Newbie in Los Angeles looking for 4-10 unit investment

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Newbie in Los Angeles looking for 4-10 unit investment

Los Angeles, CA · Member since 2017 · 5 posts · 6 votes

Hi BP friends!

I'm excited to join this real estate investing community. I've wanted to invest in an income property for over 15 years and have decided that 2017 is my year. I've got a demanding full-time job at a startup and am burning the midnight oil listening to BP podcasts, scouring Redfin and Zillow and talking to anyone who knows anything about the Los Angeles market. Since I'm making up for lost time I'm targeting a 4-10 unit for my first investment and have a few partners on board to invest.

I'm looking in a variety of neighborhoods in the greater LA area including Culver City, West Adams, Midtown, Van Nuys, North Hollywood and Glendale but the challenge is making the numbers work in this white-hot market. I'm also considering something out of town or out of state but ideally I'd invest locally for my first property. Any LA investors out there with some words of encouragement for someone just starting out?

I look forward to connecting,

Aaron

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Michael S.Pro Member

Biggerpockets Support · Las Pinas, Metro Manila · Member since 2015 · 7k+ posts · 1k+ votes

Welcome to BP @Aaron Godfred Check out this page for nearby investors you can network with https://www.biggerpockets.com/meet, it may help in finding potential partner. Good luck.

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Michael S.Pro Member
Biggerpockets Support · Las Pinas, Metro Manila · Member since 2015 · 7k+ posts · 1k+ votes
9y
Welcome to BP @Aaron Godfred Check out this page for nearby investors you can network with https://www.biggerpockets.com/meet, it may help in finding potential partner. Good luck.
1 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
Aaron Godfred welcome to BP!!
1 Reply
Tony Mai
Rental Property Investor · Los Angeles, CA · Member since 2016 · 137 posts · 80 votes
9y
Hi Aaron! Welcome to BP I have a very similar situation as you. I work a full time corp job and looking to invest in the LA market so I'll share my experiences so far for 4 unit multifamily. I haven't invested in 4+ units so I could not help you there. For 4 units or less, sellers in LA know it's a good time to sell so it is hard now to find a great deal where the numbers makes sense(positive cash flow/above 5% cap rates). Also when you do find a deal, there seems to be more foreign investors that are willing to pay cash and there are multiple offers. Eventually the final offer is high and doesn't make sense to buy unless you want to pay more. In the current market conditions (last 3 months), most of the properties that I've looked at in the LA typically will negative cash or get close to breaking even. So to invest in LA you will need to be ok with a negative cash flow and hope/wait for appreciation. During my searches, I did see some potential properties in Long Beach that had better numbers and there is a large supply of MF out there. Overall keep looking and invest when the numbers makes sense for you and your partners. Feel free to add me. Would love to see what you eventually do or buy.
1 Reply
Kiersten Vance
Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
9y
Hello Aaron Godfred Welcome to BP. This is a great place to learn. I see you mentioned 4-10 units. 4 units and under would be considered residential and 5 units and greater would be considered commercial. Are you planning to pay cash for the property with your investors or will you all be partnering in on a loan? I used to live in Glendale and are very familiar with the areas you are looking at. For a residential deal, you will have a very hard time finding a 4 unit that breaks even with 25% down. Commercial deals tend to do a little better as they are harder to buy (larger downpayment and higher rates) and they have better economies of scale. I have an 8 unit apartment complex in Loma Linda (about an hour away from LA). Did you and your investors determine a CAP rate you are aiming for in the investment? Maybe consider widening your search and looking out toward San Bernardino County and Riverside County. Your money will go farther and you will get better returns immediately. The appreciate will be different though than something close to DTLA. Always happy to chat by PM or phone if you have any more questions!
1 Reply
Mark Nolan
Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
9y
@Aaron Godfred
Welcome to Bigger Pockets. Make sure to check out the very informative blogs.
https://www.biggerpockets.com/blogs
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
9y
@Aaron Godfred welcome to the site.
Good luck to you & I'll see you around the forums.
1 Reply
Jay Dimacali
Specialist · Granada Hills, CA · Member since 2013 · 73 posts · 21 votes
9y
@Aaron Godfred
Welcome! I think most of the areas you mentioned are good just focus on areas that are rent control free (e.g. Glendale, Burbank) But you will pay a premium for those places. Like someone mentioned earlier, I would take a look out at San Bernardino and the surrounding areas. I just closed on a place out there with my group and we should be making much better returns than in the LA area. And it's an hour away (without traffic!)
1 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
Welcome aboard Aaron!
Podcast Guest on Show #121
1 Reply

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