Looking for Orange County mentor to prove me wrong

38 Replies

My wife, @Sara Hodge , and I have been on BP for around 6 months now. We own our primary residence in Orange County, California, but due to the high prices, we decided to invest out of state. We now own two rentals (SFR) in the Midwest that we purchased through turnkey providers. We are really excited about our purchases and have great expectations, but after reading some real estate investing books, I feel like we might be missing out on something more. These books, as well as a number of people on BP, make it clear that you make your money when you buy and that buying either below market, or forcing appreciation, is key to true wealth building.  Obviously this isn't possible when you buy a 100% turnkey property since you're buying retail.

Since we live in CA, I don't believe I can buy rentals that will cash flow from day one.  I'm writing this because I want to meet with someone who can prove me wrong.  I am dead set on creating passive income and wealth through rental properties, and I'd really like to be able to do this where I live (Southern California).  Is this possible?  If you are successfully buying and renting cash-flowing properties in Southern California, I would love to meet up for breakfast or coffee (on me!). 

Hi David, 

I can't speak from a position of experience but from what I understand (and after analyzing several properties in SoCal), you can get just about anything to cash flow but it depends on how much you are leveraging. I think a better question to ask your mentor is can you obtain a favorable cash on cash ROI in SoCal.

Originally posted by @Adam Pierce :

Hi David, 

I can't speak from a position of experience but from what I understand (and after analyzing several properties in SoCal), you can get just about anything to cash flow but it depends on how much you are leveraging. I think a better question to ask your mentor is can you obtain a favorable cash on cash ROI in SoCal.

Hi Adam,

Thanks for pointing that out. Yes, I'm interested in a good cash on cash ROI. I would be using leverage.

Hi, David.  

We live in AZ, but since Laguna's been like our second home for decades, and we want to end up in South OC or North County SD, we bought rentals in OC (a condo in RSM) and SD Counties (a home in the Rancho del Oro section of Oceanside) in spring of '13.  Both cash flow, as do our mobiles in NorCal.

First of all, our O'side PM (also an investor/flipper) said she's waiting to buy anything there until after the first of the year.  If we were buying anytime soon, we'd look in O'side.  You get more bang for your buck down there.  There are some very nice pockets of RE (Rancho del Oro/Ivey Ranch, for example) that are less expensive than in OC.  Taxes in SD County are less than in OC, as well.  

It really comes down to how much you want to spend, and how much you want to cash flow.  There are some areas of Central and NorCal that have yet to recover from the market downturn.  If you want to stay in SoCal, you'll either have to get creative, or bring money to the table.  

Hi David:

Can you qualify for a full doc investment property mortgage?  Have you checked into financing?  Do you have funds for a down payment of 20%-25% for something in Southern California?  Also, maybe taking advantage of Fannie's Homepath is a great way to get into an investment property with minimal down in OC?

Originally posted by @David Hodge :

My wife, @Sara Hodge , and I have been on BP for around 6 months now. We own our primary residence in Orange County, California, but due to the high prices, we decided to invest out of state. We now own two rentals (SFR) in the Midwest that we purchased through turnkey providers. We are really excited about our purchases and have great expectations, but after reading some real estate investing books, I feel like we might be missing out on something more. These books, as well as a number of people on BP, make it clear that you make your money when you buy and that buying either below market, or forcing appreciation, is key to true wealth building.  Obviously this isn't possible when you buy a 100% turnkey property since you're buying retail.

Since we live in CA, I don't believe I can buy rentals that will cash flow from day one.  I'm writing this because I want to meet with someone who can prove me wrong.  I am dead set on creating passive income and wealth through rental properties, and I'd really like to be able to do this where I live (Southern California).  Is this possible?  If you are successfully buying and renting cash-flowing properties in Southern California, I would love to meet up for breakfast or coffee (on me!). 

 Yes, you are right. But Orange County rents have increased at a rate of 4% a year over the last 40 years, so I think this is something to consider. Not to mention healthy capital appreciation caused by low inventory, steady job growth, a robust economy among many other factors. 

David,

What are your goals for wealth creation?  Ryan makes a good point about average OC appreciation of 4%.  In places like Oklahoma, you can get good cash flow, but minimal capital appreciation.  In Socal, you can still find nice reasonably priced homes in Temecula and Murrieta along with the rest of Riverside County.  I bought and flipped over 500 homes in the 1990s and early 2000s.  I think you can make money in real estate doing just about anything if you plan properly.

