Irvine, CA · Member since 2017 · 9 posts · 4 votes
Hi Everyone,
My name is Alex and I'm a new born when it comes to RE investing. I'm currently working in Irvine as a Scientist for a medical device company and renting in Lake Forest area. I went to school at UCI and been working since I graduated in 2013.
I'm mainly interested in house hacking, but since I don't have a lot of funds for a down payment right now I'm skeptical about when I can get into the market. I'm mainly looking for advice, to hear about anyone's experiences in investing in the SoCal market, any lessons learned and to being a sponge and learning as much as I can. I'm really excited about learning more about RE investing and how I can use it reach financial freedom. I want to be able to hit a point where I can work out of want instead of need.
Welcome. I'm in Huntington Beach. Happy to see fellow SoCal peeps here. Im a contractor my biz partner is a realtor. Always happy to help out a fellow REI
Don't know much about house hacking, but I sometimes which I could start over in my twenties. .. haha
Find a duplex or triplex. Live in one and rent the others. Is that kinda what you mean?
It's gonna be hard to find a good deal in OC. If your young and single, you might be brave enough to go to a sketchier neighborhood like Santa Ana, Anahiem, Fullerton.
I take that back, not that they are "sketchy". But lower income areas with older properties you can buy cheap and fix up over time. But even those areas are pricey.
Corona, riverside, Colton, if you don't mind a commute.
Or save your money, rent in Irvine and invest out of state. You can buy houses in Georgia, Detroit, Cleveland for cheap. Like $50k and rent out for $900 a month. I know a guy in his twenties who owns 6 houses out of state.
Hit me up if you wanna connect
My name is Alex and I'm a new born when it comes to RE investing. I'm currently working in Irvine as a Scientist for a medical device company and renting in Lake Forest area. I went to school at UCI and been working since I graduated in 2013.
I'm mainly interested in house hacking, but since I don't have a lot of funds for a down payment right now I'm skeptical about when I can get into the market. I'm mainly looking for advice, to hear about anyone's experiences in investing in the SoCal market, any lessons learned and to being a sponge and learning as much as I can. I'm really excited about learning more about RE investing and how I can use it reach financial freedom. I want to be able to hit a point where I can work out of want instead of need.
Hello and welcome! This is a great place to get started! Best of luck to you
Hi @Alexander San, based on your post with a low down payment you may be able to get an FHA loan (3-4% down) and buy a multifamily property to house hack out of. This is a good option for getting started and you can find some places with 2 or 3 detached houses on a lot, especially in Corona. The most important thing with house hacking is picking a property that you actually want to live in, by doing this you also have a high chance of buying a property that other people want to live in too. Reach out if you would like to discuss further.
@Alexander San Welcome to BP. There are several local meet-ups in Orange County that you can meet with like minded investors. I would concentrate on educating yourself in Real Estate to prepare yourself for the next big opportunities when the next downturn comes. House-hacking, flipping, buy and holds are all something that you can accomplish with the right information. You can get all that right here on Biggerpockets and more... Happy to connect and Good Investing to you...
@Alexander San Hey Alex! Welcome to Bigger Pockets! Bigger Pockets is the ultimate game changer when it comes to successful real estate investing. Bigger Pockets is the only way to go when networking with other investors and getting deals done correctly. Congratulations and I wish you all the best. You are not alone in your real estate ambition.
@Alexander San Glad to see you are getting into investing! Its always good to get started early. I'm very familiar with the Orange County and LA County markets and work with many investors from there.
Currently, I am seeing a lot of investors coming from those markets into the the Kern County market. The reason being, you can still buy a cash flowing property here in Kern County and your price point is going to be much lower.
I am actually currently debating on whether I should rent out a house to a single tenant, or if I should house hack for the extra few hundred a month I could get. I would love to chat with you further!
Feel free to PM me with any questions! Looking forward to connecting!
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@Alexander San Everyone here has given you some solid advice. I just thought that I'd add my 2 cents.
I think the most important thing for newbie investors to learn is financing. Typically you don't have a whole lot of capital to start and it's nice to know that you're going to have a comfortable spread between income and expenses. Yes you can do a low down payment, but typically that means PMI for x number of years. I would look into credit unions to see what offers they have. I had clients who did 5% down with a 3% interest on a their loan with a 5/5. Knowing your expenses will help you to assess whether something makes sense or not.
I'm always more than happy to talk Real Estate. Don't hesitate to reach out.
@Brian Singer Yup, you are exactly right about living in one unit and renting out the others.
It's funny you listed those neighborhoods because those were some of the areas I was looking into. I definitely do want to keep an open mind on the area so Corona, Riverside and Colton can be an option but ideally something close to work would be best.
I am a little weary about investing outside of California because i'm so new to this, but would definitely love to hear if you have any advice or tips.
Hi @Aaron K., I have briefly looked into FHA loans and a pretty vague understanding of it. Corona is an option but something a little closer to Irvine would be best. I would love to discuss with you if you have any advice on house hacking, FHA loans or anything else.
Hi @Joe Homs, you hit it right on the head. Right now i'm concentrating on educating myself as much as possible to prep before jumping into REI and if that time lines up with the next downturn then that would be great. If you have any knowledge or advice you can share with me that would be great! Good Investing to you too.
