New member from Anaheim, California

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New member from Anaheim, California

Edgar Estrada
Rental Property Investor · San Antonio, TX · Member since 2016 · 66 posts · 10 votes

Hello BP members,

My name is Edgar Estrada from Anaheim, California. I am Cal State Fullerton graduate in marketing and currently employed at a location-based marketing technology working as a Sr. SEO specialist.

I am fairly new to real estate. I am currently looking to learn as much as possible about rental real estate investing. Interested in the buy & hold strategy with the intention of purchasing a duplex, triplex or quadplex. I've been reading the BP podcast for quite some time now as well as read Brandon Turner 'The Book on Rental Proper Investing'. 

I've already reached out to several real estate agents, but seeing as how I am based in Southern California (CA), you can imagine the high property prices out here which really don't make for the best cash flow investments. 

Looking to hear suggestions or recommendations on what other BP members have to say on their out of state purchasing experience. Would you recommend me wait for a good deal here locally or perhaps look into out of state turnkey investing with a company that specializes in turnkey? 

Regards,

Edgar 

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Marco Santarelli
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
10y
Originally posted by @Edgar Estrada:
 

@Marco Santarelli - Thank you so much for your insight. I can tell you right now that I am definitely leaning more towards option 2 as you have recommended. 

As you mentioned, you started investing out-of-state 13 years ago. How have you made out-of-state investing work for you if you don't me asking?

What markets do you invest? Is there any buy and hold cities you would recommend a beginner investor to explore investing in? I commonly hear Pittsburgh, Austin, Charleston, Memphis.

Thanks again! 

Edgar

Those are two BIG questions Edgar... 

I've been able to make it work by assembling the right team of people of time, creating a purchase process, and making mistakes that led to experience that allows me to analyze a market, neighborhood, property, profit/loss, property manager, etc.  (Obviously I eventually turned all that into a business.)

I'm investing in Kansas City (MO) right now.  I'm also looking at Birmingham (AL) and Indy (IN).

Pittsburgh may be difficult because of the rent-to-value ratio there.  Austin has become a little too expensive.  Charlotte has some good pockets but it's hard to find inventory there today.  Memphis works almost all the time (good cash-flow but low appreciation).

If you're thinking about other markets, you may want to consider scheduling a free strategy session with one of our Investment Counselors.  They can get into the finer details on each market.

Continued success! 

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  • Dave VisayaPro Member
    Moderator
    Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes
    10y

    Hey @Edgar Estrada, welcome to BiggerPockets. It's great to have you here! Let us know how we can help.

    BiggerPockets
    2Reply
  • Joe HomsBusiness Member
    Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Edgar Estrada 

    Welcome to BP. There is a local meetup in Lake forest every month that you should check out. http://meetu.ps/2QWCkh

    If you would like to meet up before then and talk about investing let me know. I am in Mission Viejo and can meet at a Starbucks.

    I just finished purchasing my next project at the court house steps and I am working on a few more.

    [email protected]949-625-4533
    1Reply
  • Jill DeWitPro Member
    Investor · Scottsdale AZ · Member since 2015 · 1k+ posts · 423 votes
    10y

    Hello @Edgar Estrada and welcome to the BP community. Not only can you listen to the podcast you can also network with other investors on BP and watch free videos and take free courses.  You came to the right place and I wish you best of luck.

    1Reply
  • Jo-Ann LapinPro Member
    Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
    10y

    Welcome to BP. I would start networking with some investment clubs in the area. The women's invest group in Irvine run by Bobbi will great for you. Not just for women. I hope this helps.

    [email protected]
    0Reply
  • Sydney Hall
    Home Stager · San Luis Obispo, CA · Member since 2016 · 312 posts · 49 votes
    10y

    hi edgar, welcome! newbie here too. just wished to introduce myself. formerly from washington, dc, i'm just getting started in the staging arena in california and i'm looking to make some connections as well. thanks and sincerely, sydney

    0Reply
  • Marlon Wilson
    Houston, TX · Member since 2013 · 1k+ posts · 114 votes
    10y

    Hi and Welcome to Biggerpocktes @Edgar Estrada! Wish you all the success on your real estate ventures!

    0Reply
  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    10y

    @Edgar Estrada

    Welcome. Fill in the foundation below.

    Check out the Start Here page http://www.biggerpockets.com/starthere

    Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Find them through Google and meetup.com

    Two Great reads, I bought both J. Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbook

    Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

    http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

    Good Luck

    Paul 

    1Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y

    Hey Edgar! Well I definitely wouldn't recommend waiting until cash flow is actually a thing here (I'm close to you, just up in LA/Venice) because it pretty much never exists here, even in a downed market. If I were to wait on anything here, it'd be for a drop in prices/recession to then buy with plans for banking on the appreciation. But that could be a waiting game for awhile and appreciation is speculative and you have to play the markets right.

