SoCal Newbie Looking For REI Direction

29 Replies

Hi BP!,

Im very excited to reach out for advise from the BP community! For the last year or so I've been working OT/side jobs and everything in between to build up $$$ to get in the REI game. I've submerged myself in BP threads, podcasts, and books to help determine a solid direction for myself. With all the different perspectives and success/failure stories, I find myself even more undecided on which way to go. Haha.

Any advise on direction would be greatly appreciated given my situation.

Goal: Financial freedom

My why: Spend more time with my wife and kids enjoying life without the burden of a 9-5

My location: Southern California

Age: 30

REI focus: Cash flow and as hands off as possible utilizing PM

Cash to work with: 50k. I do have 80k in equity in my home

Freedom number: 7k/month

Thank you in advance!

Hey Tim! Well for all of your criteria (passive income in rentals via use of a PM and cash flow), you want to buy a cash-flowing rental property. Sounds...obvious...but you'd be surprised how often people don't focus on the cash-flow part of it. 

In order to get cash flow, you'll have to buy out-of-state. I'm in LA/Venice and I've always bought out-of-state for the same reason. People will argue the appreciation here in SoCal will outweigh the cash flow elsewhere, but appreciation [potential] isn't what will get you to a freedom number. 

As far as $50k cash, that can get you a great cash-flowing property in a few different markets. If you make it $130k (via the equity), there are definitely some major cash flow options if you qualify for a mortgage. 

Reach out anytime if you want to chat more!

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Hey @Ali Boone ! I appreciate your advice and was hoping you would chime in. You have a good track record for helping us locals out! Thank you! Id love to chat further. Do you recommend turnkey providers? Would you suggest MFR?

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MFR is totally fine, when the numbers work. There aren't as many of those today, at least not turnkey, that shake out as well as they used to. But they still exist. Totally depends on your own preferences and budget.

Originally posted by @Tim Wright :

Hi BP!,

Im very excited to reach out for advise from the BP community! For the last year or so I've been working OT/side jobs and everything in between to build up $$$ to get in the REI game. I've submerged myself in BP threads, podcasts, and books to help determine a solid direction for myself. With all the different perspectives and success/failure stories, I find myself even more undecided on which way to go. Haha.

Any advise on direction would be greatly appreciated given my situation.

Goal: Financial freedom

My why: Spend more time with my wife and kids enjoying life without the burden of a 9-5

My location: Southern California

Age: 30

REI focus: Cash flow and as hands off as possible utilizing PM

Cash to work with: 50k. I do have 80k in equity in my home

Freedom number: 7k/month

Thank you in advance!

 Welcome to BP! 7K passive a month might take 35 doors or so at $200 flow each (financed) is one example. That might not be as passive as one might think unless one newer multi perhaps. Maybe a syndication would be passive or Reit compared to regular landlording rentals.

However since you live in a massive market ( 20 million) there would be many other business options available to make 7k a month that might be passive ish and could be done with just 50k alone. 

If you are only considering REI, initially much research and time, travel etc is normally needed to make sure you are buying right beforehand and before any real passive income is realized. Check out the latest podcast 250 as Grant goes over what is required to make the right REI buys as far as good locations.

Good luck!

Account Closed Thank you for the perspective. Do have examples of other business that would be passive ish outside of REI?

Thank you all for the support! ill check back in with a progress report

@Tim Wright simple but not easy. 7k x 12mos = 84k year (you might want to think bigger!).  84k/11% Return (achievable without much risk) = 763k in real estate equity required.  The answer: work on other income streams (your job, starting a biz, etc) first. Work towards having cash flow left over (ie profit) that can be funneled into income producing assets.If you want true financial freedom sooner than old age you'll need to work harder than just 9-5.  Read RDPD, Cash Flow Quadrant and Guide to Investing in order and over and over (took me a few times!) till you understand and believe this at the molecular level!

If you like the get rich very very slow method (and don't mind waiting till your old to enjoy everything financial freedom provides) forget everything I just said!

All the best Tim!

Originally posted by @Tim Wright :

Hi BP!,

Im very excited to reach out for advise from the BP community! For the last year or so I've been working OT/side jobs and everything in between to build up $$$ to get in the REI game. I've submerged myself in BP threads, podcasts, and books to help determine a solid direction for myself. With all the different perspectives and success/failure stories, I find myself even more undecided on which way to go. Haha.

Any advise on direction would be greatly appreciated given my situation.

