First time investor from California

16 Replies

Hello BP!

I am currently an active duty Marine looking to invest in Multifamily homes in California. Yesterday I bought and read The Ultimate Beginners Guide to Real Estate Investing, and was hooked! I am now reading my second book on buying and renting.

I plan on using my VA loan to purchase a duplex or triplex in Southern California and keeping a unit for my wife and I and renting out the other unit. However, after reading through the forum I keep seeing posts about investing outside of California. I am open to that decision but confused on where to start? Or should I go with my first option? I'm afraid that if I do invest outside of California and no one rents the property I am stuck paying for my home here and in another state.

Thank you.

Personally, I always like doing business close to home where you know the markets, economy, area attractions, schools, etc., takes some of the risk out.

Thank YOU for your service to America!

Welcome! Well first it depends exactly what area you'd be buying in around CA. Most areas won't let you profit at all, but some might be okay(ish). Your thoughts on buying out of state and not having a tenant are valid, so you'd want to be sure you buy in an area with strong rental population and growing market (i.e. not a declining population) to help mitigate that. The reality though is even a vacant out of state property for a few months may still cost you less money than a fully occupied property in SoCal. The reason more buy and hold investors don't buy here is because prices are too high to allow for any profit. One advantage you have is the VA loan and you could buy up to a 4-unit property, but again it will be very area-dependent as to whether you would even be able to break-even or not.

My recommendation is to first learn rental property numbers. Once you are very familiar with those, it will be much easier to assess your options. Because ultimately it's the cash flow that matters, so once you know how to calculate that you can then compare all of your options.

@Joshua Becerril first off thank you for your service. I think the ideal scenario would be if you could get that VA loan for a place close by. But if the #s don't make sense then I'd look at other markets. What I like to do is have certain criteria to follow on qualifying a market. Then, look at markets where I know people and qualify or disqualify them. It helps me get off the ground faster in a new market.

@Joshua Becerril Hello Jousha and welcome to BP. Thank you for serving. My father and brother both served in the military.

You're on the right track Devil Dog. That's how I got my start into multi-family when I got out of the Corps back in '92. Just an FYI, if you get a VA loan, you need to be an owner occupier, so investing out of state might not be possible with that type of loan. I know of new properties in the LA market, but they would be jumbo loans so you would have to come out of pocket with a hefty "VA funding fee". Cashflow would be non-existant. You would just be subsidizing your living expenses.

If I was a young guy getting discharged now, I wouldn't stay in California. All the job creation and growth is happening in Texas, North Carolina and Arizona. Get out that way and get yourself a quadplex, live in one and the rents should cover the cost of you to live there. Live there for a year, refinance if possible to free up your VA loan, then do it again at your next quad. Rinse, repeat.

@karenmargrave @joefairless @christopherhunter My pleasure and thank you for paying your taxes!

@aliboone Thanks I will continue expanding my knowledge.

@ChuckHolland Semper Fi! If it wasn't for my job that I have lined up here as a military contractor I would move. My wife is also not to happy about the thought of moving away from family.

I thought tagging someone was like it would be on Instagram. Can someone explain how to tag someone in a post? Thanks

Hi Josh,

Thank you for your service to this beautiful country. Like everything in life, something is expensive or cheap for a reason. The reason real estate in certain areas is expensive because it is coveted. If you only analyze real estate based purely on numbers, you will find the more ghetto the area, the higher the yield. On the other hand, the more coveted areas tend to have low to no yield. Of course, these areas attract different types of tenants.

Have fun investigating and investing. This site is wonderful for real estate investors.

OKC is a good market right now. We only have a 4% unemployment. TAFB is here. That means you can get 'insured' renters. If they should damage the property, the govt will WD the cost from their payck til covered. I'm willing to manage it for you. I have had rentals in the past.

@Joshua Becerril

Welcome to BP Josh, I would strongly suggest trying to remain in state with your real estate investments for the same reasons other people here mentioned.

Very well. Thank you for the help everyone.

@Joshua Becerril out of state isn't bad at all.. We are in California and have holds in Indiana... And we are looking into other markets. California is so competitive it doesn't make a whole lot of sense to buy and hold there unless you get an outstanding deal which is very very rare. We have 40 in calories and around 70 out of state.. Just make sure you hire a reputable management company.

@Nick Wing. Wow. You have 110 rental properties? Is that how many deals you funded or actual houses owned. That is incredible. Do you have awebsite we can check out?

@Joshua Becerril if you are interested in looking into options in other states I'd say just like @Nick Wing did that Indiana is great for buy and holds. The nice thing about here is that you can buy multiple properties or multi-unit buildings that spread out the risk of having units go vacant.

It always sucks when you have vacant units, but if you own one single family home and it's vacant it really sucks lol. That's why it's nice when you own several units because then it doesn't sting quite as much when something does pop up which inevitably does.

@Joshua Becerril thank you for your service.

As to the highlight, first type in the @ then type in the first 3 letters of the persons name. a list will pop up below that you can choose from. you can also use @? to get a list of every one who posted. You cannot link someone's name who did not post on the thread unless you are a colleague with them.

On another note keep reading on this site. The Learn section above is loaded with great information. It took me months to get through it. You can also set key word alerts to keep up on topics or areas of interest. Thank you again for serving.

Thank you @Jerry W. @Adam Gerig @Nick Wing

I'm looking into Texas right now. I have a buddy that went to boot camp with me who lives in Texas and willing to be a partner.

If the average household size is 2.5 or 2.4 is it better to buy a 3 bedroom unit or 2 bedroom?

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