Leaving California for "sunnier" skies!

47 Replies

Hey everybody,

For the last dozen years I've been working in eCommerce in Los Angeles, but am finally scratching the itch to get into real estate.  I have sold my home and plan to use the profit I made as capital to build and grow my small empire in a smaller market with much lower acquisition costs.  I'm here to learn everything I can to decide which place is right for me.

Hey @Russell Strazzella  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.

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See you around the site!

Originally posted by @James Wise :

@Russell Strazzella

Welcome to the site.

Which markets are you looking into?

I think it will come down to a coin toss between Detroit and Savannah, but I am also considering Asheville and Columbus. Any words of advice for OH? I think Columbus would be ideal for keeping rental income flowing with all the college students. 

Hi Russell,

Welcome to BP.  Tap into the resources on this site & your business will be off to a great start.

I've got 35+ years in real estate brokerage & investing but I still learn a great deal from the BP family.

Stay plugged in and you will have access to some of the best minds in real estate investing.

I live in California (San Diego) and a couple of years ago I began investing all around the nation.  BP has enabled me to invest with confidence in markets that I have never even visited.

Good luck to you & your family in your new adventure.

I forgot to mention Georgia is one of the sun belt states. If you look at net migration patterns especially the senior population that is in the tens of millions and more most are moving to warm belt states.

Some urban core areas of cold belt states are doing well but the burbs and rural locations in a lot of those areas are dying off.

I would not be excited about investing in such places even if the prices were low for long term success.

Their are local investors in cold belt states creating legacies investing in those areas that never plan to leave but for an outside investor looking for a possible target market it doesn't seem to make sense.

Welcome @Russell Strazzella .  There must be something in the water in CA right now.  (or lack of water?)...lots of money being funneled out of state for sure.  All the best to you in your research. Take your time and hopefully there will be some great buying opportunities in the cold winter months where you are looking!

Originally posted by @Chris E. :

welcome to BP. Can't blame you for leaving CA, what made you pull the trigger?

I felt that there was no more upward mobility for me at work, and with both my wife and putting in 11 hours a day so we could afford to live in one of the few useable school districts for our son (that we weren't seeing for more than a couple hours a day), we felt it was time to realize the appreciation on our house and jump ship. Both of us have friends and family in other parts of the country, so we know it won't be too difficult to get set up somewhere.

Originally posted by @Joel Owens :

I forgot to mention Georgia is one of the sun belt states. If you look at net migration patterns especially the senior population that is in the tens of millions and more most are moving to warm belt states.

Some urban core areas of cold belt states are doing well but the burbs and rural locations in a lot of those areas are dying off.

I would not be excited about investing in such places even if the prices were low for long term success.

Their are local investors in cold belt states creating legacies investing in those areas that never plan to leave but for an outside investor looking for a possible target market it doesn't seem to make sense.

 Much appreciated! I see a lot of potential in Savannah for its appeal to retirees and the port expansion project. I want to get in on that before it's too late.

Originally posted by @Russell Strazzella :
Originally posted by @James Wise:

@Russell Strazzella

Welcome to the site.

Which markets are you looking into?

I think it will come down to a coin toss between Detroit and Savannah, but I am also considering Asheville and Columbus. Any words of advice for OH? I think Columbus would be ideal for keeping rental income flowing with all the college students. 

 The only market I have personal experience in is Cleveland Ohio. I won't go into Cleveland as that would be a biased opinion seeing as I have a financial incentive to discuss the city.

From what I hear Columbus is a pretty nice rental market. I have rented to college students in the past and generally liked it. The kids do goofy stuff every now and again but generally they are pretty controllable. You can also get Mom & Dad involved if they start to give you some problems. That usually gets them in line. I imagine getting some property near such a big school like The Ohio State University would be pretty profitable. Never ending supply of students. Just harden your Rentals! Now towel racks on the walls for you.

Hi @Russell Strazzella ,

I totally understand where you're coming from.  Being born and raised in Southern California.  Everything is out of control in pricing.  Especially where I live.   I've been researching for quite some time and where to invest and narrowed it down to the Columbus, OH area.  Meeting networking with some great people out there.  

If you need any info that I've found, feel free to ask.   I'm planning to fly out to OH end of the month to see first hand what it's like out there.

