Updated about 9 years ago on . Most recent reply
Is it possible to get cash flow in West Side LA?
I was phoning a commercial broker who deals with West Side properties, and the CAP was disturbingly low at 2-3% average. Is it just a money dump for cash heavy investors who just want a safe bet or are there any opportunities for a commercial mortgage backed investor in that kind of area?
I really wanted to invest in the West Side because it's so in-demand, but I suppose if I want actual cash flow, I have to venture out into "riskier" areas... But just wanted to see possible options in the West Side, if any...
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First I'll address your question: Yes, there are always deals. Even at hotter markets. It just takes a lot more work and efforts to find them. The question is do you want to do the work?
Strategies such as direct mailing, probate, driving for dollars, networking, etc. will eventually yield off market deals and these are the only deals you could find that will cash-flow in a super hot market.
Second, I'd like to share a thought that is true to any type of investing, real estate, stocks etc. and that is: "the masses are assess" if EVERYONE go to the west side why would you want to go there too? 2-3% cap rate means the prices are over inflated and WHEN the market turns it will be the first place to get hit hard.
at 2-3% this this probably running a negative cash-flow. Will you be able to dump money into the money pit in time when the economy is not as strong as today?
For the above reason, I personally look at secondary and tertiary markets in Texas. they are way more stable and granted I will probably never see 40%-60% appreciation I will just as much likely not to see 40%-60% drop in value. What I WILL see is steady cash-flow in both good and bad times..