    I've always gone the turnkey route myself and loved it. Whether you go that route or wait here or whatever all comes down to goals and preference. You'll really not ever have much of a chance of monthly cash flow in SoCal so it'd be an appreciation thing (and higher entry costs) or you could hit monthly cash flow in other states and not ever get quite the appreciation potential that SoCal has. 

    What do you ultimately want to do in terms of longer-term goals?

    0Reply
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    10y

    @Edgar Estrada   

    Welcome to BiggerPockets!

    Your dilemma dealing with the unaffordable high prices in Southern California is not uncommon. Many investors have had to deal with it for many years now.

    The solution can be twofold:  

    1) Become an active investor in the local market.  This will involve a considerable amount of time and knowledge to find the right deals which can be like searching for a needle in a haystack.  Even then, finding a great deal may not make sense financially as you're still dealing with high prices and therefore high down payments.  And the other problem is low rates of return because your rent to value ratio will still be pathetically low.  

    2) The other, and possibly better, alternative is to purchase properties that make sense the day you buy them.  You'll find those in prudent markets out of state where the economy, fundamentals, and affordability are in line and down-to-earth.

    It wouldn't hurt to speak to some local agents, and turnkey property providers to better educate yourself on the options available to you. You can make better decisions from there.  When I started investing out-of-state 13 years ago I had no one to lean on.  It is infinitely easier for you today.

    Continued success!

    0Reply
  • Edgar Estrada
    OP
    Rental Property Investor · San Antonio, TX · Member since 2016 · 66 posts · 10 votes
    10y

    @Marco Santarelli - Thank you so much for your insight. I can tell you right now that I am definitely leaning more towards option 2 as you have recommended. 

    As you mentioned, you started investing out-of-state 13 years ago. How have you made out-of-state investing work for you if you don't me asking?

    What markets do you invest? Is there any buy and hold cities you would recommend a beginner investor to explore investing in? I commonly hear Pittsburgh, Austin, Charleston, Memphis.

    Thanks again! 

    Edgar 

    1Reply
  • Polar Prutaseranee
    Flipper/Rehabber · Tustin, CA · Member since 2015 · 433 posts · 103 votes
    10y

    Welcome Edgar. You've come to the right place. I don't know much about buy and hold but if you have any questions regarding fix and flip, feel free to reach out. I flip homes in LA and Orange County. Good luck!

    1Reply
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    10y
    Originally posted by @Edgar Estrada:
     

    @Marco Santarelli - Thank you so much for your insight. I can tell you right now that I am definitely leaning more towards option 2 as you have recommended. 

    As you mentioned, you started investing out-of-state 13 years ago. How have you made out-of-state investing work for you if you don't me asking?

    What markets do you invest? Is there any buy and hold cities you would recommend a beginner investor to explore investing in? I commonly hear Pittsburgh, Austin, Charleston, Memphis.

    Thanks again! 

    Edgar

    Those are two BIG questions Edgar... 

    I've been able to make it work by assembling the right team of people of time, creating a purchase process, and making mistakes that led to experience that allows me to analyze a market, neighborhood, property, profit/loss, property manager, etc.  (Obviously I eventually turned all that into a business.)

    I'm investing in Kansas City (MO) right now.  I'm also looking at Birmingham (AL) and Indy (IN).

    Pittsburgh may be difficult because of the rent-to-value ratio there.  Austin has become a little too expensive.  Charlotte has some good pockets but it's hard to find inventory there today.  Memphis works almost all the time (good cash-flow but low appreciation).

    If you're thinking about other markets, you may want to consider scheduling a free strategy session with one of our Investment Counselors.  They can get into the finer details on each market.

    Continued success! 

    4Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    10y

    Welcome aboard @Edgar Estrada

    0Reply
  • Gary Swank
    Real Estate Agent · Pittsburgh, PA · Member since 2014 · 822 posts · 255 votes
    10y

    @Edgar Estrada

    Hi Edgar, Welcome to BiggerPockets. If you ever want to talk more about investing in the Pittsburgh area, let me know. There are a lot of affordable multi-family units and commercial investment opportunities in our region.  Thanks, would love to hear from you.....Gary

    1Reply
  • Sydney Hall
    Home Stager · San Luis Obispo, CA · Member since 2016 · 312 posts · 49 votes
    10y

    good morning edgar, welcome! newbie here too. just wished to introduce myself. formerly from washington, dc, i'm just getting started in the staging arena in california and i'm looking to make some connections as well. thanks and sincerely, sydney

    0Reply
  • Kevin FoxPro Member
    Real Estate Agent · San Diego, CA · Member since 2014 · 1k+ posts · 635 votes
    10y

    Hey @Edgar Estrada

    Welcome to BP!

