's a lot to comment on here.  I'll touch on just a few things:

    1 - If you can't afford to invest in an area/market/etc..., then don't.  The USA is pretty large.  What you need to do is to first learn how to analyze markets...based on dollars, NOT percentages of anything.

    2 - Partners are great, but they must fill a specific purpose...and if that partner involves money (cash &/or credit), they will always want 50% of the take.  Don't do it.

    3 - The two most important books you should read, and become VERY familiar with are: Geometry and Algebra...and I'm dead serious. I don't mean a glancing education on it, like you may have had in High School. You need to actually learn it. You need to learn it and be able to do story problems with no problem. REI is nothing but mathe with dollar signs in front,...which is just a very specific type of story problem.

    3Reply
  • Tim Johnson
    Real Estate Agent · Skagit Valley, WA · Member since 2021 · 256 posts · 283 votes
    3y
    Quote from @Joe Villeneuve:

    3 - The two most important books you should read, and become VERY familiar with are: Geometry and Algebra...and I'm dead serious. I don't mean a glancing education on it, like you may have had in High School. You need to actually learn it. You need to learn it and be able to do story problems with no problem. REI is nothing but mathe with dollar signs in front,...which is just a very specific type of story problem.

    I don't disagree with Joe's comment about math here. He's right....our math abilities often determine our success or failure....and to what degree our investments are actually succeeding. I WILL add though...don't let any fear of math or lack of "mastering algebra" keep you out of the game. Lots of folks have gotten stinking rich just by doing correct addition and subtraction on the back of a napkin.....or counting on their fingers. Sometimes it can be surprisingly simple and obvious. (how much is coming in?.....how much is going out?.....)
    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y

    My opinion is this is one of the most challenging times to enter RE.  The rates have more than doubled since the start if 2022 which results in a doubling of the P&I.  Homes have not fallen anywhere close to 50% in any market I am aware of. Between May to Jan, San Diego prices fell ~10% but have started to rise again. 

    Residential RE is not passive even with the use of a PM.

    All this adds up to low return from an asset class (residential RE) that is not passive.  

    The S&P500 has a lifetime return of near 10% just to list one well known, long established index fund.  Good syndicators (which I would not recommend for someone in your current stage of investing experience and financial State) have in recent times been returning ~20%. 

    CDs and money market are ~5.

    There are a lot of investment options.  Residential RE is less passive than many.  My underwriting show it producing minimal returns (excluding very active options like flips, developing, self managing STRs, etc). 

    For me to invest in residential RE, my projected return must far exceed the lifetime S&P due to increased effort and risks involved.  My underwriting is not showing that Residential RE is meeting my return requirements in my market (San diego).

    I have made a lot of money on San Diego residential RE, but I have not purchased any RE since Dec 2021. I get 15 to 20 off market listings sent to me most days. In general these are lower price than RE listed on MLS (and typically are under contract in less than 3 days). If I am not finding RE to purchase with this deal flow shows the challenges of getting a good investment off the MLS.

    Residential RE is not always going to produce the best return.  It makes sense after the RE returns of the last decade that the returns may be less substantial.  Combine this with the fed actively trying to curb rising prices makes RE investing a challenge.

    There are other investment options. Too many to list. 

    Good luck

    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Tim Johnson:
    Quote from @Joe Villeneuve:

    3 - The two most important books you should read, and become VERY familiar with are: Geometry and Algebra...and I'm dead serious. I don't mean a glancing education on it, like you may have had in High School. You need to actually learn it. You need to learn it and be able to do story problems with no problem. REI is nothing but mathe with dollar signs in front,...which is just a very specific type of story problem.

