If you are looking for cash flow, head up the 14 to the Antelope Valley (Lancaster and Palmdale). You could try Bakersfield too, but that is a bit further away. Just know that you will likely be giving up a lot of that wonderful S. Cal appreciation to invest in these markets for cash flow. There is a lot of vacant land up there, so if prices climb, they just build more ...
Alternatively, if you do not already own your primary residence, I would look to acquire that in a nicer neighborhood which will be more of an appreciation play. Or if you do own your primary, you could consider turning it into a rental and purchasing your next primary.
I've done both short term cash flow investments in the Antelope Valley and long term appreciation plays in LA (which all started out as my primary) as described above, and have made money on both, but I have made orders of magnitude more money on my appreciation plays. The appreciation plays do take time, though ... I wouldn't count on amazing appreciation over 5 years unless you timed your purchase very well, and I doubt that is today. Wherever you buy, NEVER pay retail, EVER.
Make sure to read what different people are posting about emerging markets. One of the biggest problems with L.A. is that you want to try to get 1% of the purchase price in rent per month. That is why we don't buy properties in this region.
You also want to be aware of what class property you are buying. We acquire B class properties because we want reliable renters. However, for the amount of money you have, you might want to consider participating in a syndication. It is not uncommon to get 15% or greater cash-on-cash return averaged over five years if the value of the property appreciates considerably or you are able to raise rents, which can be a sticky point in Los Angeles. But be wary of people who guarantee that percentage. It is also not uncommon to make only 5% for the first 2-3 years.
If you are looking for cash flow, head up the 14 to the Antelope Valley (Lancaster and Palmdale). You could try Bakersfield too, but that is a bit further away. Just know that you will likely be giving up a lot of that wonderful S. Cal appreciation to invest in these markets for cash flow. There is a lot of vacant land up there, so if prices climb, they just build more ...
Alternatively, if you do not already own your primary residence, I would look to acquire that in a nicer neighborhood which will be more of an appreciation play. Or if you do own your primary, you could consider turning it into a rental and purchasing your next primary.
I've done both short term cash flow investments in the Antelope Valley and long term appreciation plays in LA (which all started out as my primary) as described above, and have made money on both, but I have made orders of magnitude more money on my appreciation plays. The appreciation plays do take time, though ... I wouldn't count on amazing appreciation over 5 years unless you timed your purchase very well, and I doubt that is today. Wherever you buy, NEVER pay retail, EVER.
You could try Bakersfield too, but that is a bit further away.
I don't disagree with this suggestion, I just want to emphasize that Bakersfield is a region where housing is dependent on the price of oil. Their recent downturn in price is heavily influenced by the plunging price of oil. Oil is cheap now and I personally believe it will recover as it always has, but in this poster's opinion, buying property in Bakersfield is only a slightly muted version of buying shares of oil ETFs .
Realistically and practically speaking, assuming you want to stay within California, most of the more populous cities are too expensive to break into for a lot of new investors. The market rents are high too in those areas, but a lot of people I've met from LA and San Diego say that cash flows are not as good in the big cities.
Also, there are a lot of tiny rural towns in California that are really cheap to purchase in but where the rental market is not as good due to location and low market rents. I think the central valley, specifically Bakersfield and Fresno, are the best places to invest in because they are right in the middle: medium-sized fairly populous cities that are less expensive to purchase properties in and also have strong market rents.
Many people from the bay area are investing in the Sacramento area. I would just recommend buying at below value since the values have gone up so much since April 2012. You could have purchased above the appraised value back in early 2012 and it would not have mattered since prices were so cheap. The values are bound to peak some time in the near future so it is safer to buy at below appraised value. Many people from the bay area are moving to Sacramento and working for Bay area companies so there will always be demand as long as the bay area market is strong.
Depending on what you're comfortable with as far the area and tenants are concerned if you do plan for holding 5 years or more the high desert area has property to consider. Victorville has good options and areas that are nice in terms of tenants and property. A little farther up the 15 is Barstow/lenwood/dagget and for your 100k you could own a multifamily with good cash flow with enough left for a hell of a weekend in Vegas or the down for another multifamily
You can buy a rental property for 100k in Merced CA. and expect 700 to 800 a month in rent. That will give you a decent amount of passive income for 5 years (don't forget to deduct expenses) and hopefully appreciate in value over the course of 5 years.
@Nader Tashakor for buy and hold, you will be able to find stuff in Riverside co if you're looking close to home. Also, Fresno is a fantastic opportunity but it's much farther from your backyard.
The further people tell you to go out looking for deals, the much closer you are to kissing your $100K bye bye. When people (not investors) from L.A. and OC start looking at "deals" in 29 Palms, Blythe and Bakersfield, you might as well start taking financial advice from your barber.
The safest route for your $100K right now is to lend to an investor at 60% LTV and get 7% interest only. You'll make an easy $7,000 a year, not have a day of vacancy or a dollar of maintenance and if they stop paying, you spend a few grand, foreclose, and sell the house for a nice profit.
I would seek a Joint Venture with a local flipper in Fresno or central valley (Merced, Turlock, Madera, Tulare, Visalia, Bakersfield) all good areas. Find a reliable realtor (buy/hold) or flipper (JV).
I'm a local realtor from Merced and I live in Turlock so I'm very familiar with the market in Merced and Stanislaus County. Feel free to inbox me if you would be interested in looking at some properties that are competitively priced. One thing I always tell investors is that there are good deals on the MLS every once in awhile, the key thing is to act fast before everyone else.
@Aaron Mazzrillo. Great suggestion but how could one go about doing that?
Surely you must know an investor who also buys rentals. I can't think of a single investor that wouldn't be interested in 3-5 year money at 7% interest only.
Thank you @Aaron Mazzrillo lending is the next thing I am planning on researching on BP. Just by reading your post here, you reminded me to get on with it.
But I'm not sure if I agree about not going out to the lower priced desert areas or central valley in California. We have 4 rental houses in Desert Hot Springs. Certainly not an A class area. Our rents are all in the $1,200 to $1,400 range and we have been seeing tremendous appreciation. The area is growing and improving. Imagine if you had invested in Palm Springs 20 or 30 years ago.
California has approved the DHS area for commercial Marijuana farming which believe it or not is a good thing. The land values have been going up as a result.
@chris Latham you're exactly right about Palm springs. And if you consider the history(20 to 50 yrs or so) of census stats and the economic factors of places like palm springs, beaumont(my home town), victorville, or riverside before they had a huge housing demand you'll safely place your money is towns like DHS or barstow now and be rewarded in just a few years.
Do you have a steady income where you could use that 100k as a down payment on a property or are you looking for an all cash deal? That will make a big difference.
I do have a steady income, but I don't want to have to put in any more money in the property once it is rented out, so it needs to have enough cash coming to pay for the mortgage and expenses.
Best to take advantage of this market and flip that 100k in a JV as many times as you can. Once the market tapers (slowly is now) and then when it bursts, but how much, I will then start buying my BRRR deals.