Finding your "Farm Area"

11 Replies

I am trying to get started investing in the Los Angeles area. I want to fix and flip a property, but am having a hard time finding a "farm area" in my price range near Los Angeles. I would like my first property to be in the $100-200k range, so I am definitely not looking in the city of LA. I was looking in areas that border LA county (Simi Valley, San Bernardino, Riverside, etc.) I would like to choose a farm area before choosing a realtor so I can pick a realtor familiar with the particular area. I am having a hard time analyzing/finding a good "farm area" though . Does anyone have any suggestions? Is there a way to see recently sold REOs/short sales other than the MLS? Thank you!

@Serena Halterman What made you decide against LA from the jump? Was it your research or hearsay? If you're wanting to fix and flip as opposed to fix and hold,... LA is closer to you than the the areas you mentioned, if it's at all an option, you shouldn't just dismiss it out right, unless of course your research says otherwise which in that case I'll bow out - stage right!  Just saying... ;-)

The price was the main factor in my decision. Any average property in LA is going to be at least 500,000 and I didn't want to buy in a bad neighborhood since I have a full time job and won't be able to watch the property during the day. I figured start with a lower price while I am still learning. I dont have any construction knowledge so I am sure I will make mistakes during the construction phase. I am open to any suggestions!! By the way I was looking at 3 bedroom 2 bath because I figured those would be the easiest to sell. Again this is all speculation since I am brand new! 

Case in point. This address is all if 1.4 miles from USC (University of Spoiled [rich] Children. Hint, hint you do the math. 

3741 S ST ANDREWS PL LOS ANGELES, CA 90018

The fix and flip game gives me cause for pause however, this is going for $237,900.00 which is "a little" over your stated price range. I wouldn't be surprised if it sold for less than $200k. This area is part of my "hunting" ground.  Folks like myself who prefer buy and hold would certainly take a strong interest if houses like this were fixed and ready to "flip". Furthermore, this area is a strong rental market (but then generally, where in LA isn't?). This is all to say that yes the "average" prices may be going for 500k but you have if you can actually "drive for dollars" through some of these neighborhoods and cast a creative/unorthodox eye in terms of what you're trying to do, there are/can be some potential lucrative solutions to be found - within your budget. 

Hello Serena. 

Riverside, and most of the IE have much better prices than LA. You can find many home in that price range in the IE. 

If you do end up going towards the IE, Here is my agent's number: 951-751-5504. His name is Michael Nugent. He is great agent. I have not worked with him in buying investment property yet, however i assume he is investor friendly (or at least knows what investment property is) because he is a fix and flipper, and has a buy and hold portfolio as well.

Thank you @Francis A. ! That actually helps a lot. I just assumed I wouldn't be able to invest in LA without puttiing the time to look into it. I will definitely look into different markets here now including USC. I heard that there are some pretty bad areas near that school though? I will try driving around to make sure I am not looking in the very bad neighborhoods. Thanks again!

There are lots of moderately priced properties much closer to you than out in Riverside or the IE for that matter. Look in the area from the 105 - 405 - 710 freeways. Just because these houses are $200-400K doesn't mean it is a bad area. Entry level housing is always the easiest to acquire, finance and sell. It will be a lot closer for you to drive and get to know the area as well as check up on your deal. I know several IE folks who target that area and do well.

Also, working with an agent who is an investor doesn't sound like the most productive use of your time. Why would an agent who also invests ever pass along a good deal? On a very rare occasion, he/she might, but I guarantee the best deals are going to be closed by that agent. You need to find a commission ninja. Those are the agents who don't invest in property and only care about getting that next commission check so they can keep making payments on their leased car. That is the agent who is going to give you the deals with the biggest equity spreads. Especially when you offer to him/her double end it on the buy if it is their listing and represent you again on the sell. 

Real estate agents are the most corrupt business people, next to investment bankers and the mob. I know of no other industry which requires its members to take ethics training in order to renew their licenses. Find the greedy agent with pocket listings and you've hit the jackpot. One of my best deals to this day came from a pocket listing an agent at my chriropractor's office handed me in the waiting room. It was a Thursday afternoon and she said the seller was accepting offers for 3 days only, told me what their minimum acceptable price was, then said she thought her fax machine might not be working after 5pm and she would be listing it around 4:45pm so I should get my offer in ASAP. I only wish she were still in real estate...

@Aaron Mazzrillo

Aaron is totally right. Honestly, when I hear people say LA is too expensive, I generally don't weigh in because I'm too busy trying to do my own thing (now that I've seen the light) HA!!  This is why Biggerpockets is so great! (SHOUT OUT TO BIGGER POCKEEEETS)!! HA!