Mark

@David Hodge Welcome to BP! Did you know there's a meetup in Lake Forest on the 3rd Wednesday of the month? It's at Round Table, on Lambert and Lake Forest Dr. at 7:00 p.m. It's a great place to meet BP members. 

You didn't say how much you had to invest, etc. There's different options for investing in high priced areas, such as partnering with other investors, etc., or you might consider buying condos rather than houses.

Also, in regard to cash flow, there's a lot of investors that cash flow with Vacation Rental properties. 

There's been so many posts on those encouraging people to buy outside of California. But, remember prices are based on supply and demand. Orange County, and much of southern California have all the drivers that create demand. 

  • Broad based strong economy
  • World class education and healthcare
  • Manufacturing, high tech, you name it, the biggest names are here
  • Amusements, professional sports, recreation and cultural venues
  • The beach
  • Perfect year round weather
  • Tourists and business people visit from around the world
  • Every mid to major airline flies in to both Orange County and LAX
  • BEST OF ALL - Qualified tenants and buyers. 

All of those things drive demand, which pushes up pricing (and yes costs) but, there may never be lower prices than there are right now! On the other hand, you can buy cheap houses in areas where you can watch the grass grow, and pay the bills, but won't realize any appreciation for years and years. 

Hi David,

Im not a mentor but I think it will be difficult to prove your premise wrong in Orange county unless you find a very unique opportunity out there. With todays values in orange county it will be very hard to find something that cash flows good, most likely that if you leverage you wont get positive cash flow. And if you are looking for appreciation then that may be even more difficult, a crash does not seem likely but if you want appreciation you should at least be able to recover costs of sale and with todays values you may be looking at several years for your property to appreciate beyond costs of sale. I would caution against thinking that Orange county properties will always hold value, this is especially important if you have a negative cash flow property.

Your may be able to find cash flow properties at inland markets in California, but it is challenging.

If you are looking for passive investments in real estate perhaps you should consider other options such as investing in Deed of Trusts or Notes.

Originally posted by @Wendy Black :

Hi, David.  

We live in AZ, but since Laguna's been like our second home for decades, and we want to end up in South OC or North County SD, we bought rentals in OC (a condo in RSM) and SD Counties (a home in the Rancho del Oro section of Oceanside) in spring of '13.  Both cash flow, as do our mobiles in NorCal.

First of all, our O'side PM (also an investor/flipper) said she's waiting to buy anything there until after the first of the year.  If we were buying anytime soon, we'd look in O'side.  You get more bang for your buck down there.  There are some very nice pockets of RE (Rancho del Oro/Ivey Ranch, for example) that are less expensive than in OC.  Taxes in SD County are less than in OC, as well.  

It really comes down to how much you want to spend, and how much you want to cash flow.  There are some areas of Central and NorCal that have yet to recover from the market downturn.  If you want to stay in SoCal, you'll either have to get creative, or bring money to the table.  

Hi Wendy,

We live in Aliso Viejo, right next to Laguna Beach.  Have you been to Las Brisas in Laguna?  They have a delicious breakfast and it overlooks the ocean. We love it there!

If you don't mind me asking, how did you find your Oceanside property?  Did your PM help you?  Thank you for your response! :)

Originally posted by @Logan Drew :

Hi David:

Can you qualify for a full doc investment property mortgage?  Have you checked into financing?  Do you have funds for a down payment of 20%-25% for something in Southern California?  Also, maybe taking advantage of Fannie's Homepath is a great way to get into an investment property with minimal down in OC?

Hi Logan,

Yes, I believe I would qualify for a loan and have barely enough to put 20% down on a lower valued house in CA. Is a "full doc investment property mortgage" just a conventional mortgage on an investment property? I haven't heard of Fannie's Homepath until now. It looks like the benefit is that you can put less than 20% down and not pay PMI? Is that available for any foreclosure owned by Fannie? Thanks for introducing me to this!