Hi @Sanjeev Advani, I'm mainly looking into house hacking right now and how to make that happen in SoCal but I am open to learning about investing in other markets and Counties. I'm actually originally from Fresno so I wouldn't mind learning more about the market in Kern county. If you have any advice or knowledge you can pass down that would be amazing!
@Alexander San where you will be able to find a property will really depend on your budget, the FHA coupled with house hacking gives you a big benefit in that you need a much lower down payment to get started with investing.
Hi @Kristina Heimstaedt! You make a great point about the finances. I'm definitely still learning about about finances and how to make it work for me. I'm still fairly new in my financial journey but I feel like I have definitely made some progress compared to myself from 2 years ago.
If you have any advice you can pass on, that would be amazing and thank you for reaching out.
@Aaron K. I am trying to save up enough funds to afford property in the orange county or Long beach area. Until then, i'm look more to just learn about those markets, find out different strategies or approaches there are to get into the market and to start putting a defined plan to jump into REI.
@Alexander San Long Beach will be much cheaper than Orange County for multifamily properties. You might look into an FHA 203k that has the benefits of FHA while also allowing you to rehab a property because many properties in Long Beach may need significant rehab.
@Alexander San talk to lenders, talk to credit unions, get an idea of what your leveraging abilities are so that when you look at a property, you can accurately assess cash flow. When you're young, you want to make sure that your money is going to continue to grow and you want more coming in rather than feeding or paying to sustain a property. Learn the difference between adjustable rates, versus fixed rates, private money, and seller financing. Rates can range from as low as 3.5% to north of 10% based on where you get your money from and on a loan of $500,000 which could mean $1500/month to $4200/month or more. That will dramatically impact what you determine to be a good versus a bad deal. First and foremost, learn about the money that you're getting.
Next, learn about construction costs. I had a client buy a house recently thinking that the cost to fix up the property would be significantly lower than he thought it would be. He's happy where he is, but his property is costing him every time he turns around whether it's actual remodel costs or just furnishing the property because it's his personal residence. There were a lot of things that he thought would be minor that turned out to be more costly than he thought they would be whether it was scraping ceilings, creating a flush ceiling, raising a roof line, changing a door, it's added up and been more complicated than he thought.
This game requires doing your due diligence especially in Southern California where the swings are still fractional, but when 25% is $250,000, it hurts when it goes south. Like I said, if you have more questions and would like to talk, PM me and I'd be happy to continue the conversation.
@Alexander San I would definitely be able to help you out with the Kern County market, and I think it could be a good place to start because you will be cash flowing from day one, which would be able to help off-set your rents in OC, but now you have people who are also paying down your mortgage which is earning you equity in the long term, as well.
As far as house hacking in SoCal, I have some friends who graduated from UCI and have done well with their house (although they bought in 2008). They bought a rather large house (5 bedrooms), and were able to have the mortgage covered by their 7 roommates, and today they are earning equity in an asset that has appreciated quite a bit as well.
I think the main question for you to answer here is whether you think the OC market is getting a little top heavy, or if you think it will keep appreciating into the future? If you think it is top heavy then buying right now would not be the best idea, unless you are wanting to hold the asset and house hack for quite a while. If you think that there is still appreciation left, then it could be a good decision to hop in and house hack and let your roommates pay down your mortgage so you can sell in a couple of years and earn some appreciation income in the property.
@Alexander San I think now is the best time to get started you will probably qualify for an FHA loan which requires less down. 3.5% down is usually what is required. I would suggest house hacking where you purchase a multi family house and you live in one of the apartments. Since you are already renting I think this would be a great strategy for you, let someone else pay your mortgage while you live essentially for free and continue to save more money hopefully for your next house purchase.
Hi @Melissa Gittens, thank you so much for the advice. House hacking is actually one of the main things I am looking into. If you have any advice or knowledge that you can share about house hacking that would be great!
@Sanjeev Advani I'm definitely open to learning a bit more about the Kern County market in comparison to the OC market, but my only concern is starting out with REI in a market far from myself. If I am able to learn more about it then I may be a bit more comfortable but I am mainly looking to find deals more locally first to get comfortable.
Since i'm fairly new to REI in general I'm not too sure what the market is like in the OC in comparison to other markets or the past other than prices are a lot higher now. I'm leaning more towards buying property to house hack for awhile.
Hey Alex! Well my only offering for thought is that if financial freedom is your goal, cash flow is going to be your ticket. Right now, there's no cash flow in SoCal so if you want that, you'll have to invest out-of-state. That's what me and a lot of folks who live here do. SoCal can work for appreciation, obviously, but your timing on that has to be right on. I'm not sure now is the right time for that based on how high our prices are. So my only encouragement is to be sure to run the numbers on any house-hacks you are thinking of here and see what your cash flow would be (there won't be any). Then compare that to out-of-state properties. Out-of-state would be friendlier to smaller down payments too.
@Alexander San I actually house hacked my for my first property and it has been working out for me. I purchased a duplex and got a great tenant in there. Then purchased another property a year later. I am currently half way to my goal for this year of units/doors in my portfolio. I would definitely suggest house hacking so that someone else can pay your mortgage while you save for your next future property purchases.