Simple Passive Investor from California

OP

Investor · Los Angeles, CA · Member since 2016 · 32 posts · 13 votes

10y

hopefully I'll hear from investors/clients. Thanks for the welcome.

James Martin

Property Management · Memphis, TN · Member since 2009 · 667 posts · 362 votes

10y

Welcome to BiggerPockets! Just as you I enjoy the podcasts as well. If Memphis is the market that's on your radar there's several companies that can assist you with both options. I personally network with Memphis Turnkey and Crestcore Realty. Hopefully someone with experience with these companies will chime in. If I can be of help let me know?

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

10y

@Mabel L. why move out of CA. you have probably made more money there than you could in a lifetime investing out of state.

but If you want to go out of state there are plenty of options.

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4 Reply

David Faulkner

Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes

10y

I agree with Jay. Stay local in CA and your returns will likely smoke what you could do with an out of state turnkey over the long haul. It will NOT likely be 100% passive, though. You could put your money to work locally in a pool or individually placed through a mortgage broker issuing Hard Money Loans. That would be totally passive. Lots of good groups like the Norris Group in SoCal doing this.

If you insist on 100% passive and out of state REI, then I think there are better investment models than turnkey. For one, if you qualify as an accredited investor (if you are near financial independence then you likely will), then you could look into private placements whereby you could be a passive investment in an apartment syndication. In other words, you would invest in a large apartment complex, get a preferred return of 8-12%, and the syndicator who puts together and manages the deal takes or splits profits above the preferred return. Larger scale and better aligned incentive structure than with a turnkey operator IMO.

So, a few options for you, but out of state turnkey would be just about the last option on the list I would advise you to choose. I'm sure there are plenty of turnkey operators and those that are marketing for them that would disagree, but the difference is I'm not trying to sell you anything.

5 Reply

Stephen Akindona

Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes

10y

Welcome to the site! Turnkey is a great option for you but be sure to throughly vet any companies you decide to work with lot of shady characters out there that prey on out of state investors who aren't as familiar with that market. Turnkey does work if you work with the right folks!

Happy investing!

OP

Investor · Los Angeles, CA · Member since 2016 · 32 posts · 13 votes

10y

@James Martin, I am not leaning towards Memphis which is why I'm interested in other TK operators. But I'm not 100%. Just at the beginning stage here. Thank you for the offer...I will definitely hit you up if I have questions!

@Stephen Akindona, yes completely aware of shady characters that's why it would be so helpful to get actual clients to share their experiences. Reputation is of utmost importance. Thanks!

OP

Investor · Los Angeles, CA · Member since 2016 · 32 posts · 13 votes

10y

@Jay Hinrichs, I guess I'm not looking at the right places and not working with any real estate professionals to find deals? I just look often on like realtor.com and I'm not finding properties with cashflow in Los Angeles. That's what I'm looking for. Is there specific parts of California you are referring to? I appreciate your time and input!

@David Faulkner, you got my wheels spinning! I was recently listening to a podcast about syndication-I am indeed interested. Why does lending Hard Money seem so scary and risky? So much to learn. But yes you've got my wheels spinning and I may ask you more questions down the way if that is ok with you. Thank you so much for your time and input!

Larry Im

Real Estate Opportunist · Tustin, CA · Member since 2012 · 23 posts · 17 votes

10y

Welcome fellow SoCalifornian! BP is a great resource to learn of the experiences from many others, but be careful to understand what is education vs marketing. I'll be sending you a colleague request to share my experience.

Leslie Pappas

Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes

10y

Hi @Mabel L.. Regarding syndications, if you are an accredited investor, you can buy into institutional grade $50-125M projects with as little as $100,000 and diversify. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse. This is the world of Delaware Statutory Trusts. I wrote a book on this that was released in January called Cashing In Tax Free. If this interests you, you can start to learn more at my website. Please let me know if I can help. Leslie

3 Reply

Derrick Craig

Memphis, TN · Member since 2013 · 969 posts · 524 votes

10y

@Mabel L.

Do YOUR OWN Due Diligence!!! Don't believe anything until you see it for yourself only advice I can give at this point because they vultures will be coming out of the wood works!!

