Semi-Newbie in Southern California

24 Replies

Hello BP Community!

I am Jenny Kim.  I have my primary residence and one rental property in the Los Angeles area.  

I say that I am a semi-newbie, because I already have one rental property (which was a condo I used to live in), and I think I have made all the mistakes possible with it.  I am in the middle of a refi now on it, which will put my in positive cashflow after about 4 years of renting it.  I also say that I am a semi-newbie, because I have so much to learn.  

When I moved out of my condo into a single family residence, I decided to rent out the condo on the thought that it would be a good idea.  I did a little research and hired a management company.  It wasn't the smoothest experience with either the management company or my first tenant.  I was about $300 out of pocket every month, my tenant was high maintenance, and my management company wasn't the most communicative (or effective).  But, it wasn't so horrible that I decided to give up real estate investing completely.  Now, I have a new management company, a great tenant, and the refi will put me in positive cashflow (probably about $50/month).  

On the flip side, my primary residence has gone up in value about $175,000 in 4 years (YAY!), and now I'm thinking about my next investment steps.  Wanting to do things "right" this time, I searched the web and found Bigger Pockets.  So glad!!  This community and the podcasts are amazing!

I am looking to purchase Buy and Hold investments.  I would like to get into multi-family and apartment complexes.  I like my neighborhood (and SoCal), but right now, it's too pricey for my budget.  So, I am looking outside my "neighborhood."  I have family in the Chicago area (also pricey), so I am looking there as well as in other more affordable locations.  I will be posting a question on the forums asking how to vet a neighborhood as soon as I am done posting this.  

Thanks for listening BP Community.  I look forward to meeting you!

-jenny.

Welcome to bigger pockets. I am SoCal based mortgage banker, and I know extensively the northern california markets. Right now San Joaquin County cities like Manteca, Stockton, Lathrop are good markets to consider for investing if you're willing to invest in California. Good luck! 

@Jayden Hakunti.  Someone else was telling me about Stockton.  I have been looking into it, and the stuff I have read on Wikipedia is a little scary.  What should I look for when I vet neighborhoods.  

@Chris E. I have been definitely listening to the podcasts and doing some analysis with the calculators.  And my small positive cashflow does not account for maintenance.  Alas, another newbie mistake.  I will keep that in mind moving forward.  Thanks!

Hi @Jenny Kim  

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 has been nice for the appreciation but it doesn't make a lot of sense for longer term buy-and-hold (cash-flow) investments.  

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

Continues success! 

Hi @Adrian Chu .  

I am not opposed to fix and flip, but I want to increase my cash flow first. I would not be able to compete with all cash offers right now.  And wirh a full time job, I don't think I could commit the time I think doing a good flip would require.  But as get more experience, I think it would be great.

Hey Jenny! Fellow(ette) SoCal-er. Stevenson Ranch...is that up near Santa Clarita? Sounds familiar from that area.

Prices here are definitely hefty, but more so cash flow is very hard to get here (as you've found out). Chicago does actually have some good multi-family options (at least 2-4 unit MFRs, can't speak for commercial), so I wouldn't rule it out. I live in SoCal and have always bought my properties out-of-state, so it can definitely be done!

Hi @Ali Boone .  Stevenson Ranch is in Santa Clarita!  SoCal is definitely pricier.  It would be nice to find something in Chicago.  But I am definitely keeping all my options open!  Thanks for the encouragement.  This will be a great journey!

@Jenny Kim

Welcome to BP.  I'm currently selling my one and only california property (also a prior primary residence)

I think California is again near peak or peaking and therefore want to avoid a huge downturn.  

The equity I get out of my California property will be put to good use in high cashflow (and possible appreciation play) in Texas most likely.

Yeah it will! Will be super fun. And yep, I was thinking of the right Stevenson Ranch then :) I used to work in Palmdale so was through there quite a bit.

Originally posted by @Jayden Hakunti :

Welcome to bigger pockets. I am SoCal based mortgage banker, and I know extensively the northern california markets. Right now San Joaquin County cities like Manteca, Stockton, Lathrop are good markets to consider for investing if you're willing to invest in California. Good luck! 

I'm re-posting for Jayden, since I didn't know how to use the tagging system the first time. 

Someone else was telling me about Stockton. I have been looking into it, and the stuff I have read on Wikipedia is a little scary. What should I look for when I vet neighborhoods.

Welcome to BP! I'm also a newbie! I refinanced my home while I was renting it out and now I'm selling it. Didn't want to deal with renting it out anymore and wanted the cash to start flipping houses. I was lucky to have my mom live next door to my rental so she served as my property manager. We were both really picky on who we put in the house. She screened them in person and I did the background checks. Rented for two years with no problems.

Since you are renting your house out have you looked into airbnb. You can download it as an app on your phone. It basically allows you to do short-term rentals on your property such as days at a time. I haven't tried it myself but I have a friend who lives in Santa Clarita and they rented their townhome out for a week for $800 while they were on vacation.

I have not really thought about AirBnB for the Santa Clarita area @James Davis , but I will look into it.  Does your friend AirBnB regularly, or was it a one time thing?  I'm wondering how consistently they would be able to rent it out.  

Thanks for the tip @Romel Aquino .  I have been listening to the podcasts, but I have been jumping around.  Not really a good idea.  I can't always remember what I have or have not listened to.  But I will definitely check out shows 61 and 62.

It was only for a one time thing while they were on vacation. They live in the house so they may only do it again when they go out of town. It could be a hidden gem though because there is absolutely nobody doing it in that area and they rented it out to a businessman who was doing business in the area. With Six Flags in the area you may attract people who want to spend the night in a nice house instead of a hotel room.

@Jenny Kim

Welcome to BP.

Your are on the right track. Multifamily is a great buy and hold. You will need to invest in Midwest region small towns to get the best cash flow. I can't imagine a good cash flow in cities like Los Angeles, New York, Chicago, Miami, etc.

I am in Illinois and have bought some properties in small towns and they cash flow great. I could assist you here in Illinois.

Hope it helps.

Two suggestions:

1. I would find a good handyman to assist you with your rental.  I would not hire a management company with only one rental.

2. I would suggest for you to do the exact opposite.  Fix n Flip first to gain capital and then build your rental portfolio.

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