Originally posted by @Ryan Byrne :
Originally posted by @David Hodge:

My wife, @Sara Hodge , and I have been on BP for around 6 months now. We own our primary residence in Orange County, California, but due to the high prices, we decided to invest out of state. We now own two rentals (SFR) in the Midwest that we purchased through turnkey providers. We are really excited about our purchases and have great expectations, but after reading some real estate investing books, I feel like we might be missing out on something more. These books, as well as a number of people on BP, make it clear that you make your money when you buy and that buying either below market, or forcing appreciation, is key to true wealth building.  Obviously this isn't possible when you buy a 100% turnkey property since you're buying retail.

Since we live in CA, I don't believe I can buy rentals that will cash flow from day one.  I'm writing this because I want to meet with someone who can prove me wrong.  I am dead set on creating passive income and wealth through rental properties, and I'd really like to be able to do this where I live (Southern California).  Is this possible?  If you are successfully buying and renting cash-flowing properties in Southern California, I would love to meet up for breakfast or coffee (on me!). 

 Yes, you are right. But Orange County rents have increased at a rate of 4% a year over the last 40 years, so I think this is something to consider. Not to mention healthy capital appreciation caused by low inventory, steady job growth, a robust economy among many other factors. 

Ryan,

That's the reason I'm really wanting to get into the CA market.  There is so much upside potential.  I just can't justify buying a property that will have negative cashflow right off the bat.  What if rent doesn't increase for 5 or more years and I end up spending a decade paying out of my own pocket?

It looks like you work with investors in the CA market?  How do most of your investors finance their deals?  I could probably have positive CF if I put more down (maybe 40% instead of 20%?).  Is it common for investors to put more down to force positive CF and then pull the equity out once rents have increased enough?  Or do they typically just take negative CF in the beginning?

Thanks Ryan!

Originally posted by @Mark Creason :

David,

What are your goals for wealth creation?  Ryan makes a good point about average OC appreciation of 4%.  In places like Oklahoma, you can get good cash flow, but minimal capital appreciation.  In Socal, you can still find nice reasonably priced homes in Temecula and Murrieta along with the rest of Riverside County.  I bought and flipped over 500 homes in the 1990s and early 2000s.  I think you can make money in real estate doing just about anything if you plan properly.

Mark

Hi Mark,

My primary goal is to bring in enough cash flow within 10 years to cover all my living expenses so that I can live life on my own terms.  I would like to also build some equity though.  It almost feels like you have to choose one or the other, but I know that's not the case.  I'm just having trouble figuring out how I am going to combine the two.

That's an impressive number of flips!  Did you hold on to any of them?  What direction would you go if you were in my shoes (CA or cheaper market)?   Thank you for your insight!!

Originally posted by @Karen Margrave :

@David Hodge Welcome to BP! Did you know there's a meetup in Lake Forest on the 3rd Wednesday of the month? It's at Round Table, on Lambert and Lake Forest Dr. at 7:00 p.m. It's a great place to meet BP members. 

You didn't say how much you had to invest, etc. There's different options for investing in high priced areas, such as partnering with other investors, etc., or you might consider buying condos rather than houses.

Also, in regard to cash flow, there's a lot of investors that cash flow with Vacation Rental properties. 

There's been so many posts on those encouraging people to buy outside of California. But, remember prices are based on supply and demand. Orange County, and much of southern California have all the drivers that create demand. 

  • Broad based strong economy
  • World class education and healthcare
  • Manufacturing, high tech, you name it, the biggest names are here
  • Amusements, professional sports, recreation and cultural venues
  • The beach
  • Perfect year round weather
  • Tourists and business people visit from around the world
  • Every mid to major airline flies in to both Orange County and LAX
  • BEST OF ALL - Qualified tenants and buyers. 

All of those things drive demand, which pushes up pricing (and yes costs) but, there may never be lower prices than there are right now! On the other hand, you can buy cheap houses in areas where you can watch the grass grow, and pay the bills, but won't realize any appreciation for years and years. 

Karen,

I added the meetup to my calendar.  I'm not positive I can make it, but my wife and I are going to try!

Regarding how much I have... currently I have a little over $40K left to invest. My original plan was to invest all my cash into B class properties in the Midwest. I might continue purchasing in the cheaper states but I want to explore my options in California first. I know $40K probably isn't enough to buy a quality SFH in CA today, so I'll either have to find a great deal or save up a little more.