Manolo D.

Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes

10y

@Mabel L. Check out @Logan Allec for out-of-state investing, she has 2 rentals in TX, not familiar with how it's doing but she has 2. I have met and talked to them. Join LA BP meetup, second Saturday 10am at UnUrban Cafe in Santa Monica, this is the only meetup I've been that doesn't push you to buy a product or push a service. In CA, if you can find cash flow, that's good, there's another plus, appreciation. Good luck.

Jeff Greenberg

Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes

10y

@Manolo D. thanks for the shout out but I want to correct the time of out meetup. 11:00 on the 2nd sat. @Mabel L. We have people in the group doing all different things. From hands on to very passive. You can talk one on one with them.

As in any aspect of any business that you take a passive role, the person taking on the active part of the process is critical. Being the capital source for a hard money lender is the same. There are several ways that they can protect your investment. I am not a HML but have met several that I feel are very reputable.

There are many was to invest in RE. Many of them more passively than others. Other than the ones previously mentioned there are notes, tax liens, tax deeds, capital funds, private lending, and more

Do some searches on BP and keep listing to the podcasts.

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

10y

@Mabel L. there is also crowdfunding... just choose your deals carefully not blindly.

FIBI is in Manhatton beach they run a great program

Aaron Norris is giving a presentation shortly as well I believe and their HML company is top shelf

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https://www.biggerpockets.com/forums/432/topics/30...

Alex CraigBusiness Member

Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes

10y

@Mabel L. that's awesome, financial independence by the time you are 45. Another income stream you may want to pursue is writing a book on how you did that! Good job.

901-848-9028

4 Reply

David Thompson

Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes

10y

Mabel,

If you are looking at passive investment, geography (staying in CA) or not should not be a deciding factor really. You want to be in the best markets (essentially boils down to where are people moving to and where are the jobs being created). Last I check folks are moving out of CA and heading to TX and that is a theme that will play for some time. Secondly, you mentioned syndication which for your objectives stated seems like one very plausible option. Multi-family vs SFR, I think most folks will say scaling and forced appreciation can give MFRs the edge and since you are not managing it, you can get there quicker by investing w/experienced syndicators w/great track records. If you are accredited investor status, many of these opportunities open up for you. I have several folks from CA in our TX deals. You can be passive, but we have investors who want to continue to learn and can do so with an "intentional" approach. See link below if you'd like to continue to learn intentionally while investing passively to support your interests and lifestyle.

Jo-Ann LapinPro Member

Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes

10y

What not look into trust deed investments as way to diversify?

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OP

Investor · Los Angeles, CA · Member since 2016 · 32 posts · 13 votes

10y

@Derrick Craig Duly Noted! Thanks!

@Manolo D. Thank you for the connections.

@Jay Hinrichs Thanks. I'm checking out the next FIBI in Pasadena and Aaron Norris is also the speaker. Interested in learning more avenues of real estate investment.

@Alex Craig Ha that's an idea! I do owe it to those who did write blogs (not books): notably the madfientist, jimcollinsnh, and of course, the famous mrmoneymustache.

Anton Mattli

Lender · Dallas, TX · Member since 2014 · 36 posts · 32 votes

10y

@Mabel L., CA is notorious for low cash returns and going out of state is a viable option but requires a lot of personal commitment or trusting experienced sponsors with proven track records. Do an in-depth due diligence on prospective sponsors or intermediaries before writing a check.

David Cowan

Investor · Twinsburg, OH · Member since 2014 · 111 posts · 41 votes

10y

@Mabel L. If you really want to find cashflow properties inside California, try areas outside of LA Bakersfield, perhaps? OR areas East of LA where the SFR house prices are much lower. For example, Victorville has houses for under $200,000 with $1000 - $1500 rents.

A good agent can help you find what you're looking for. It looks like you're going to be ok, though. It seems there are lots of people in this BP community who can point you to reliable resources.

By the way- Good teachers are hard to find. Kudos to you for all you do for your kids.

