New here and looking to start either in LA or out of state.

9 Replies

My husband and I are looking to start out in buy and hold. The problem we are having is whether or not to invest where we are or out of state. We live in Los Angeles and real estate just seems so unobtainable out here. We have saved 30k so far and can possibly double that as my dad is willing to invest with us if the deal is good. We are looking at a duplex to 4 unit buildings in the range of 500k-600k but not sure if only 10% downpayment will cut it. We wouldn't mind house hacking if possible though.

Anyone have experience starting out with low downpayment in Los Angeles? We have full time jobs and decent credit scores lowest being 700. 

I am just not sure how to start or where to look or what to look for. I am currently reading Brandon Turners book The Book on Rental Property Investing and scouring bigger pockets for more information. 

Would investing out of state be a better start since our money would stretch further? Or should we keep it in Los Angeles to property manage better?

Any advice or information would be much appreciated.

@Monica McDowell I'm replying to this to keep an eye on this thread. I live in my first property but am looking to invest as well. And I have also been thinking maybe out of state or cheaper areas in California. House hacking would seem like a good idea for you guys, do you follow any REI's on Facebook? I saw a duplex listed by an agent in Los Angeles for about 600k. It didn't look that bad. Good luck!

@Luis Vaca I was just on meetup.com looking for REI groups there but will look into facebook as well. I was leaning more towards house hacking but am still sorting out whether out of state is better all around. There are many great duplex's in LA from what I have seen but I am trying to get the best bang for my buck. lol

The out of state is appealing but I am not sure how to handle it since I am completely new to investing. I have seen websites like roofstock.com, midsouthhomebuyers.com and ohiocashflow.com and was wondering if I should start with some property on there but am not sure about those sites so will need to do further research. 

So many things to research and it's a tad overwhelming. lol

I would say the biggest thing is to understand the numbers. If you understand the numbers and then still decide to invest in LA, then that's one thing. But if you don't realize what you're getting into with a rental in LA, especially at 10% down, you could get yourself in trouble.

So the first thing is to understand the numbers. Try this-

https://www.biggerpockets.com/renewsblog/2013/01/1...

The first thing you'll find when you run the numbers in LA is that you aren't going to get positive cash flow. So if (when) that's the case, then you need to know how you're going to profit. If you don't know that, you could just end up losing a lot of money.

For house-hacking specifically, here are considerations-

https://www.biggerpockets.com/renewsblog/considera...

I'm in LA and most of my properties are out-of-state. I started with those, for capital reasons and cash flow reasons (you can actually cash flow elsewhere). I do now also have a duplex in Venice that is cash-flow negative, but I knew the reasons I was doing that one and where the intended profit will come from.

Hope that helps.

@Monica McDowell

Hi Monica, and welcome to BiggerPockets.

When it comes to investing in your first property it's always best to start with your goals. Are you looking for a property that's going to appreciate well over time or are you looking for something that will generate cash flow day one?

And as for out of state investing, this is getting much easier to do, especially with property management companies. Though you'll pay a % of the rent to the property management company, they'll undoubtedly save you a ton of time and relieve stress. That being said, if you're passionate about having a house locally, then you may be able to manage the property yourself. It's really up to you.

I hope this helps, and let me know if you have any questions.

@Zach Evanish

Hi Zach! Thanks for responding! Several options recently came to my attention and now I am trying to figure out which one I like best. But overall we would like the buy and hold cash flow but are also interested in fix and flips. There are so many pros and cons with the different avenues we can pursue it's a tad overwhelming but exciting. I have looked up roofstock and see a lot of great properties on there. I think for our first we have decided that it should be local so we can get a feel for it and learn hands on. But would love to work with roofstock one day as out of state seems like a great way to go to expand our portfolio faster. Whenever we get to that point I will reach out and let you know.

Wishing you continued success!

@Monica McDowell Sounds great! I know it can be overwhelming. I have done it all (buy and hold, flips, multi-family, office, retail, REIT's, hard money, etc.) and would be happy to be a resource as you decide which path is best for you!

@Monica McDowell

Hello Monica much success in your new real estate investing business.

From a commercial lender prospective (which is what I do) what you have to be concerned about in addition to the right market and location, is financing.

"Normally"  when you are new to real estate investing the typical guidelines for a "newbie" are: 30% Down Payment + Closing Cost + Reserves.   Many lenders will promote and advertise their most attractive programs such as; 100% financing, knowing that about 100% of newbies will never qualify.

Now that is not to say you can not find a lender to give you 90% LTV (10% down payment), but the likely hood is not great with no experience. Therefore, my advice is to prepare for the 30% down payment + closing cost and reserves and if you 90% great.

I wish you the very best.