    One strategy I recommend you look into is house hacking 2-4 units.  Great way to jump start your portfolio and can be an awesome investment, especially for your first.

    Feel free to reach out if you have any questions or want to chat about the option further.

    0Reply
  • John Duguid
    Real Estate Agent · Pasadena, CA · Member since 2016 · 17 posts · 5 votes
    10y

    HEAD EAST! If you are looking for cash flow, that is going to be a difficult proposition in Southern California. You may be able to find properties with the cash flow you are looking for in areas of San Bernardo or Riverside counties. Also, the San Joaquin Valley (Bakersfield / Fresno) has much higher cap rates, but you really need to research the areas in which you would be considering investing.

    2Reply
  • Edgar Estrada
    OP
    Rental Property Investor · San Antonio, TX · Member since 2016 · 66 posts · 10 votes
    10y

    @John Duguid Thank you for your insight. If you were in my position as a beginner investor looking to purchase a multi-family for the first time as a buy and hold strategy. Would you purchase locally like you've stated in the San Joaquin Valley (Bakersfield / Fresno) or Riverside County? Or would you take that leap as a beginner and purchase out of state and look east for markets where properties and way more affordable than in Southern California? 

    I'm hesitantly leaning towards the turn key property management route where the property would be renovated at purchase and tenants are taken care of through the property management. However, since these turn key property management companies make their money on reselling to investors at near retail value, I'll probably lose significantly on that instant equity I could get not going the turn key property management route. 

    0Reply
  • Max Gradowitz
    Bakersfield, CA · Member since 2016 · 378 posts · 307 votes
    10y

    I'll second what @John Duguid said about the Central Valley being the highest cap rates in the state.  Bakersfield and Fresno have particularly high cap rates because they are semi-big cities with growing economies/populations with high rents, yet purchasing real estate in these areas is still very affordable compared to every other medium-large city in California.  That's the ideal recipe for a high cap rate and a profitable rental investment overall.

    2Reply
  • Chris Viglietta
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 74 posts · 10 votes
    10y

    Good Afternoon @Edgar Estrada and welcome to Bigger Pockets

    First, I went to LMU which isn't to far from CFU and the Anaheim area

    There's not much else that hasn't been said from the other members-- all sound advice. If you're looking for access to REOs and short-sale properties, let's setup a time to talk. My firm works with investors to purchase and finance investment properties across several states--our core state being CA

    You mentioned you're interested in a buy-hold multi-family. It's pretty difficult to find a GREAT deal in Southern CA with those parameters. As somebody else mentioned, are you looking for cash-flow or appreciation? My guess: cash-flow. Central Valley might be a good place to search our properties.

    1Reply
  • Stephen FrancoPro Member
    Scranton, PA · Member since 2016 · 201 posts · 44 votes
    10y

    My market of Scranton Pennsylvania is terrific for cap rates 15 or 25% or higher. Per unit Investments well under $30,000 per unit. 

    Personally, the best thing I can suggest to people who live in a market like yours is flip California rent higher cap rate areas such as Scranton.

    0Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    10y
    Originally posted by @Stephen Franco:

    My market of Scranton Pennsylvania is terrific for cap rates 15 or 25% or higher. Per unit Investments well under $30,000 per unit. 

    Personally, the best thing I can suggest to people who live in a market like yours is flip California rent higher cap rate areas such as Scranton.

    Sure 15 or 25% or higher cap rates!!!  Can you document with a couple of verifiable cap rate comps?

    0Reply
  • Stephen FrancoPro Member
    Scranton, PA · Member since 2016 · 201 posts · 44 votes
    10y

    sure. Send me your email.

    I have a book 28 rentals under management that I own myself, making about that. And I can give you the references of a few other people that are doing the same thing. Depending on what you take out for maintenance vacancy in management pads, is really where the swing comes in. For instance, I have 15 units right now in four separate buildings, fully rented for $275,000. Average rent 600 a month no. Our taxes are about 1500 a year per building Insurance about $300 per unit, and other costs are equally low.

    0Reply
  • Stephen FrancoPro Member
    Scranton, PA · Member since 2016 · 201 posts · 44 votes
    10y

    typical 2 unit, bought and fixed for around 40 to $50,000, gross 1300 to $1,500 a month rents, taxes around fifteen hundred a year to around 400 year Insurance around six hundred a year.

    0Reply
  • Nick Lamagna
    Cash Investor · Baldwin, NY · Member since 2016 · 14 posts · 3 votes
    10y

    Welcome, looking forward to networking with you, theres lots of great opportunities in cash flow outside of CA as well.  All depends on what you want and your comfort level, looking forward to speaking with you

    -Nick

    0Reply
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