Thanks Karen! I'll look for you if I make it to the meetup.

Originally posted by @Juan Carlos Quiroz Zolezzi :

Hi David,

Im not a mentor but I think it will be difficult to prove your premise wrong in Orange county unless you find a very unique opportunity out there. With todays values in orange county it will be very hard to find something that cash flows good, most likely that if you leverage you wont get positive cash flow. And if you are looking for appreciation then that may be even more difficult, a crash does not seem likely but if you want appreciation you should at least be able to recover costs of sale and with todays values you may be looking at several years for your property to appreciate beyond costs of sale. I would caution against thinking that Orange county properties will always hold value, this is especially important if you have a negative cash flow property.

Your may be able to find cash flow properties at inland markets in California, but it is challenging.

If you are looking for passive investments in real estate perhaps you should consider other options such as investing in Deed of Trusts or Notes.

Thanks for the insight Juan!  I might look into deeds or notes in the future but not yet.

I own rentals all over SoCal, even in OC. Lots of stuff cash flows here, but you have to stop looking at the prices of properties in Homes & Land magazine and instead get knees to knees with an owner of a property and work something out with him/her. You could conceivably buy and ocean front mansion and get it to cash flow IF you negotiate the right terms. Is this possible? Absolutely. Are you going to close one this week? Most likely not. However, you'd be surprised what you can buy if you stop talking to real estate agents and start talking to people.

This past summer, my buddy closed on a 6,000 sq/ft south OC house with an ocean view. 90% seller financed. It wouldn't cash flow the way he negotiated it, but he was looking to move into it so cash flow wasn't his objection. It's such a bad *** house the pool has its own house that is bigger than my house! Could he have gotten it to cash flow? I bet if that is what he was looking for. 

You need to study creative financing but not with numbers. You need to look at the psychology side and focus on motivation. Here is one of the key points that once you comprehend it, things will look entirely different to you; not everyone is in real estate for the money, unlike the bunch of sharks on this forum. All you are looking at is dollar signs so you think every other person who owns real estate only sees dollar signs too. I guarantee you of the 100s of houses I bought, not one single seller ever said to me, "I need to sell because I need the money to go do...." NEVER. Not once. 

It is more like, "I want to sell because_____" You can fill in the blank from this partial list;

I'm tired of dealing with it. 

I let my stupid/loser/deadbeat brother/sister/grandson/daughter/son live there and he/she stopped paying me/isn't helping out/has a bunch of drug addict friends.

I want to simplify my life.

It needs a lot of work and I don't have time/energy for it.

I'm getting old.

I don't want to sell to someone who will kick out my tenants.

I can't afford my mortgage any longer.

I got a job transfer.

I want to be near my kids/grand kids.

The list goes on and on, but I've never once heard "I need $100K to get heart surgery/kidney replacement/triple bypass or I'm going to die!!!"

Stop price shopping and start talking to people. And by people I don't mean real estate agents. They aren't people. They're lazy, greedy pigs who are looking to destroy people's financial lives by telling them, "Sell today and convert 100% of your equity into cash so you can pay all those taxes!" because they're financial idiots who also like to pay high taxes and very few own any investments or understand anything at all about investing.

As far as making money when you buy, I disagree 100% with that. I've never made money the day I bought I house other than the change I find laying on the floor. All I ever did was take on more debt and a huge mess that costs me more money to fix up. Let me tell you from experience, just because you have equity on the day you close doesn't mean it's going to be there the day you're ready to sell! Equity is a myth. It's a false sense of security. You only make money the day that escrow check clears the bank and the deed transfers to someone else.

Forcing appreciation is another myth I don't understand. A house is only worth so much. Yeah, you can find an amazing lot and go nuts building some super spec home that will sell for an outrageous price, but the average house in SoCal is a tract house and those have a ceiling on value both on retail sales price and rental income. I think some people have this idea they can put in granite counter tops and charge another $100/month rent. Then put in a tile tub surround and charge another $50 a month. Well, you're going to hit a point where the perspective tenants will just rent the house down the street that is on the market for about the same rent as every other vacant house in the neighborhood. If by forced appreciation you mean flipping, same rule applies. The house has a top value the day you close. You might have to invest money to get it up to that value, but I wouldn't say you're forcing appreciation. You're just getting back what is there, but not being utilized. 