I have a lot of clients from California and New York. The way they are explaining it to me is those markets are mainly appreciation only. You could refi and hold the property taking out around 75% ltv or could 1031 exchange into something else.

My clients are getting 3 caps for selling their properties in Cali. They are doing exchanges with generally around 7 figures plus.

When they can buy elsewhere and get quality 8 caps for cash flow it makes sense to them.

Owners in Cali do not want to wait and the market softens there and they have to wait until the next cycle before they see equity gains again they can do something with. 

Hi Russell,

You have the right idea about finding lower entry points with significant cash flow and much higher Cap Rates in other parts of the country.  If you go right into Multifamily and keep 1031 exchanging, you can't go wrong.  Education is extremely important right now for you.  I choose to stay in sunny San Diego and invest in North East Ohio presently.  My advice to you is to make your home in a nice area, rent in that area, buy out of state for cash flow.  Then, defer, defer, defer, defer, and die.  Ultimately, your kid(s) inherit at stepped up basis and depreciation starts all over again.  Multigenerational wealth is created this way.  Sorry.  I don't want to live in the areas your speak of.  I just want to make money and be financially free and renting anywhere  choose to live.  Your home is a liability anyway, not an asset.  It takes money out of my pocket every month.  In less than a decade I will sell my liability (personal residence) and buy an apartment complex with tax free proceeds. That complex will help to fund my lifestyle in sunny San Diego.  Cash flow for liabilities is my game now.  When rich dad's prophecy comes true in the next 1-3  years, you will be glad that you move 70% of your net worth into hard assets.  Specifically, assets that give you passive cash flow in your pocket every month.  You do realize they are beginning to give mortgages to people with 600 credit scores and fed's printing money out of thin air, indicates more opportunity for us!!

Can you feel it!!

Swanny

Originally posted by @Russell Strazzella :
Originally posted by @James Wise:

@Russell Strazzella

Welcome to the site.

Which markets are you looking into?

I think it will come down to a coin toss between Detroit and Savannah...

I left Orange County CA (Tustin) My coin toss was Atlanta, Chicago, Detroit.

I'm glad I chose Detroit! 

Originally posted by @Jonna Weber :

Welcome @Russell Strazzella .  There must be something in the water in CA right now.  (or lack of water?)...lots of money being funneled out of state for sure.  All the best to you in your research. Take your time and hopefully there will be some great buying opportunities in the cold winter months where you are looking!

 Really? Then why are homes in the Bay area going up 20% per year or more? But really to give up CA for Detroit? Wow,..

Hi, Russell,

We're here in Columbus and would love to talk with you about the rental market here--we were at 1-3% vacancy with our company's rentals for most of the summer. I own properties here, too. It's a great place to be an investor. I'll reach out in a message.

Best of luck to you!

David

Agreed. Cbus is a great market and the secret is getting out. I have a few rentals myself and there's a lot of neighborhoods in transition that you can get into at a low cost! Btw David is a long time friend of the family and stand up guy so he's a great resource.
Originally posted by @Russell Strazzella :

Hey everybody,

For the last dozen years I've been working in eCommerce in Los Angeles, but am finally scratching the itch to get into real estate.  I have sold my home and plan to use the profit I made as capital to build and grow my small empire in a smaller market with much lower acquisition costs.  I'm here to learn everything I can to decide which place is right for me.

 Russell, when you look at real estate markets, you should look for the following:

1. Is the Volume of Sales picking up? Here's the data for Chicago (where I invest in):

2. Is Supply Going Down?

3. A Key Leading Indicator is New Foreclosure Filings - It Going Down is A Great Signal

4. Very Important - JOBS - Are New Jobs Being Created or Lost?

5. Lastly, Where Is the Market Vs. The Long Term Trend Line for That Market?

As one can see from the above data, the Chicago market is great for short-term appreciation plays. Other markets like Southern CA are already passed beyond their long term trend line. This is why I am doing fix-n-flips and rent to own in Chicago. However, Chicago is NOT good for buy-and-hold because of the high property taxes and corrupt politicians (which will further lead to higher property taxes).

Hope the above helps!

Originally posted by @Michael Swan :

When rich dad's prophecy comes true in the next 1-3  years, you will be glad that you move 70% of your net worth into hard assets.  Specifically, assets that give you passive cash flow in your pocket every month.