Biggerpockets encourages me to share. My instinct is, this is a competitive life why should I step in to help someone who has already made up his or her own mind etc etc. Time is precious. But that's not a good mindset to have ALL the time. Right? :-)

Point is, I was in your position once before. In my case I was forced NOT to listen to the naysayers because I HAD to make a move away from renting to buying and buying an over priced SFR and footing the mortgage bill was a non starter for me. I like to do other things other than pay massive bills. Besides, my apartment was down the street from the office. World class grocery stores, famous chef's restaurants nearby etc. Why should I have given them up? We'll have you seen the Whole Foods store that is opening downtown? Have you been to some of the fantastic restaurants downtown LA? Insane. Forget your parents (so to speak) but downtown LA is not your older cousin's downtown any more. But that's a whole other topic.

Addressing your point of bad areas near USC. You're going to find iffy pockets everywhere. I've now lived in two of the top three cities in the US and it's the same in both places. I'm sure it's the same almost everywhere. You'll find patches of iffy spots but you have to mix that in with your goals, saute the ingredients and come out with a solution that will put YOU where you want to be in 5, 10, 20 years. You are looking to be in the fix and flip game so you have to think accordingly to what would probably work for you. Besides you won't be living there unless you change your mind after doing such a fantastic job fixing a duplex. I'm assuming making some cha ching when you sell your first flip is probably at the top of your list. Followed by "don't let the construction people swindle me". This might mean being able to get to your construction site quickly from Signal Hill. And on and on and on. You will make mistakes. All you can do is try to minimize them. 

I moved from the west side to live 12 minutes away from USC in a duplex. I lived on the west side for years. I was 12 minutes from the Santa Monica pier and 18 minutes from Venice Beach. You know the drill, nice houses, parks, beautiful people, Santa Monica mountains, sweet rides to oogle at if that's your thing, Frank Gehry's offices right down the street and more and more!  Heck some office buildings in my former neighborhood have more electric car charging stations than most cities have installed right now. The world is slowly moving towards electric cars. Thank you Tesla! 

To put it bluntly, when I move out into another place, my mortgage will be covered plus a couple hundred bucks a month. Long story I won't get into it except to say that the duplex was rehabbed by a fix and flipper. Music to your ears I assume. Demand for rental units is very strong in LA. I've posted quite a few articles about this in the past. A fix and flippers can be a buy and hold person's best friend. 

I could go on but I'll stop. All this is to say that keep and OPEN mind. At the end of the day it's about you and not what others are saying about this (or that) place is too expensive. You're an engineer. Engineers come up with creative solutions every day. I'm sure you had to do case studies in school. I know I did. However, the research for case studies take work. Fix and flipping (and RE investing in general) is no different. You'll have to drive around and do the due dliigence. Call up the USC security office. Talk to them like I did. They'll clue you in some. And then you use your smarts and start building a picture of the who, what, when, where, why of it all! It's doable. Heck, you might end up teaching US what it's all about when it's all said and done. :-)

Good luck, make it happen!!

Thank you so much @Aaron Mazzrillo for your responses. I will keep an open mind and shop around to look for the right market for me. Obviously the closer the better since this will be my first flip. Instead of starting far, I'm going to see what I find in my own backyard and go from there! I really appreciate all of the advice. If you have any other pointers for newbies let me know. It is great to meet people that invest in the area. 

There used to be a monthly real estate club that met in Anaheim. It was run by and old guy who had been investing in real estate for decades and owned quite a few rentals around Garden Grove. He used to preach: Why look across town if you haven't looked in your own backyard? 

He claimed he bought a lot of his properties just by door knocking neighborhoods. I met a guy in San Diego at a mastermind group who said he gets most of his leads door knocking. He just posted pics on FB about a house he paid $450K for and sold for over $700K. 

The point of my post is, there are deals every where. One just has to figure out what is the best method for you to attract those deals into your funnel. No need to drive by lots of potential looking for something over an hour away when you can find the same opportunities much closer to home.

Originally posted by @Serena Halterman :

Thank you so much @Aaron Mazzrillo for your responses. I will keep an open mind and shop around to look for the right market for me. Obviously the closer the better since this will be my first flip. Instead of starting far, I'm going to see what I find in my own backyard and go from there! I really appreciate all of the advice. If you have any other pointers for newbies let me know. It is great to meet people that invest in the area. 

Hi Serena

I have been focusing on homes close to the medium home price.  We have deals in Anaheim, Ca, Menifee,Ca., and Riverside, Ca. All 3 are very close to that mid number and all 16 of my deals this year closed escrow within 109 days or better a couple under 90.  The biggest reason for the fast sales are the price we sold them for.  

I believe this is the most importaint part of locating your farm, I have read the saying "begin with the end in mind" this is why we have the enteance and exit plan set as the biggest part of all choices I make when it comes to anything.

Make this easy how much can you buy, how much can you sell for.  When you locate properties that fit this model you will locate your farm.  

Good luck

Jim