New Investor looking to cash flow, what should I do?

6 Replies

I'm currently living in LA and looking to get my first investment property, here's my current situation:

- I have 300k available for down payment

- I have a somewhat decent credit score (in the mid-high 700)

- My household income is around 240k annually combined with my SO

My main goal for now is cash flow, and even though I would very much prefer to invest locally, I understand that Socal is not the most friendly place for landlords, through some research I can hardly find anything with a decent CAP rate reasonably close to where I live. But at the same time, investing out of state definitely kind of scares me too.

Now my options are pretty much between:

1) Investing in LA for cash flow, which would be preferable, but I'm not sure if it's possible

2) Investing in SoCal but outside of the city (thinking Riverside, San Bernardino, etc.) It seems like properties in these areas have much better CAP rates and I can visit and manage by myself in a reasonable capacity

3) Investing in cash flow friendly areas such as Mid west or South east. These properties seem way more profitable than those in Socal but investing out of state and the fact that I can't check out and manage the place really worries me(not to mention my complete lack of knowledge of the areas in general)

So here's it goes, I'm not really sure what I should do at this moment especially when covid adds another set of uncertainty to all of this. I'm super grateful for any help/advice, thanks!

Hey @Miles Yang , super excited to chat with you on this subject. I am extremely bullish myself on the Inland Empire. There is massive amounts of growth in the job sector, a great tenant base, and pockets where cash flow is still available. Having grown up in Riverside, I've seen the transformation first hand. It's been really fun to watch. I invest in the area myself and have found it to be extremely profitable. I know dozens of investors that have and continue to find reasonably priced rental units that provide good cash flow and even better appreciation, something out of state markets just can't compete with. Really looking forward to discussing further with you. 

Hi @Miles Yang !

I have no experience with CA myself, but from reading forums I think I can shed some light on the situation.

1.) You will most likely not find cash flow in LA. House hacking might be away for you to decrease your living expense allowing you to save more money each month for investments. 

2.) I have seen many people recommend investing outside the city. This seems like it might be a good option for you since a big concern for you is your proximity to the property.@Tyler Hungerford seems like he could shed some more light on the types of opportunities that are available.

3.) I made my first investment this past October. It was out of state for me. Most important thing when investing is finding a great team of people. This goes for in state and out of state investing. I decided going the turnkey route was a good option for me, especially being out of state. I would be happy to discuss my experience if this might be an option you won't to consider. 

Hopefully this helps!

Best Wishes!

How active do you want to be? If you invest long distance it'll definitely require more of your time and attention, but you'll probably see more deal flow. 

Or maybe you could bring capital to JV and have operators you trust. You could even invest passively in a syndication if you want to be totally hands off. Definitely a number of options! But what are your goals?

Hello @Miles Yang .  I dont' know that you'll find many opportunities for good cash flow in southern California.  The Midwest offers better cashflow in my experience.  I'm happy to help you with investing in full turnkey properties in Wisconsin if that interests you; feel free to message me.  Best of luck in your investing future!

A lot of us in So. Cal are looking further afield for better cash flow.   East of the Mississippi River the entry prices are lower and cash flows much more freely than in the west (generally speaking).  In the west, demand is high and appreciation is prodigious. 

LA is a pricey market.   Markets are pricey because they appreciate or have appreciated,  and demand is high.