What exactly is Rich Dad's prophecy?

Originally posted by @Michael Swan :

Hi Russell,

You have the right idea about finding lower entry points with significant cash flow and much higher Cap Rates in other parts of the country.  If you go right into Multifamily and keep 1031 exchanging, you can't go wrong.  Education is extremely important right now for you.  I choose to stay in sunny San Diego and invest in North East Ohio presently.  My advice to you is to make your home in a nice area, rent in that area, buy out of state for cash flow.  Then, defer, defer, defer, defer, and die.  Ultimately, your kid(s) inherit at stepped up basis and depreciation starts all over again.  Multigenerational wealth is created this way.  Sorry.  I don't want to live in the areas your speak of.  I just want to make money and be financially free and renting anywhere  choose to live.  Your home is a liability anyway, not an asset.  It takes money out of my pocket every month.  In less than a decade I will sell my liability (personal residence) and buy an apartment complex with tax free proceeds. That complex will help to fund my lifestyle in sunny San Diego.  Cash flow for liabilities is my game now.  When rich dad's prophecy comes true in the next 1-3  years, you will be glad that you move 70% of your net worth into hard assets.  Specifically, assets that give you passive cash flow in your pocket every month.  You do realize they are beginning to give mortgages to people with 600 credit scores and fed's printing money out of thin air, indicates more opportunity for us!!

Can you feel it!!

Swanny

 That sounds like a great plan, and I would love to buy a large building after managing (and ultimately selling) a few 4-door properties with good caps.  Rich dad, for sure.  For the time being, however, I plan to keep operating costs low and do my own management since I come from a family of handymen.  That means living close to my investments... not across the country.  I've got to start somewhere.

Originally posted by Account Closed:
Originally posted by @Russell Strazzella:

Hey everybody,

For the last dozen years I've been working in eCommerce in Los Angeles, but am finally scratching the itch to get into real estate.  I have sold my home and plan to use the profit I made as capital to build and grow my small empire in a smaller market with much lower acquisition costs.  I'm here to learn everything I can to decide which place is right for me.

 Russell, when you look at real estate markets, you should look for the following:

1. Is the Volume of Sales picking up? Here's the data for Chicago (where I invest in):

2. Is Supply Going Down?

3. A Key Leading Indicator is New Foreclosure Filings - It Going Down is A Great Signal

4. Very Important - JOBS - Are New Jobs Being Created or Lost?

5. Lastly, Where Is the Market Vs. The Long Term Trend Line for That Market?

As one can see from the above data, the Chicago market is great for short-term appreciation plays. Other markets like Southern CA are already passed beyond their long term trend line. This is why I am doing fix-n-flips and rent to own in Chicago. However, Chicago is NOT good for buy-and-hold because of the high property taxes and corrupt politicians (which will further lead to higher property taxes).

Hope the above helps!

 Absolutely wonderful tips.  Thanks!!!

One can examine the price history of the region, particularly in Los Angeles. The record covers all the transaction from 1975 to the present, and the data has been adjusted for inflation. Some short term fluctuations are also found in the data including the 4 major housing price cycles.

A more comprehensive report has been published in Builder On Line Newsletter. It summarizes the report written by economist William Yu in his column in L.A Times.Yu found out that based on records the current trend of home pricing is consistent with the historical norms.

According to Yu, if one uses history as a guide, the cycle of housing prices in Los Angeles always lasts on average of about 12 years. The first 7 years is usually spent in the bull market, having at least 65% real price appreciation, then the remaining 5 years is spent in the bear market.

At present, Yu said that L.A is on its 3rd year in its housing recovery which started in 2012. So far, the market has 27% appreciation. Following the cycle, there are still 4 more years before the turning point. Within that span of 4 years, homebuyers expect 38% more price growth.

@Brent Seehusen Account Closed

thoughts?

Updated about 6 years ago

http://www.anderson.ucla.edu/centers/ucla-anderson-forecast/about-us/william-yu

Updated over 3 years ago

http://www.anderson.ucla.edu/centers/ucla-anderson-forecast/about-us/william-yu

Updated over 3 years ago

http://www.anderson.ucla.edu/centers/ucla-anderson-forecast/about-us/william-yu

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