Hi to all,
I need some tips for my next investment peeps. I'm currently selling a rental I have and walking out with about 100k in clean profit (after commissions/taxes/etc)
What's my next move?
1. Move into flips at this time in LA with partners or HML? (Or surrounding areas)
2. Buy in cheaper area (such as Bakersfield, CA), financed, and rent out for some minimal cash flow on rents?
Let me hear some opinions and what you did or would do in my situation?
Some factors to consider: I'm 25, work a full time job, salary is just above 100k. So this would just be money on the side that I don't need to count on or won't really associate much risk to. I've researched markets and how it's moved the past couple of years owning my rental. A second opinion is always good though
Hard to do a flip if you working full time . Perhaps a rehab and hold would be better?
Do you own a principle residence? buying a multifamily property and living in a unit would be my vote if you don't.
If you own your principle residence and you're looking for cash flow with little risk, I'd suggest moving out of state to a city that hasn't experienced the appreciation that CA has. I'm not big on Bakersfield but I do have friends that have done well out there.
Thanks Jo-Ann. That would be idea. Maybe partner up with someone and rehab a good deal from an auction
William, at the moment I actually rent a room at my parents house so I have very minimal bills. I'm willing to take risks in surrounding areas but definitely not move out of state since I have my career which I just begun here in LA.
Thanks for your input!
Yes that could be an idea so you don't get in over your head.sounds like you are doing great and taking slow . All good traits of an investor
@Jo-Ann Lapin thanks! I appreciate the positive feedback throughout this app 👌🏼 any good forum where I can find good GCs and Subs here in the LA area ?
I'm also in the LA area. I kind of did both 1 and 2 - doing flips out in Bakersfield. Am about halfway through the rehab process on my first flip property. I agree with Jo-Ann, it is definitely a lot of work (I'm doing it full time), especially since I have to drive out there a couple times a week. The good news is you have good steady income so you can be more flexible with what you choose.
@Jonathan Yip I agree, I would like to have both. Something to generate me a few hundred a month (rental property) and do a couple flips a year. Starting with 100k doesn't give me the option for both at the moment. But I like the Bakersfield area as well. Thanks for your input 👍🏼
@Carlos Sotelo -Congrats and glad you are here in BP! Great place to learn and an excellent way to learn about real estate is buying and selling undeveloped land. Incredible returns, no rehab needed, and you can buy/sell all over the country. Being as you are in California why not buy some rural vacant land, say Kern or San Bernardino County for a $500, sell for $1500 and keep growing your acquisition balance to where you are comfortable enough to make some other decisions?
You absolutely CAN do this part time and I personally would not recommend quitting a good job until you can replace that income and it no longer makes sense to keep that job. I have heard many members say they left their version of a "day job" because they were losing deals, it was costing them money, and they could no longer juggle the two. (Great place to be in, by the way)
I would start small and build a property portfolio. With little $ you can get a website going (to sell what you buy), find motivated sellers, and start flipping property.
And since no debt, it is okay if a property takes a few weeks to sell. The key is really learning how to buy it right. Look at property as a business. Not emotional - just as an investment. If you cannot buy it so inexpensively that you can easily double your money tomorrow, don't buy it. Just move on to the next deal. Easy to get your phone ringing with motivated sellers once you learn how to reach them! Hope this helps!
@Anthony Malveto wow, you just opened my eyes to a whole new sector regarding buy/sell land tactics. I will definitely look into that and see how that works. If you have any info, feel free to drop some links I can take a look at.
Thanks again for the input!
Welcome to BP! Let's sync up. I was born and raise in LA.
@Carlos Sotelo here is my long winded response, sorry in advance!
Option 1 - With the cash that you have, you could go into a multi-family property in your area (higher price point), and hopefully purchase a few units that need rehab over time but are livable now. That would set you up to take advantage of the BRRR strategy, along with being able to use the FHA low downpayment, and you can have other tenants pay your mortgage and utilities so you don't actually have any bills (just like staying at your parents house, but better!). The only thing that I would think about before doing this is where you think the market will be going into the future (at a minimum 1 year). The reason for this is because you have to hold on to that property for a while, but if you can figure out how to find a cash flowing property in that area (very hard) then it could work out for you.
Option 2 - You can take the cash you have and potentially buy 2 SFR's in a cheaper area (ex. Bakersfield, given $180K purchase price @ 25% down). Doing this will provide you with even more cash flow with which to go and purchase more rental units into the future. You may have good appreciation over time due to the different factors in the Bakersfield market (feel free to ask me for more details), and you will have a cash flow of approximately $500/month after expenses conservatively.
Option 3 - This is the new trending keyword 'multi-family'. Buy a multi in a cheaper area (ie. Bakersfield and start renting that out for some cash flow. Spend some time fixing it up and getting top of market rents then flip it into a bigger property and so on.
If you are interested in more information please feel free to PM me and we can chat further!
@Sanjeev Advani what are those different factors in the Bakersfield market that are helping with the appreciation?
@CJ Berina CA as a whole will go up over time and we have seen that especially recently. Looking at Bakersfield specifically, we have not reached our peaks from the previous market spike as many of the other areas of CA have. I️ think that will help to keep the market going up.
As far as market drivers, Bakersfield has been hit my a bad Ag and Oil market which has made the recovery slower than other places in the state. Now, a lot of people will say that Oil and Ag may not come back but we are seeing both in a stronger market than before. The next thing is that Bakersfield is increasing its employment opportunities into other areas of the market that will diversify it from being just an Ag and Oil town in the future.
Another good driver of appreciation is development and currently we are seeing some of the largest projects in the cities history begin development which means that property values around all of these projects will start going up.
On the whole, in my opinion the market looks good, you just have to know where and how to get in where it makes sense. I️ have been seeing more and more out of town investors coming and losing their shirts because they came in without the experience of the market.
Anyway, that’s my two cents! Hope it helps! Feel free to PM any time!
@Sanjeev Advani great insight, I'm definitely interested in investing there. Sent you a colleague request. Maybe I can drop by soon and check out the area.
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