    I don't disagree with Joe's comment about math here. He's right....our math abilities often determine our success or failure....and to what degree our investments are actually succeeding. I WILL add though...don't let any fear of math or lack of "mastering algebra" keep you out of the game. Lots of folks have gotten stinking rich just by doing correct addition and subtraction on the back of a napkin.....or counting on their fingers. Sometimes it can be surprisingly simple and obvious. (how much is coming in?.....how much is going out?.....)
    The better you are at math, the better you will be at REI.  If you base your REI on napkin math, you can be wildly successful,...and miss out on a lot.  The biggest secret to REI isn't finding great deals,...it's making them from opportunities that can only be recognized with an understanding of Geometry and Algebra 
    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y

    my email contained this tidbit from Core Logic:
    “In Q4 2022, investor purchase activity decreased 25% YOY for single-family homes. Mega-investors retreated from the market relatively more quickly than the other three groups — large, medium and small investors — as small investors (those who own fewer than 10 properties) were purchasing an increasingly larger part of the investor share.”

    Take away is all investors are finding it more difficult to acquire investment properties.  In addition, if we go with there being a correlation with size of investors and their investor success, the more successful (larger) RE investors have reduced their purchases more than less successful (smaller) RE investors.  

    Residential RE is not going to be the best investment option at every point in time.  From 2012 through 2021, residential RE produced crazy high return. My underwriting is showing poor return forecasts for the RE I have analyzed.  It appears my underwriting is showing similar to what the large RE investors are finding. 

    Note I am not stating there is zero good RE purchased.  I am stating there are less than there less than a year ago.

    Good luck

    0Reply
  • Kenneth Donaghy
    Real Estate Broker · San Diego, CA · Member since 2016 · 355 posts · 195 votes
    3y

    Hi @Laurin Wilson, 

    I really like your mindset in your first paragraph. You have a clear cashflow goal, and have took baby steps in education yourself. I do strongly believe househacking a great place to start. I've help many people from BiggerPockets get started via househacking, the smallest househack purchase was a 2bd/1ba condo in OB for 428K with a rare FHA downpayment assistance loan. My client found a surfing buddy for a roommate to pay half the mortgage. That was a few years ago, but i share the story to help shift the mindset to possibilities and away from scarcity.

    I would also keep in mind not everyone in the industry has high integrity, and their are scammers everywhere these days. So be careful stating "I'm new and I have this much money, help me get started." I say this from experience, I've been burned when I got started, which is one of the big reasons why I got licensed to help people avoid the same mistakes. 

    I do have a couple ideas how you may partner with someone, which I will be happy to share privately. First I would like to get more information about your personal situation to give better suggestions. Feel free to reach out. 

    1Reply
  • Jill DeWitPro Member
    Investor · Scottsdale AZ · Member since 2015 · 1k+ posts · 423 votes
    3y

    From one female investor to another female investor, welcome @Laurin Wilson! 

    You are clearly smart, by thinking, planning, and asking GREAT questions here.

    I am originally from Southern California, living in Scottsdale area now, and the majority of my investments are in other states. (Although for full transparency, I do have a 500+ acre parcel for sale in Santa Barbara County.) 

    I've done the house flipping thing (ugh, NEVER worked so hard for $38,000 in my LIFE) - but I always come back to land. A normal deal for me would be... Buy for $30,000 and sell for $75,000-$90,000. All rural vacant land, in MANY other states. I have always paid cash and sold for cash - so no hassle or worrying about any lenders. I can easily handle many deals at a time, and since they are vacant land in other states, it does not matter where I AM. We are actually preparing to take RV out for another 3 months this year.

    Whatever is important to you, I am sure you will hit it. You are already talking #s, setting clear goals, and thinking of ways to solve problems.

    Best wishes!!!

    Jill

    0Reply
  • Jack Nazarian
    Rental Property Investor · Las Vegas, NV · Member since 2019 · 38 posts · 38 votes
    3y

    @Laurin Wilson

    As an investor from Las Vegas, i share the same goals as you with a similar realization that my market did not match my current means.

    Out of market real estate is much cheaper and can still bring great returns. That is how i got my first property. Just desperately combing through markets to find any decent prices!

    If you decide to go out of state you have tons of people on BP that can guide you through it.

    Do not get discouraged! Go grab that dream!

    2Reply
  • Janelle K. Eagle
    Real Estate Agent · Central Coast, CA · Member since 2022 · 110 posts · 58 votes
    3y

    Hi @Laurin Wilson (and shout out to @Jill DeWit above as well) for being fellow LADY INVESTORS! I love love love to hear your ambition and commitment. You will hear (and clearly have already in this chain) all the reasons NOT to invest and all the ways it is HARD. And those with hesitation are not wrong. 