Max Gradowitz

Bakersfield, CA · Member since 2016 · 378 posts · 307 votes

10y

I'll second Bakersfield as being a great cash flow city in California, and at the same time I'll second the fact that most big cities in California are NOT good cash flow areas right now. If you want to stay local to California, stick with the central valley for sure. I may be partial to recommending Bakersfield (because I live and practice here) but I can't tell you how many Los Angeles, San Fran, San Diego, etc. investors buy investment properties here in Bakersfield due to it's unique combination of relatively low purchase costs and high market rents.

Alex Franks

Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes

10y

Originally posted by @Mabel L.:

Hello! I'm so happy to have stumbled upon BP through the Madfientist podcast and now, I'm addicted to listening to all of the BP podcast!

My husband and I are in our late 30's and are about 4-5 years away from reaching financial independence and of lately, I've been thinking about how to speed up that process and create additional streams of income.

I have bought and sold a couple of properties (including land-lording) so I have a little experience here and there. The podcasts however, have opened up so many different ways of approaching real estate that I had never thought of and has actually helped solidify the kind of investor I definitely do NOT want to be.

At this point, I am really interested in turnkey properties. I think it may be a good fit for all of the following reasons:

#1) I can't seem to find properties with good cash flow around here (in SoCal).

#2) I don't know anyone out-of-state that can help me acquire, rehab, manage properties.

#3) The idea of putting a team together to do #2 is not attractive. I like simple. Sounds like a lot of work (at least I can admit it!)

#4) Time is precious. I have a full time job (Middle School teacher). I do not want to spend my nights and weekends looking at ugly houses much less flying to places to investigate. (Instead, I grade papers and plan lessons...much more exciting!)

#5) I HATE landlording.

#6) I know finding good tenants is actually quite easy if the location is prime (I own in SF and just sold in Pasadena - plenty of high-quality renters, never a vacancy).

#7) I am happy with decent returns, I do not need to squeeze every possible penny out of a transaction. I believe everyone can win.

I am really interested in hearing from those that have experiences with turnkey companies, especially how to go about evaluating property managers/managements.

I'd also love it if anyone can offer how they compared the TK companies and what were the determining factors that helped them choose a particular TK.

The TK company I've read over and over again is Memphis Invest (which I'm at this point quite convinced they are a sound and reputable company) so I would love to hear from anyone with experiences with a different company.

Thanks BP for providing this forum and to all who have generously contributed to BP!

~ Mabel

Mabel I would focus on home first. I have grown to like the Apartment syndication avenue as well. Some folks just cant afford to be there which is fine. Then turn key is an option.

I would also Look into Bruce Norris and Arron Norris in your market as well.

Alex

Aaron Norris

Lender · California and Florida · Member since 2008 · 319 posts · 194 votes

10y

Thanks for the love @Alex Franks! @Mabel L. , just be careful in markets like Bakersfield. There are good parts and really rough parts. Not only is some of the housing in poor condition, the market is very dependent on a few industries. I am in your age range and also looking for cash flow here and out of state. Have you looked in San Jacinto/Hemet area? Still some decent finds. not home runs, but I feel more comfortable being close to some larger job pools that aren't so reliant on specific industries. Also, I'm always approaching my rentals with the viewpoint I am going very long. I don't care if they fluctuate in value.

Judy Rae

Lender · Sherman Oaks, CA · Member since 2014 · 68 posts · 80 votes

10y

If you want to stay in California and be totally passive you may want to consider being an Investor with any number of Hard Money Lender in the State of California. 10% returns on average is what you can expect.

Gene HackerPro Member

Flipper/Rehabber · Lake Isabella, CA · Member since 2011 · 969 posts · 488 votes

10y

Bakersfield is diversifying so being dependent on just a couple industries is becoming less of a factor. But in terms of market timing the fact that Bakersfield is dependent on oil and ag could make this a great opportunity. Oil has hit Bakersfield hard, if you think oil will eventually rise back above 50 then this could be a buying opportunity. Ag also got hit really hard with the worst drought in centuries. Ground water allocations were virtually non-existant for the past 4 years.

Values have suffered from these factors and the result is that Bakersfield is one of the few places in CA with some really great deals still.