Forcing appreciation to me sounds like being the market maker in a neighborhood. I do this quite often, but I'm not getting some absurd price above what the comps sell for. I might get 10%, but I'm also spending more money to get it there so it's a trade off and it is a risky one. It is more likely here in SoCal that you'll be the market maker in setting the new low comp in the neighborhood than the new high comp. An investment house can only sit on the market so long while your lender and time burn up your potential profit in monthly interest payments, taxes, insurance, vandalism, theft and utilities. At some point, you're going to take the next offer that comes across the table no matter how many thousands of dollars in credit the buyer wants in closing cost assistance.

Building wealth takes time. I know a few investors who beat that clock and have become fabulously wealthy making consistent great plays or a few lucky ones. Most wealthy investors I know buy houses at a discount from today's prices, leverage them up, and wait... for years and years and years. Then one day you look at the pile of junk you own and realize you have 7 figures of equity tied up and it's not changing your life one bit, but you're a millionaire on paper.

Aaron Mazzrillo has given you some great comments, follow his lead and you will reach your financial goals. As he said, stop talking to agents and start talking to and negotiating with sellers, make offers that suit you, not the seller. We say here in Baltimore "If you are not embarrassed with your offer, you are offering too much" Charles Parrish

@Aaron Mazzrillo is exactly right.  You need to be going "to the source" so to speak.  I am in Boston which is another market nobody thinks cash flows and they're probably right if you try to buy something through a realtor in Boston proper.

You need to look at this more strategically and eliminate the middlemen.  Find sellers who need solutions and solve their problems in a way that benefits both of you.  That may mean you take over their mortgage payments or using other creative seller-financing strategies. 

The flip-side of high priced properties is that those areas also tend to appreciate much quicker and/or retain their value and they are in places people wan to live!  Use that to your advantage.

I know I am being fairly vague with my answers but that's because you need to approach these sellers with multiple strategies to create a win-win scenario.  Do that and you are on your way to building wealth.

Good luck.

Originally posted by @David Hodge :
Originally posted by @Logan Drew:

Hi David:

Can you qualify for a full doc investment property mortgage?  Have you checked into financing?  Do you have funds for a down payment of 20%-25% for something in Southern California?  Also, maybe taking advantage of Fannie's Homepath is a great way to get into an investment property with minimal down in OC?

Hi Logan,

Yes, I believe I would qualify for a loan and have barely enough to put 20% down on a lower valued house in CA. Is a "full doc investment property mortgage" just a conventional mortgage on an investment property? I haven't heard of Fannie's Homepath until now. It looks like the benefit is that you can put less than 20% down and not pay PMI? Is that available for any foreclosure owned by Fannie? Thanks for introducing me to this!

 Hi David:

Try www.homepath.com. You can search Fannie HomePath properties there. They are all Fannie owned properties. Yes, you can utilize minimal down payments and no PMI on investment property/ non-owner occupied properties using the HomePath program. I am a lender and can answer any questions you have about qualifying conventionally or otherwise. Let me know if you need to get into more detail via PM or email/ call me.

@David Hodge as was pointed out you manufacture deals and opportunities by rolling up your sleeves and looking where no one else is searching.  The Southern California market is a mature market with very experienced and deep pocketed investors.  Beginners will find difficulty following the standard guru methods in their most basic forms.

Although there's quite a bit of hyperbole in @Aaron Mazzrillo 's comments his point is well stated - you won't find deals searching the MLS, relying upon unseasoned brokers/agents, or combing through Zillow, Trulia, etc. etc.

You may get lucky with one or two deals, but if you're trying to build a business in Southern California you won't be successful by waiting for deals to fall in your lap or by looking where everyone else is looking.

I've been investing and have owned and run a brokerage company in Los Angeles for over 20 years and have consistently found cash flowing deals for myself and my clients regardless of the market conditions. Aaron spells out many of the reasons these opportunities arise with sellers - the answer to how you find them is hitting the streets, finding the types of sellers who are likely to find themselves in the situations Aaron mentioned, and finding the successful investment brokers who know how to find these deals - there are a select few of us still around...

