Amateur RE Investor from Los Angeles - on the hunt for an MFR :)

17 Replies

Hello BP!

Been lurking for a while, but it feels good to finally meet and introduce myself to this awesome community.

I'm a 27 year old from Los Angeles, CA that has a (tiny) bit of real estate experience - I bought a condo and a town-home in 2012, not really knowing what I was doing. Things just worked out since prices were so low, as I'm sure all you savvy pros are aware of.

Lately I've become obsessed with BP, and my short-term goal for 2015 is to buy my first MFR (purely as a rental for cash-flow purposes), hopefully a tri/four-plex. The numbers don't really make sense for MFRs in Los Angeles, so I'm expanding my search to other southern parts of California, and also going to be looking into Phoenix, Arizona & Dallas/Houston/Austin.

Don't really know anyone outside of CA in real estate, so hopefully I meet some experienced realtors/investors that can point me in the right direction. Feel free to advise me on areas outside of SoCal that currently have good cap rates for multi-families :) Cheers!

Hey @Larry Fried   - thanks for the warm welcome.

I would say I'm pretty much focused only on MFRs at the moment, as I eventually want to buy more and more MFRs. I'm not opposed to SFHs, but MFRs just really align with my long-term goals, interest, and passion.

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The MF market in PHX is very pricy right now.  I see a lot of deals in the 8% range but it is very competitive.

Fell free to ask if you have a specific deal you want to put up for review.

Hey @Rohan J.  welcome to BiggerPockets! You've definitely come to the right place to learn more about investing. If you haven't yet, be sure to check out the The Ultimate Beginner's Guide to Real Estate Investing and The BiggerPockets Podcast. They are both great at learning the fundamentals.

You may also enjoy this post, about multifamily properties: How to Buy a Small MultiFamily Property: A Step by Step Case Study

Oh - and don't forget to set up your Keyword Alerts!

See you around the site!

Hi @Rohan J. ,

Welcome to BiggerPockets!

Glad to hear that you want to get started in real estate investing.  It's a great time to be building your real estate portfolio.  California is very expensive and the numbers don't make sense here.  You will find better deals in more affordable markets with higher rent-to-value ratios.

Be sure to check out the Ultimate Beginners Guide as well as my 10 Rules of Successful Real Estate Investing.

Continues success!

HI @Rohan J. ,

Assuming that you're not personally managing your property (which I don't recommend unless you have the time, experience, and thick skin to do so), what benefit do you expect to gain for a property that's "closer"?

Some of the investor clients we work with tell us it makes them "feel better".  But after we discuss it and they think about it, they realize that there really isn't a benefit outside of "comfort".  But they realize that they're losing out on better cash-flow and returns.  They are also taking on greater risk in a market with high land values that can (and do) fall as the market cycles.

As yourself what's more important to you and try to answer logically.

Hope that helps.  Feel free to post any other questions.

Continued success!

Rohan. What makes you think one cap rate is better than another?  Educate yourself before you're bombarded with offers of out of state better "returns".

Rohan, I feel ya on the LA part. I think you are smart to focus on multis vs sfh. Walkable multis in most cities in particular. I thought I would mention Tucson, AZ as long as your looking at AZ now. IDK much about Tucson except that is affordable. Let us know what happens and good luck with your search!

Welcome! I see you are considering TX; like I tell any new investor, do not neglect the Alamo City! We have very inexpensive houses 50-60k, 12-15% cap on a buy and hold, no maintenance if you owner finance. It's an awesome market. Good luck. 

Tucson, AZ has gotten pricier, but there are still some deals out there. Let me know if you're interested and I may have a few clients that would be interested in selling some multi-units.

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@Rohan J.

Welcome to the community! Good to see another Los Angeles investor getting active BP has a tremendous amount of information to help you, but it is only available if you seek it out. Be sure to be as active and engaging as possible. Read blogs, post questions, and the podcasts are gold! The best free education you can get.

Also, we have been setting up monthly meetings. Be sure to check out BP Events and Happenings for the next LA meetup, or you can send me a message for the info. Next meetup in LA is on Feb 28th!

It's cheaper to get in in other markets, even if you can get cap rates in LA that are comparable. If you stay in LA, good luck , lots of people do well there. I have good contacts in my city , as well as Kansas City. 

@Rohan J.  

Welcome fellow Bigger Pockets member! This is a great forum and I am sure it will help you learn many facets of the real estate investment world. I purchased my first investment property over 40 years ago and only wish that I had a resource likeBP community when I got started! So you are in a good company.

Some say that your net-worth equals your network, and this is the place to make right connections. You should also find investors locally and network with them face-to-face. Find people close to you using MEET feature. Also, look for investor meetings on Meetup.

All the best!

Don't disqualify Los Angeles just yet!

I'll give you one example / story that two of my friends /past clients went through...

One bought a triplex in Scottsdale 2 years ago. One bought triplex in LA. Doesn't matter the price difference. The difference was maybe $13K in their out of pocket expense.

Both held their properties for 2 years. AZ guy had a cash flow of $800 a month (approx $19K after 2 years). CA investor had no cash flow. They both sold. AZ had $70K profit, CA had $150K.

This means that this extra $13K made $60K extra profit within 2 years. Nice, ha? :)

Hey Rohan! I'm in LA as well. What part are you in? As far as MFRs go, the markets you mention will be tough for those for cash flow. Some of those markets could get you cash flow on SFRs, but not as much MFRs. There are other markets out there though with killer cash flow on MFRs- Philly, Birmingham, Chicago...places like that. Not sure how set on location you are, but definitely some options out there.

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