California Investment Strategies

Member since 2021 · 2 posts · 0 votes

Hi BP Community,

First time posting on Bigger Pockets here. I live in Orange County and I have been looking into some out-of-state investments for single family up to triplex for a buy and hold to build my rental portfolio. I really want to find something nearby that I can really get my hands on and be involved in. I know that California markets are so challenging to invest in for cash flow (which is what I am looking for as a new investor). I have been running the numbers for all different strategies (rent by the bedroom, BRRRR method, etc.) I wanted to reach out for advice / thoughts from other investors in expensive markets. Any advice is much appreciated. Thank you so much!

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Rental Property Investor · Escondido, CA · Member since 2018 · 268 posts · 137 votes
5y
@Tatum Kantor, investing for cashflow is going to be difficult in many parts of Southern CA. If you were well networked, and could get a great deal on a fixer and then tackle the rehab, that might work, but much of L.A., Orange, and SD counties definitely have price to rent ratios that are not favorable for cashflow. I haven't personally looked, but depending on how far you consider "something nearby" you could start to look towards Bakersfield/Fresno or moving east. I knew someone who invested in Yuma.
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Tatum Kantor
OP
Member since 2021 · 2 posts · 0 votes
5y
@chad lanting thanks for your thoughts!
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Rich O'Neill
Contractor · Chadds Ford, PA · Member since 2015 · 567 posts · 460 votes
5y
@Tatum Kantor I would recommend you talk to @Ross Yeager, he lives in CA and does a lot of OOS deals. He is one of our clients here in Philly. He also does some coaching and hosts a few groups on the topic.
If you decide on Philly as one of your markets I am happy to help any way that I can. Best of luck!
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Eric HuangPro Member
Member since 2020 · 4 posts · 1 vote
5y
Hi Tatum,
I am a newbie here in Southern California too. Have been looking around and found that the Inland Empire have had properties that could make cash flow work. Hope this helps!
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Ryan Fox
Investor · NV and CA · Member since 2016 · 373 posts · 227 votes
2y
@Tatum Kantor- Investing OOS has been a lot easier on my schedule than trying to do something local. Once you start making offers, the whole process of underwriting then offering is time-consuming enough. It also seems to interrupt the day as well because good deals go fast.
And then if you're going to do the rehab process and hire the contractor, draft the scope of work, be available at any time during the day to deal with hiccups, that gets really time consuming. You can do BRRRR deals without getting into any of these rehab complications. It's a matter of hiring a team that will handle it for you and where the numbers would generally work for what you want to accomplish.
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Logan Winn
Realtor · SF Bay Area · Member since 2023 · 18 posts · 22 votes
2y
Hi Tatum!

Welcome to Bigger Pockets! Investing in California, particularly in Orange County, can indeed be challenging but also rewarding with the right strategies. Here are some key recommendations to consider:

1. Focus on Emerging Neighborhoods:

Look for emerging neighborhoods in Orange County where property prices are still reasonable but expected to appreciate.

2. Niche Markets:

Consider niche markets like student housing or senior living, which can offer stable rental income.

3. BRRRR Strategy:

Use the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) to increase your property's value and refinance to reinvest.

4. Partnerships:

Form partnerships with other investors to pool resources and share risks. Partnering with experienced investors can provide valuable insights.

5. Creative Financing:

Explore creative financing options like seller financing or private lenders to secure better terms.

6. Rent by the Bedroom:

In high-demand areas, renting by the bedroom can boost your rental income significantly.

7. Local Market Analysis:

Stay updated on local market trends and network with other investors for insights and opportunities.

Always analyze potential investments thoroughly and run detailed cash flow projections. Best of luck with your investment journey!

Warm regards,

Logan Winn
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Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
2y
Quote from @Tatum Kantor:

Hi BP Community,

First time posting on Bigger Pockets here. I live in Orange County and I have been looking into some out-of-state investments for single family up to triplex for a buy and hold to build my rental portfolio. I really want to find something nearby that I can really get my hands on and be involved in. I know that California markets are so challenging to invest in for cash flow (which is what I am looking for as a new investor). I have been running the numbers for all different strategies (rent by the bedroom, BRRRR method, etc.) I wanted to reach out for advice / thoughts from other investors in expensive markets. Any advice is much appreciated. Thank you so much!

In escrow on a deal within 45 miles of OC.. Lot is large, has two SFRs on the lot, and space to build an ADU (maybe two). Buying for 625K, cost for fix up with 1 ADU about 400K.. Rents without ADU $6,450 and with ADU 2/1 $9000.00.. Out price/ARV $1.35M roughly.. There are deals in your backyard too.. Would talk to people about partnering if you want to stay in the CA market, not pushing you away from out of state.. but there are deals here that cashflow and make sense too.
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