Realtor · Long Beach, CA · Member since 2015 · 4 posts · 2 votes
Hi all,
I'm just starting to dive into all the great info here! I would like to start looking for properties to buy and hold for cash flow (ideally) but am finding that goal is almost impossible to find.
I live in the Southbay area and am looking to purchase my first investment property. A buy and hold property in the SoCal area interest me most since I will be close enough to self-manage.
Any advice of markets I should look into specifically? Any experienced investors in the area with advice would be greatly appreciated.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Kailee! Cody is correct- people don't buy in SoCal for cash flow. You just won't find it, unfortunately. Even if you do find cash flow somewhere (unlikely in the heart of SoCal...I'm talking more like Fresno or somewhere), it's not likely to be very high and it may not be enough to make up for the risks with all the tenant-friendly laws here. It's never been worth it to me, at least. I live in Venice and have always bough out-of-state. I started buying out-of-state years ago, as I was fairly convinced here was a no-go, but more recently I started looking back into SoCal because I was working with someone who wanted a property here. He was even willing to just break even or even accept a little negative cash flow, and we still couldn't find anything that made any sense.
Soooo....
It's going to depend on your goals. One question to ask would be- is it worth being able to self-manage if it means having negative cash flow every month?
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Hate to answer your question with a short answer but this is been asked many times.
People don't buy in Southern California with the idea of cash flowing. They buy with the hopes of appreciation.
I'm not gonna pass judgment as to if that's a good business model or not, but even people buying in San Diego aren't likely to dispute that fact.
I was born and raised in San Diego, and outside of my personal residence, I own nothing here.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Kailee! Cody is correct- people don't buy in SoCal for cash flow. You just won't find it, unfortunately. Even if you do find cash flow somewhere (unlikely in the heart of SoCal...I'm talking more like Fresno or somewhere), it's not likely to be very high and it may not be enough to make up for the risks with all the tenant-friendly laws here. It's never been worth it to me, at least. I live in Venice and have always bough out-of-state. I started buying out-of-state years ago, as I was fairly convinced here was a no-go, but more recently I started looking back into SoCal because I was working with someone who wanted a property here. He was even willing to just break even or even accept a little negative cash flow, and we still couldn't find anything that made any sense.
Soooo....
It's going to depend on your goals. One question to ask would be- is it worth being able to self-manage if it means having negative cash flow every month?
If you don't mind me asking, what areas do you own investment properties?
No prob. Houston. And I'm not saying don't invest in socal as everyone has their own objectives. I'm just saying "cash flow" isn't typically the objective (at least not 'day one' objective) of buyers in socal. They're buying because they 'want' to own here ('pride of ownership', 'trophy property', etc.). Again, nothing wrong with that. My objectives are different.
e. He was even willing to just break even or even accept a little negative cash flow, and we still couldn't find anything that made any sense.
Yeah. That's crazy to me. But again, to each their own. I'm sure in the long run he'll be fine. I just don't see how you can grow a larger company/portfolio of properties with this model. But if that's not your objective then it doesn't really matter I guess.
Investor · Santa Ynez, CA · Member since 2008 · 375 posts · 175 votes
9y
Hi All,
I pretty much agree with everyone, with one big caveat, which is when (there will be at some point) there's another market crash, it's possible to buy right, get cash flow and appreciation. I purchased a short sale house in Burbank in 2011 that cash-flowed quite nicely from day 1 and is nearly doubled in appreciation.
I was investing in Fresno (mostly Clovis) for pure cash flow and hopes of appreciation up until a couple months ago and got rid of my last property up there. It doubled in value in 6 years and cash flowed from day 1 as well.
San Diego, CA · Member since 2015 · 273 posts · 226 votes
9y
@Kailee Tedesco I agree with everyone who states that cash flow is tough in SoCal. But it's also tough to learn a business from 1000+ miles away. From what I've seen the people who invest out of state with great success either:
1. Invest in the area they grew up in, so they have a strong familiarity with neighborhoods, trends, and possibly have family in the area to help
2. Invest out of state with a partner in the area (a turn key company is not a partner).
3. Move to the area they want to invest in, get their business rolling, then move back. (@Cody L. isn't this what you did?)
4. Have already learned the ropes locally so they have a strong foundation in RE for remote investing.
Everyone says it, but house hacking a 2-4 unit is the best way to start.
I'm just starting to dive into all the great info here! I would like to start looking for properties to buy and hold for cash flow (ideally) but am finding that goal is almost impossible to find.
I live in the Southbay area and am looking to purchase my first investment property. A buy and hold property in the SoCal area interest me most since I will be close enough to self-manage.
Any advice of markets I should look into specifically? Any experienced investors in the area with advice would be greatly appreciated.
