Where are the cashflowing areas in southern california?

6 Replies

Any suggestions on cashflowing SFH or multiunit properties in southern california?

Originally posted by @Jose Garcia :

Any suggestions on cashflowing SFH or multiunit properties in southern california?

 I had the same question a few weeks ago, so I began comparing markets.  My current target area is going to be the Riverside & San Bernardino counties.  The numbers made sense.

If cash flow is what you are looking for specifically, you'll have a really hard or impossible time finding it here! Unfortunately. It's a bummer. Inland, maybe, but it will still be tight.

@Jose Garcia

There are multiple ways to achieve cash flow from real estate. It really comes down to how hands-on do you want to be and how much capital do you have to spend. 

Single family homes are the first thing new investors think of when thinking about investing for cashflow. However, they are not the only way to generate cashflow from real estate. In our market in southern California the price-to-rent ratio doesn't make sense financially, so you have to get creative because the low-hanging fruit has been picked. If your dead set on buy-n-hold SFR, you can drive a couple of hours to the central valley or the high desert, but that would require you to frequent those places (but who want to do that... no offense to anyone living in those areas :o )

Here is an LA times article about Airbnb (a vacation rental platform). Of course this strategy would require you to own a property in a location that has that type of demand (Like the beach cities).

I know a lot of investors that have been bullish on large apartment/ multi-family dwellings. Those type of properties are generally easier to get financing for, however they require you to be heavily capitalized and you'll have to put down a large down-payment. An advanced strategy would be to syndicate an apartment deal, which would allow you to use other peoples money to acquire the deal and allow you ownership in the investment.

If you want to take a more passive approach you can invest in notes, non-performing notes, trust deeds, etc. Since we are a hard money lender we have literature on this and can teach you the basics on how to be a private lender.

Bottom line is we are in the growth phase of the real estate cycle, and we will continue to be in the growth phase for probably the next 3 years. If you're a hands on guy and you want to be physically involved in your investments I'd consider getting into flipping houses. This will allow you to be active in the market, establish contacts, and build relationships so that when the next time the market crashes (using history as your guide), you can capitalize on the next opportunity.

Cash flow exist all over SoCal. Mostly with airbnb or forced appreciation for LA but still some exist as straight up rentals in the 1% range. Lower entry level exist in Antelope Valley, IE, deserts and way far out stuff would have CF opportunities as well. It is not like you can just find CF deals easy though.

Here is one recent example of a reposition in LA.

http://www.biggerpockets.com/forums/223/topics/162...

Here is one Airbnb in Silvelake that grosses 200k. 

http://www.loopnet.com/xNet/MainSite/Listing/Profi...

Jose, I work with a broker in Orange County. And we have a great system in place that allows an investor to get nice cash flow on an average priced home. Most of the areas in southern CA do not cash flow because prices are overinflated again, and the rents do not keep up. You can still head out to Victorville and Palm Desert and try to find something out there. But I'm not sure how the rental market is out that way.

Welcome to BP.

 Southern California will be very tuff market for a decent cash flow.

Good luck.

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