Beginner in SoCal. Getting in with only $50K

24 Replies

I’m a LEO in San Diego County. Own a home that I can pull $50K out of which doesn’t seem to be enough to break into this market. Not sure I’m comfortable for a first time investment going out of state. I’m thinking partnering is the best bet.Suggestions?

@Kevin Wilson

There are some concerns going out of state, especially with your first one. But also concerns with predatory partners. We have been glad we went out of state and have found better returns that any partnership or deal that's ever been offered to us by someone else.

Kevin,

If you're serious about investing out of state, I suggest you read David Greene's book on out of state real estate investing. Partnerships can be beneficial, and they can be very problematic. Just understand that partnerships are like a marriage. You really should take time to get to know potential partners, and have those uncomfortable conversations about goals, legal issues, and determining responsibilities. Best of luck on your endeavors.

Sincerely,

@Kevin Wilson

No major experiences with cost or tax prep.

I'd travel to meet your team on the first one or couple at least. Try to get a reliable referral to someone once you settle on a market area. We have family that had property managers charging them for repairs that were never completed and vacancies when the properties were occupied. We always ask questions. I call and inquire about any repair/charge/late rent within 24 hours so all our property managers know we are paying attention to the details. If it comes down to it, you have to be prepared to get a flight on short notice and cancel weekend plans or trade some shifts to travel to and resolve the issue. We were extremely nervous about our first property being out of state, but the butterflies decrease exponentially as you do more. Once you have worked with a team a time or two and everyone has performed well/you've replaced who you've needed to you can start to do things remotely as you get comfortable but when that happens will be different for everyone.

@Kevin Wilson possible opportunity would be if you qualified for a fha for 2 units and you can move into one unit. And the other “If” is your willingness to do so even if you are qualified.

Best of luck!

@twana 

@Twana Rasoul I own a primary residence already and married with two kids and soon to be one on the way so it would have to be an ideal multi-family setup. Definitely thinking Single family with an accessory dwelling unit may be an option though 

@Kevin Wilson I see. Yes if you can trade up to a house with an ADU or buy 2 separate houses on one lot. But you'd have to find one within the limits of fha max limits.

Best of luck and congrats on the growing family!

@Kevin Wilson I live in Los Angeles- and I can relate to this big time.

There are a lot of like minded investors who would be happy to partner on deals.

30% of US mortgage loans in 2018 were originated in California, you have an advantage just by living here!

If you can work with people who bring capital plus experience I think so cal is a great market, even if you’re on a budget.

I am going to have to disagree.  50k is not enough to "invest" in Southern California...  At least not a worthwhile investment.  House hacking, MAYBE, but with only 50k you are looking at major improvement costs to see a return for a home that can qualify.


@Kevin Wilson I'm in CA as well and I just no longer want to invest in CA because of the poor return. After months of doing research about Philadelphia, I'm finally taking a dive and made my first serious offer for something that will give me a 1% return that I can't make here in CA. I'm just going to do some cosmetic touch ups on this home, no full on BRRRR since it's still new to me. While my local friend makes 1.7% return, I'll be happy making my 1% for now. Better than sitting here with dead money in the bank. Also, West philly is growing nicely so I'm hoping mine will appreciate to double in the next 10 yrs.

@Kalanie Tran I may end up going out of state as well. I lived in Lake Tahoe in high school and my brother still lives in Reno so I’ve thought about Nevada but Reno is getting quite expensive as well albeit not SoCal

I am in a very similar situation. I am also is the LA area with a little over 85k and having the benefit with using the VA loan but trying to find deals with multi family is difficult. Analyzing properties beings to make me nervous when I see the numbers. But with all that I am still much more comfortable investing in an area I know and house hacking is my primary goal

@Kevin Wilson

Hello Kevin! Fellow LEO in Fresno, Ca here. First off, I want to say congrats on stumbling onto this website as well as wanting to put your hard earned money to “try” and work harder than we do in this field. My first rental income was amazing to me as it made my first income stream outside of fighting, handcuffing, chasing, responding, and taking criticism. I’m excited for you!

As far as your real estate investment career goes, I myself am going to invest out of state by the end of the year as California prices are making it difficult to accomplish my cash flow goals to keep my wife at home with our son and daughter on the way (Due October). PM me and we can connect on our goals/strategies. Best of luck to you Kevin!

Originally posted by @Chad Quintana :

I am in a very similar situation. I am also is the LA area with a little over 85k and having the benefit with using the VA loan but trying to find deals with multi family is difficult. Analyzing properties beings to make me nervous when I see the numbers. But with all that I am still much more comfortable investing in an area I know and house hacking is my primary goal

 

@Kevin Wilson

Hey Kevin,

I'm in the Reno market. Regardless- yes, most of the inventory on our MLS is not going to cash flow at 20% equity position, and with a median home price of $400,000, $50k won't get you a whole lot.

Some of the outlying areas like Fallon have much better CAP rates but definitely aren't as viable for long-term appreciation.

I actually have this report from our local association of realtors with all the market details hosted in my google drive if you want to check it out.

monthlyreport

ONE OPTION to still stay local is to buy in the Temecula- Menifee area.  Great Schools, Growing area, lots of renters with excellent jobs who just dont have the down payment. You can get in with $50K.  You can get a house for $380K.  Appreciation.  I've been very happy with my investments here.  As a matter of fact, I sold a san diego house and bought 3 here.  income went from $3500 to $6000/Mo on those 3.  

Happy to talk to you.