Thank you!
KP
I would agree with some others in here. Investors in CA are often looking for appreciation. Cash flowing and long term holdings are normally done in markets where home prices are lower. Often in the Midwest etc.
Congratulations on wanting to get started investing. SoCal would not be the best or right place if you're looking for a good rate of return, cash-flow, and a more stable-type real estate market.
If you're seriously planning to self-manage, then you're limiting your options because you're boxing yourself into a market that doesn't make sense.
We almost always recommend our clients use professional property management (in all the markets we're in). Self-managing is doable, but not where you want to start as a first time investor.
It's hard to recommend markets for you without knowing what your investment goals are and the criteria that will driving your decisions. That's what we start with all time. Start with the bigger picture first.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
Sweet RB in the house. I used to live on Esplanade and Ave B.
Since only one response actually invested in Socal besides this one you may want to qualify who you listen to. It is far too easy to tell you it is harder in Socal and give up..... just understand it is more profitable historically ( #1 since 2000 nationally for flow and equity) and that is partly why it is harder. Ask anyone who invested in Redondo Beach if that harder part was worth it. The others who responded here only have an interest in selling you something far away so keep that in mind. You really can't get useful info from that type of response.
Perhaps consider doing airbnb or adding an additional dwelling to help with initial cash flow or just straight up partner up on a flips until you find the one suited best for local buy and hold.
Inglewood or Long Beach, check bp market place I just saw an off market LB on there for 220k.
I'm just starting to dive into all the great info here! I would like to start looking for properties to buy and hold for cash flow (ideally) but am finding that goal is almost impossible to find.
I live in the Southbay area and am looking to purchase my first investment property. A buy and hold property in the SoCal area interest me most since I will be close enough to self-manage.
Any advice of markets I should look into specifically? Any experienced investors in the area with advice would be greatly appreciated.
Investor · Los Angeles, CA · Member since 2017 · 95 posts · 52 votes
9y
I'd recommend reading through the forums and listening to some of the podcasts on BP. You'll begin to get a better feel for how to interpret and discern the different responses on the threads. As @Matt R. mentioned previously, there may be some responses coming from members promoting their services they provide. And the services they promote may be great but I feel the responses should be processed differently.
I've noticed that most SoCal investors either entirely invest out of state, or entirely locally. I have one rental locally and plan to continue to buy locally but am intrigued and opened to out of state options as well. They definitely behave differently and have different risks/benefits. I feel that I've gained more of a flavor of what the out of state options provide and am more equipped to make a decision on whether or not out of state investing lines up with my investor profile after reading through some of the BP forums.
Clearly people have made money both ways, but I think its important to figure out what works for you. I also personally try to stay away from rent control areas and I don't buy in an HOA. Those are just my preferences.
Investor · Santa Ynez, CA · Member since 2008 · 375 posts · 175 votes
9y
@Ronda R. Couple reasons. One is my dad has been my boots on the ground in that area and he's getting too old to effectively deal with things. The other is it's just a judgement call of when to pull the chips off the table. I doubled the value and feel like the market overall is pretty hot and I'm wondering how long it continues, so this was my opportunity after losing my tenant. If I had a 20 year timeline in Fresno, I'd for sure hold onto the property since it was cash flowing nicely.
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
San Diego does have properties that cash flow (I have been presented 3 in the last month) but do not cash flow like other locations.
However, the ROI on financed coastal So Cal buy n hold units exceed virtually every other local whether you go back 10 years, 20 years, 30 years, 40 years or 50 years. This historically great ROI is why coastal So Cal RE commands the high price.
Due to this historically great ROI I do not understand So Cal residents choosing to invest out of state. I do realize that there are many So Cal investors that succeed investing out of state but the only coastal So Cal buy n hold RE investors that I am aware or that have lost money were over leveraged and forced to sell (or foreclosed) when the markets were depressed. Historically it has been difficult to lose money on So Cal coastal buy n hold properties.
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
9y
Cash flow and tax advantages of owning real estate over a long period of time will significantly out weigh the short term benefits cashing in on appreciate.
Replacing income is much hard than replacing equity.
Real Estate Investor · Los Angeles, CA · Member since 2013 · 2k+ posts · 694 votes
9y
Cash flow short term is pretty hard to find locally. Long term + appreciation tends to do well especially after a correction because the swings are that much larger and quicker here, so if you can afford to wait it out then you'll probably do ok.
Where you should buy totally depends on your goals, financial situation, your ability to source deals, or create value where others don't. If you're starting out, you probably have few of those, so you might have to choose cash flow vs the ability to self manage, and if it's cash flow then going out of state is probably easier at a smaller initial investment.