Goal: Financial freedom

My why: Spend more time with my wife and kids enjoying life without the burden of a 9-5

My location: Southern California

Age: 30

REI focus: Cash flow and as hands off as possible utilizing PM

Cash to work with: 50k. I do have 80k in equity in my home

Freedom number: 7k/month

Thank you in advance!

Maybe something you have some personal interest level  in is a start. Two apps I have been experimenting with is turo or hyrecar. These two are like airbnb or monthly rentals for cars. 50k there should do around 5-8k a month. 

Good luck!

@Ivan Barratt Thank you! ive almost finished RDPD and he mentions having to go bigger if you start the asset column at 30+. ill buy CFQ and G to I. Your advise rings true to alot of what im reading and listening to. Im noticing that my mind set is correct but my financial education is lacking. Thanks again for the guidance

@Matt R.  thank you for the tip on Turo and Hyrecar! I currently work for SpaceX and have a the model 3 available to me. Thank you for the advice!

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Originally posted by @Tim Wright :

@Ivan Barratt Thank you! ive almost finished RDPD and he mentions having to go bigger if you start the asset column at 30+. ill buy CFQ and G to I. Your advise rings true to alot of what im reading and listening to. Im noticing that my mind set is correct but my financial education is lacking. Thanks again for the guidance

@Matt R. thank you for the tip on Turo and Hyrecar! I currently work for SpaceX and have a the model 3 available to me. Thank you for the advice!

 Nice. One could leave a car like that over at the LAX turo lot. It would book solid for maybe 3k -4k ish a month and it would be virtually 100% passive with automatic booking. Good luck! 

@Matt R. Do you have first hand experience with Turo? If so, how long have you been doing it, can you share what car type of car, and monthly cash generated?   

Originally posted by @Tim Wright :

@Matt R. Do you have first hand experience with Turo? If so, how long have you been doing it, can you share what car type of car, and monthly cash generated?   

 6 months

2007 G6 $3500 cost and makes $400ish mo on Turo. IDk maybe an 1 hour a month work. 

2012 Prius $6500 cost and makes $650 mo on hyrecar. Same hour or less so far. These get renewed or rented monthly or sometimes weekly. 

That is it so far. I do know of dudes making 6 figures plus when they scale up. I was maybe looking to go more exotic with Porches or alike. Still evaluating. 

@Matt R.  Very cool! I appreciate you sharing. I’d like to stay connected and hear more about your future  passive income strategies. 

Originally posted by @Tim Wright :

@Matt R. Very cool! I appreciate you sharing. I’d like to stay connected and hear more about your future  passive income strategies. 

 Right on. My surf schools are fairly passive with manager most days. One reit I am in is at 8.1% and that would be my most passive. Good luck!

@Matt R. @Tim Wright cool stuff! Glad to be on this post! I think it's a great example of finding scaleable businesses that can generate positive cash flow which in turn is invested in more income producing assets!  For me, I did it with a property management company and syndication platform!

ONE NOTE: I would be cautious going all in on the car rental platform. Think barriers to entry of competition!  The space could get saturated quick by competition (big and small). That would drive down margins fast!  Sounds like an awesome short wave of profit potential to get you to the next "thing!"

@Matt R.

Turo does seem interesting . I notice there are quite a few people in L.A renting out pretty big fleets of vehicles so I'm guessing they must be making good money or they wouldn't scale up like that .
I looked at the LAX turo lot prices but it seems like the fees would eat up a lot of the profit.

There was a reddit thread I saw where this guy said he was a former Uber driver and now he's renting out a fleet of sports cars ( like BMW M4 , Porsche 911 etc) on Turo .

This is it
https://www.reddit.com/r/cars/comments/6zyyob/i_have_been_renting_out_sports_cars_on_turo_for_a/

Supposedly he is able to buy these cars with little money down .

Long term I would be worried about the maintenance and repairs on high end vehicles like that plus most sports cars seem to depreciate like crazy .
The guy from the reddit thread did say he buys certified preowned (CPO) though so I guess that could take care of some of the issues .

Originally posted by @Joseph M. :

Matt R.

Turo does seem interesting . I notice there are quite a few people in L.A renting out pretty big fleets of vehicles so I'm guessing they must be making good money or they wouldn't scale up like that .
I looked at the LAX turo lot prices but it seems like the fees would eat up a lot of the profit.

There was a reddit thread I saw where this guy said he was a former Uber driver and now he's renting out a fleet of sports cars ( like BMW M4 , Porsche 911 etc) on Turo .