Best of luck

A

Originally posted by @Allan Glass :

@David Hodge as was pointed out you manufacture deals and opportunities by rolling up your sleeves and looking where no one else is searching.  The Southern California market is a mature market with very experienced and deep pocketed investors.  Beginners will find difficulty following the standard guru methods in their most basic forms.

Although there's quite a bit of hyperbole in @Aaron Mazzrillo's comments his point is well stated - you won't find deals searching the MLS, relying upon unseasoned brokers/agents, or combing through Zillow, Trulia, etc. etc.

You may get lucky with one or two deals, but if you're trying to build a business in Southern California you won't be successful by waiting for deals to fall in your lap or by looking where everyone else is looking.

I've been investing and have owned and run a brokerage company in Los Angeles for over 20 years and have consistently found cash flowing deals for myself and my clients regardless of the market conditions. Aaron spells out many of the reasons these opportunities arise with sellers - the answer to how you find them is hitting the streets, finding the types of sellers who are likely to find themselves in the situations Aaron mentioned, and finding the successful investment brokers who know how to find these deals - there are a select few of us still around...

Best of luck

A

 No disrespect directed at you as a licensee. I'm a licensed broker as well. When I speak publicly about investing, I like to say, "99% of the licensees out there make the rest of us look bad." You sound like a fellow 1%'er. Just being on this forum puts you into the right kind of licensed person to be talking to in my book.

I have cash flowing properties in SoCal ... though I'm not as seasoned as some, here are a few ways I've done it:

1) Buy inland. It is easier to cash flow in Riverside than OC, for example. Personally, I have SFRs in Palmdale & Lancaster that cashflow great from day 1. These are not ghetto houses where you can't collect reant either, like everyone always assumes. There are plenty of those in these markets, but plenty that aren't also if you look hard and carefully.

2) Buy in a down market. SoCal is a manic market with sharp ups and downs. Use this to your advantage to buy when it is way down and ride the wave up, cash flowing all the way. The market is way high now, but that won't last forever.

3) House hack. Buy a cosmetic fixer and live there a few years. You can rent rooms, "mother-in-law-suite, etc. in a SFR or units in a small multi (2-4 unit) to lower living expenses. It may not cashflow day 1, but you may be surprised how quickly it does as rent increases and your mortgage stays the same. Key is to add value via sweat equity in the meantime and make sure you can afford to hold as a primary without forced sale if the market tanks in the short term. When it cashflows and you've saved enough for another down payment, turn it into a rental, rinse & repeat as necessary.

 Other possibilities I have not tried, but hope to in the future:

4) Buy off market deals, possibly using "creative finance" methods. Already covered by previous comments.

5) Buy multi-unit properties. Anything 2-4 units is still considered residential property and can be financed as such, just like any other single family home. Cash flow should be better, but appreciation may not be as strong as single family homes. Anything above 4 units is commercial property, and still may cash flow better, but this is a whole other ball game not advised for newbies in SoCal.

6) Short term rentals. Near the Beach, Big Bear, Disneyland, Lego Land, large hospitals etc. Any place where people visit/stay for short periods of time is a target. Properties may cost more, but do the math on the rental return using AirBnB comps etc. and will likely find it is possible to cash flow day 1. This is not as passive as long-term rentals, as you will continuously need to take reservations and turn the unit between renters. Plus is that California is less seasonal than other vacation rental markets, since the weather is good year round. Downside is vacancies may rise during recession, so underwrite conservatively. As stated, I've not yet implemented this strategy, so please chime in @Mike R. or others that may have more experience in this strategy.

I've successfully deployed combinations of the 1st 3 above and have a portfolio of cash flowing properties in SoCal. I have also purchased cash flowing properties out of state (Phoenix) and like a hybrid strategy of building equity (but lower cashflow) in SoCal 1st and then parlay that equity (via cash out refi and redeployed cashflow) into higher cashflow (but lower appreciation) markets out of state. Feel free to reach out direct if you'd like to discuss further.

Originally posted by @Aaron Mazzrillo :

I own rentals all over SoCal, even in OC. Lots of stuff cash flows here, but you have to stop looking at the prices of properties in Homes & Land magazine and instead get knees to knees with an owner of a property and work something out with him/her. You could conceivably buy and ocean front mansion and get it to cash flow IF you negotiate the right terms. Is this possible? Absolutely. Are you going to close one this week? Most likely not. However, you'd be surprised what you can buy if you stop talking to real estate agents and start talking to people.