    What I want to gift to you is that your ambition and passion matter A LOT. Your journey becomes about getting educated and confident - because in good news you already have the means. $100K is a lot more than many others have started with. 

    Love the house-hacking suggestion. You could also become a hard money lender. You could buy securities in a 1031 exchange. Or put money into an REIT. You could certainly buy outside of San Diego and do remote investing. There are LOTS of options that can take you step by step closer to your goal.

    If you haven't already checked out the Bigger Pockets Rookie podcast, that is a great place to start to build your understanding of the various option and trust your gut on which way it's pushing you. 

    Best of luck! I'm always here if you need a cheerleader!!

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Laurin Wilson- thanks ....getting the loan pre aprpoval done was definitely a good spot to begin .... I think  trying to locate an investment opportunity in a location that you can afford  and that your cash and loan amount will work  will be the best  way to go    

    0Reply
  • Ken Maguire
    Realtor · San Diego, CA · Member since 2020 · 14 posts · 9 votes
    3y
    Quote from @Laurin Wilson:

    Hello all!

    My name is Laurin and I am a Future Investor! I started my journey about a year ago, taking on extra work and saving my a$$ off, diligently. I've been keeping my eye on the market and trying to educate myself as much as possible. My dream is to eventually have a huge portfolio, be a real estate tycoon, and have $10,000 in cashflow a month.

    To make a long story short, I inherited some money and combined with my savings I will have $100,000 total in about 2 months. I have already applied with a lender, and the results were pretty disheartening. I always heard it was impossible to buy in San Diego, but I couldn't help but try to be optimistic. All my hard work will pay off! I got this!     In reality, the results were that I would need to make $6000 more a month in order to afford a $650,000 property, which I've never seen anywhere on Zillow in the San Diego area! Never! And since I don't have any blood relatives any more ( single lady over here) I would need to partner up in order to really find something out here. Which bums me out because I wanted to do this on my own. 

    But I'm keeping an open mind! 

    So, my question is, should I try to find a partnership here in San Diego some how? Or should I put energy into finding an investment property within my means out of state? I am aware that within the perimeters of using the first time home buyers loan, I would need to live in the property for at least 6 months to a year before I rent the whole space out, which at that time I would want to continue buying properties and expand my portfolio. And I am open to that! House hacking is the strategy of choice for this scenario. I would like to dive into airbnb, eventually,  if I find the right property or do mid term rentals to traveling nurses or doctors. 

    Thank you for your time and consideration! I appreciate any and all input in regards to my dreams! 

    Be well,

    Laurin

    P.S.

    Any book recommendations for newbies such as myself are also appreciated. <3


     Laurin, 

    Congrats on putting in that hard work and saving to reach this point in a year! Thats awesome! You have a great attitude and couple that with the work you've already put in you will make your success.

    In terms of finding a place around here in San Diego, there are a few strategies and game plans to put together based on your goals. The best one to use starting out is typically house hacking here in San Diego. It is possible for you to do just have to see all the pieces important to you.

    If you have any more questions. I am here an happy to help!

    Cheers

    0Reply
  • Brielle Calcagno
    Member since 2020 · 4 posts · 1 vote
    3y

    I'd love to help you out Laurin! I specialize in finding what you're looking for all of the time. 

    0Reply
  • Mark Frattini
    Real Estate Agent · San Diego, CA · Member since 2014 · 338 posts · 176 votes
    3y

    @Laurin Wilson

    Do you currently own where you live? San Diego can be a challenging market but far from impossible! Check the just listed/just solds. Lot's of properties changing hands every day 365. Keep in mind that you don't have to knock it out of the park on your first deal and everyone has to start somewhere. Buy something for yourself if you currently rent. Leverage that into a house hack or sell after you've built up equity. You should only need ~3.5% as a down payment if you plan to live in the home. If you own currently then rent that out and find another property for you.

    There's currently over 200 properties for sale in San Diego under $650k.

    0Reply
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