Rosemead, CA · Member since 2015 · 25 posts · 10 votes
Hi all,
Like many other desirable areas across the country, I'm having difficulty finding a property where the numbers make sense (1%/50% rule).
The closest that I've found are in class C neighborhoods, near Inglewood.
Hypothetically, if given the opportunity, would you invest in Property A or Property B? Keep in mind, property A is only 30 minutes away whereas property B is 2 hours away. I'm trying to decide on where to buy my first property.
Property A: South Los Angeles (Compton/Lynwood/Huntington Park) area - Class C - $300,000 - 3br/1ba - 1000 sqft
Rents go for about 1800-2000 in the area.
Or
Property B: Lancaster/Palmdale Area - Class B/B+ - $250,000 - $300,000 - 3br/2ba - 1500 sqft
Rents go for about 1500-1700 in the area.
Most of these numbers are pulled from Zillow so they're probably off. What do you professionals think?
Real Estate Agent · Inglewood, CA · Member since 2015 · 294 posts · 150 votes
10y
What is your idea of the numbers making sense. Things that are working for Indiana investory don't necessarily apply to California and vice versa. So while I take note of the "rules" they are never concrete. Also, if your looking at South LA focus on Southgate and the 90047 zip code and look for low $400k multifamilis rather than $300k single family residences. There's still $400k duplexes in Inglewood (no rent control and Inglewood adjacent LA).
Real Estate Agent · Inglewood, CA · Member since 2015 · 294 posts · 150 votes
10y
What is your idea of the numbers making sense? Things that are working for Indiana investors don't necessarily apply to California and vice versa. So while I take note of the "rules," they are never concrete. Also, if your looking at South LA focus on Southgate and the 90047 zip code and look for low $400k multifamily properties rather than $300k single family residences. There's still $400k duplexes in Inglewood (no rent control and Inglewood adjacent LA).
Santa Ana, CA · Member since 2016 · 22 posts · 5 votes
10y
To be honest I don't recommend looking for rentals in California at all. Prices are too high for the 1% rule to make sense and the laws favor the renters more so than the owners. There are some great out of state markets that will stretch your dollar futher and bring in better ROI.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Don't know anything about property A market, but I know the property B market well. You seem to be quoting full blown retail price on the west side of AV... I do my investing on the far East side, but only carefully cherry picking the neighborhoods block by block; you need to know the market well to do this successfully, and that is true anywhere. Buying a pure rental (not house hack) in SoCal at full blown retail price at this stage of the RE cycle is not a very good strategy IMHO. If you can get property below retail market price, do a forced appreciation equity bump, and it will cash flow (even mildly), then you have an unrealized profit early on and are off to the races. Else, I'd pass personally. Pulling that off in today's market is very difficult, thus I've been doing a lot of passing, but I already own a local cash flowing portfolio so I get paid to wait ...
I live in Venice and have always bought out-of-state because there's no cash flow here. And don't forget with Compton you'll have to wear a helmet to go check out your property...
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
10y
Everyone here has given good sound advice. You have to think what you long term goals are here. C properties are great as long as they are in areas that have a bit of an upside in the loans run.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
Both the A & B properties are in some rough areas. Every zipcode has all property classes,
but whatever the numbers look like, get some Google Map - Street views to get clues to the nature of the area - - those bared windows area there for a reason, eg:---
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Better to keep looking, learning, saving, and waiting to find a good deal locally than to venture out of state as a newbie IMO. I've invested both locally and out of state. Without a doubt, local is more profitable and predictable for me even if (or especially because of, if you think and invest like I do) the price to rent ratios are so low here. By far the biggest hurdle for out of state is finding a property manager that will actually do their job competently without robbing you blind in the process. I had 7 years of local experience before going out of state, and 7 property managers and 5 years later and those cash flow projections never materialized ... lot's of crooked PMs got rich off cash flow from me and my properties, but I sure as heck didn't. People will try to tell you its easy ... by and large, they are trying to sell you something. Never ask a barber if you need a haircut. Good luck whichever path you choose.
Investor · Long Beach, CA · Member since 2015 · 201 posts · 29 votes
10y
I started right out in 2008, investing Out-Of-State, 14 deals in 18 months, never saw one of them, and I barely spoke English and knew nobody in USA in Dec 2007 when I came here! Better for cash-flow that is for sure! Just doing a Fix & Flip now in Long Beach on a condo (less competition) that works for a rental B&H buyer, but they are really really RARE!!! I've searched over 2 months for that!
Remember, everything is possible when you want it bad enough.... that needs work, perseverance, immerse yourself, network, but FIRST, numbers need to work. Let me know if you need help on that... :-)
Rental Property Investor · Anaheim, CA · Member since 2015 · 138 posts · 37 votes
10y
@nadielajoie If you dont mind me asking, where are your out of state investments? Im in California and i'm interested in out of state investments. Thanks
Like many other desirable areas across the country, I'm having difficulty finding a property where the numbers make sense (1%/50% rule).
The closest that I've found are in class C neighborhoods, near Inglewood.
Hypothetically, if given the opportunity, would you invest in Property A or Property B? Keep in mind, property A is only 30 minutes away whereas property B is 2 hours away. I'm trying to decide on where to buy my first property.
Property A: South Los Angeles (Compton/Lynwood/Huntington Park) area - Class C - $300,000 - 3br/1ba - 1000 sqft
Rents go for about 1800-2000 in the area.
Or
Property B: Lancaster/Palmdale Area - Class B/B+ - $250,000 - $300,000 - 3br/2ba - 1500 sqft
Rents go for about 1500-1700 in the area.
Most of these numbers are pulled from Zillow so they're probably off. What do you professionals think?
Hello Jonathan!
Welcome to BP and REI! I am sure you will find all of the help you need to get started in CA. I know the market there needs A LOT of research before you jump into things.
Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
10y
Hello and welcome to BP! I would look at what Memphis Invest has to offer you. They are in Memphis and Dallas and have a lot of experience. One of their people is on BP. Just make sure you feel good about them and they are trustworthy. A diverse community and a good location are critical. A growing population is also important. Having good people to take care of your properties is important. Anywhere in the warmer mid-county around big cities will probably do well. Just make sure your gut is trusted.i do not have any investor experience but I am 59 years old now and I do have experience with construction and real estate. If you think I can help you with anything please contact me through BP at any time. Good luck!
Santa Monica, CA · Member since 2016 · 15 posts · 5 votes
9y
I am also looking to house hack a 2 bed 2 bath condo in Los Angeles. I agree with the above investors who are saying that in this RE Cycle the numbers don't make sense, but that doesn't mean you can't continue researching and making offers with numbers that do make sense. Me personally, I am getting my real estate license to make commissions off my own purchase or to further negotiate down the price (provided I can find a broker to work with). At that point I will weigh the opportunity cost of continuing to rent and waiting for the bubble to pop (unknown number of years) or to bite the bullet and pay extra in this cycle in hopes that my real estate will not lose more value than the combined rental income I saved purchasing now rather than later.
If anyone has incite on the above I'd be happy to hear it!