This is it
https://www.reddit.com/r/cars/comments/6zyyob/i_ha...

Supposedly he is able to buy these cars with little money down .

Long term I would be worried about the maintenance and repairs on high end vehicles like that plus most sports cars seem to depreciate like crazy .
The guy from the reddit thread did say he buys certified preowned (CPO) though so I guess that could take care of some of the issues .

 Right on. This method requires you know about cars a little bit. I am still learning the ropes. It would take a higher end car to make the turo lax lot fees work is likely. It is not necessary to be at Lax lot or this would be a no go for me. 

Another thing, LA rentals are dirt cheap. I think some other areas you might might make the same with half the fleet. 

Thanks for the link. I will check it out. 

Originally posted by @Ivan Barratt :

@Matt R. @Tim Wright cool stuff! Glad to be on this post! I think it's a great example of finding scaleable businesses that can generate positive cash flow which in turn is invested in more income producing assets!  For me, I did it with a property management company and syndication platform!

ONE NOTE: I would be cautious going all in on the car rental platform. Think barriers to entry of competition!  The space could get saturated quick by competition (big and small). That would drive down margins fast!  Sounds like an awesome short wave of profit potential to get you to the next "thing!"

 Those are good points. Like anything most don't follow thru 80/20 or this is maybe 90/10. My longer term concern would be self driving fleets by 2030 ish. The exotics for fun driving might be less competition idk.  

There are some RE apps one can earn with but they require actual working time.  

Originally posted by @Matt R. :

 Right on. This method requires you know about cars a little bit. I am still learning the ropes. It would take a higher end car to make the turo lax lot fees work is likely. It is not necessary to be at Lax lot or this would be a no go for me. 

Another thing, LA rentals are dirt cheap. I think some other areas you might might make the same with half the fleet. 

Thanks for the link. I will check it out. 

 Yeah it seems like there are certain cars that do really well. Convertibles are supposed to do pretty well from what I read. Yeah I noticed that too about prices being pretty low. You can rent Teslas , Corvettes, etc for around $100 pretty cheap....but I'm guessing the demand is pretty strong too since we have so many millions of tourist visit every year in L.A.  Sometimes when I've looked up to see if cars are rented it seems a lot are available but I'm sure most people book more last minute. Not sure if this is what you've experienced.

Originally posted by @Ivan Barratt :

@Matt R. @Tim Wright cool stuff! Glad to be on this post! I think it's a great example of finding scaleable businesses that can generate positive cash flow which in turn is invested in more income producing assets!  For me, I did it with a property management company and syndication platform!

ONE NOTE: I would be cautious going all in on the car rental platform. Think barriers to entry of competition!  The space could get saturated quick by competition (big and small). That would drive down margins fast!  Sounds like an awesome short wave of profit potential to get you to the next "thing!"

 Yeah hard to say what will happen with a lot of these platforms. Another thing what happens if a platform goes out of business and you were relying on it for a lot of your income?. Probably not likely at least for a while with Turo since they have raised $193 million and Daimler recently invested in them. 

I could see it similar to Airbnb, in the beginning there weren't that many listings....but now there are a lot of listings (more competition) ..but now demand is higher than ever and Airbnb is a household name. 

I agree it would be risky to go all in on any of these platforms.

Originally posted by @Joseph M. :
Originally posted by @Matt R.:

 Right on. This method requires you know about cars a little bit. I am still learning the ropes. It would take a higher end car to make the turo lax lot fees work is likely. It is not necessary to be at Lax lot or this would be a no go for me. 

Another thing, LA rentals are dirt cheap. I think some other areas you might might make the same with half the fleet. 

Thanks for the link. I will check it out. 

 Yeah it seems like there are certain cars that do really well. Convertibles are supposed to do pretty well from what I read. Yeah I noticed that too about prices being pretty low. You can rent Teslas , Corvettes, etc for around $100 pretty cheap....but I'm guessing the demand is pretty strong too since we have so many millions of tourist visit every year in L.A.  Sometimes when I've looked up to see if cars are rented it seems a lot are available but I'm sure most people book more last minute. Not sure if this is what you've experienced.

You got to figure you are competing with hertz, enterprise types too. The apps streamline the process top to bottom but one could always open regular car rental biz alternative. So far it has been turnkey and super easy to handle. I have it set for instant booking and you can set lead times if working or not around. Some just do it remotely too. 

I did it as a cash flow experiment and the COC is about 100% thus far. If financed that would be 200 -300%?

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