This past summer, my buddy closed on a 6,000 sq/ft south OC house with an ocean view. 90% seller financed. It wouldn't cash flow the way he negotiated it, but he was looking to move into it so cash flow wasn't his objection. It's such a bad *** house the pool has its own house that is bigger than my house! Could he have gotten it to cash flow? I bet if that is what he was looking for. 

You need to study creative financing but not with numbers. You need to look at the psychology side and focus on motivation. Here is one of the key points that once you comprehend it, things will look entirely different to you; not everyone is in real estate for the money, unlike the bunch of sharks on this forum. All you are looking at is dollar signs so you think every other person who owns real estate only sees dollar signs too. I guarantee you of the 100s of houses I bought, not one single seller ever said to me, "I need to sell because I need the money to go do...." NEVER. Not once. 

It is more like, "I want to sell because_____" You can fill in the blank from this partial list;

I'm tired of dealing with it. 

I let my stupid/loser/deadbeat brother/sister/grandson/daughter/son live there and he/she stopped paying me/isn't helping out/has a bunch of drug addict friends.

I want to simplify my life.

It needs a lot of work and I don't have time/energy for it.

I'm getting old.

I don't want to sell to someone who will kick out my tenants.

I can't afford my mortgage any longer.

I got a job transfer.

I want to be near my kids/grand kids.

The list goes on and on, but I've never once heard "I need $100K to get heart surgery/kidney replacement/triple bypass or I'm going to die!!!"

Stop price shopping and start talking to people. And by people I don't mean real estate agents. They aren't people. They're lazy, greedy pigs who are looking to destroy people's financial lives by telling them, "Sell today and convert 100% of your equity into cash so you can pay all those taxes!" because they're financial idiots who also like to pay high taxes and very few own any investments or understand anything at all about investing.

As far as making money when you buy, I disagree 100% with that. I've never made money the day I bought I house other than the change I find laying on the floor. All I ever did was take on more debt and a huge mess that costs me more money to fix up. Let me tell you from experience, just because you have equity on the day you close doesn't mean it's going to be there the day you're ready to sell! Equity is a myth. It's a false sense of security. You only make money the day that escrow check clears the bank and the deed transfers to someone else.

Forcing appreciation is another myth I don't understand. A house is only worth so much. Yeah, you can find an amazing lot and go nuts building some super spec home that will sell for an outrageous price, but the average house in SoCal is a tract house and those have a ceiling on value both on retail sales price and rental income. I think some people have this idea they can put in granite counter tops and charge another $100/month rent. Then put in a tile tub surround and charge another $50 a month. Well, you're going to hit a point where the perspective tenants will just rent the house down the street that is on the market for about the same rent as every other vacant house in the neighborhood. If by forced appreciation you mean flipping, same rule applies. The house has a top value the day you close. You might have to invest money to get it up to that value, but I wouldn't say you're forcing appreciation. You're just getting back what is there, but not being utilized. 

Forcing appreciation to me sounds like being the market maker in a neighborhood. I do this quite often, but I'm not getting some absurd price above what the comps sell for. I might get 10%, but I'm also spending more money to get it there so it's a trade off and it is a risky one. It is more likely here in SoCal that you'll be the market maker in setting the new low comp in the neighborhood than the new high comp. An investment house can only sit on the market so long while your lender and time burn up your potential profit in monthly interest payments, taxes, insurance, vandalism, theft and utilities. At some point, you're going to take the next offer that comes across the table no matter how many thousands of dollars in credit the buyer wants in closing cost assistance.

Building wealth takes time. I know a few investors who beat that clock and have become fabulously wealthy making consistent great plays or a few lucky ones. Most wealthy investors I know buy houses at a discount from today's prices, leverage them up, and wait... for years and years and years. Then one day you look at the pile of junk you own and realize you have 7 figures of equity tied up and it's not changing your life one bit, but you're a millionaire on paper.

Aaron,

What you're saying makes sense.  How have you found the right people to talk to?  I know there are many strategies like "driving for dollars" and simply telling everyone you come across what it is you do.  What's worked for you?  Do you have any book recommendations for creative financing and understanding the psychology side?