BEST WAY TO INVEST $75,000???

Question

I've been looking for my first investment property(s) but after listening to various BP podcasts/blogs, I realize I need to hone in on a strategy.  My main goal is to generate cash flow and get as many properties as I can with the following:

I'd like to keep my cash outlay to $50-75,000. I have a pre-approval for a Lo-Doc, non-owner occupied loan up to $500,000, 25% down, 6.25 interest, 30 years -- and my loan stipulates whatever property(s) I choose, the 30 day market rents have to cover the total payment (including any HOA).

I live in Los Angeles (and have a real estate license). I've been looking online in various states.. but mainly close by in CA, NV, AZ (and Hawaii for short-term rentals). I work, so I can't spend a lot of time traveling to other states but am open to finding trusted partners. Your thoughts on how to best maximize my $75,000 and get my Real Estate portfolio started?? Go for Multiplex? SFRs? Fix-n-flip? Turnkey? Notes? Combo of these? Thanks!

Melanie McDaniel · Answer

@Melanie Johnston My two cents: Find a great operator and put it in a syndication. As a real estate professional (you are because you are an agent), you will get all the benefits of owning real estate, plus the benefit of accelerated depreciation which could possibly wipe out most of your agent income in regards to taxes. All the benefits, none of the headaches. Sorry, way off from what you were talking about, but I just wanted to throw you something outside of the box. : ) Good luck!

Melanie Johnston · Answer

Hi @Lisa Gauff. If you've lived in Scottsdale then you know that this city and surrounding areas continue to offer a great quality of life that attracts renter by the hoards. As an agent myself, I recently struggled to find a decent Scottsdale rental for a couple from Chicago willing to pay $2,500 a month. Inventory is really low. It's a great time to be a landlord here.

And there are opportunities all across the Valley. I'm in touch with a BP member who recently purchased and lightly rehabbed a SFR in 85041. The house is only 1,100 SF and she cash flows $500 per month. She plans to share this investment in her BP profile soon and I think it will open people's eyes to the fact that you don't have to use $1 per square foot (the average here) as a barometer for rental rates.

Regarding local multi-family, that's a very hot target right now. This high demand is often reflected in MF asking prices.

There are always opportunities worth considering in Metro Phoenix, which you have the advantage of being familiar with. [Solicitation Removed by Moderators]

Best of luck!

Melanie

Duc Ong · Answer

@Lisa Gauff If you're looking for short term rentals on Oahu, the recent STR laws have come into effect, which makes things more restrictive, but not impossible. There are still opportunities that can work, but they would require more effort than before. As for CA, the downside is the law not being very landlord friendly, along with the high fees to maintain an LLC and rent control. I own a SFH in Anaheim, CA, which I rent out to my family, so I'm not concerned about liability. If it weren't for my family, I would have sold it already.

Aaron K. · Answer

@Lisa Gauff a lot people abandon California in search of "better returns" but for SFR especially, Arizona and Nevada aren't that different from the less expensive places in California like the Central Valley and Inland Empire.  They are however cheaper from a dollar perspective, meaning you can buy a $250k house instead of a $350k house.  By a B area, it is a way of measuring the quality of a neighborhood, and is subjective from person to person.

Lisa Gauff · Answer

Thanks@Aaron K.... yes, I used to live in Scottsdale and believe the Phoenix area is a good place to invest, though I don't really know the definition of a "B" rental area?  Bottomline is I don't really know what numbers I should be aiming for?  I'm a little nervous about it all and feel like I probably need some hand holding for this first deal.  Also, not sure what you mean by your comment re: CA??

Aaron K. · Answer

For the most part if you are looking in AZ and NV for rentals, if you are looking at B inventory or better returns can be similar, so I'd go for the areas you know better.  Also I know I'll get pushback on that claim but I am referring to what is available in CA not what is most common.

BEST WAY TO INVEST $75,000???

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