Hello All! Newbie investor here, from California

OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

@Tom Ott Thank you very much!

Dave VisayaPro Member

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Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes

8y

Hello @Ralph Naval, welcome to BiggerPockets. It's great to have you here! Let us know how we can help.

OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

Thanks for the warm welcome @Dave Visaya . Lots of exciting stuff here, I'm looking forward to it. Best wishes to you for the New Year, my kababayan!

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

Hi Ralph! Ooh, pharmaceutical chemist...that sounds fancy :) And we're neighbors...I'm in Venice.

If your goal is to replace the work income of your girlfriend, just be sure you are up on running numbers as you start shopping. To replace an income, you have to have cash flow. There's not typically much for cash flow in SoCal. So if cash flow is the goal, you'll have to get creative. Out-of-state offers cash flow, or you have to work the appreciation route here. Even that is sketchy right now because we are closer to peak prices right now than not.

Not trying to be a buzzkill, but just want to emphasize how important running the numbers will be if that is your goal!

(if you want any help on them, check out https://www.biggerpockets.com/renewsblog/2013/01/1...)

Reach out anytime if you ever have questions!

3 Reply

Jorge Barboza Jr.

Investor · Yorba Linda, CA · Member since 2016 · 114 posts · 32 votes

8y

Hey @Ralph Naval! Welcome to BP! There is a ton of great material here and it is a great place to network. Please PM me if you have any questions.

@Ali Boone makes a great comment. Make sure you run your numbers well and nice jump with the comment @Ali Boone

Fernando E.

Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes

8y

Ralph Naval welcome to BP! Happy to see you join this awesome network! Best of luck, cheers!!!

Michael S.

Rental Property Investor · Woodcliff Lake, NJ · Member since 2017 · 42 posts · 26 votes

8y

Originally posted by @Ali Boone:

Hi Ralph! Ooh, pharmaceutical chemist...that sounds fancy :) And we're neighbors...I'm in Venice.

If your goal is to replace the work income of your girlfriend, just be sure you are up on running numbers as you start shopping. To replace an income, you have to have cash flow. There's not typically much for cash flow in SoCal. So if cash flow is the goal, you'll have to get creative. Out-of-state offers cash flow, or you have to work the appreciation route here. Even that is sketchy right now because we are closer to peak prices right now than not.

Not trying to be a buzzkill, but just want to emphasize how important running the numbers will be if that is your goal!

(if you want any help on them, check out https://www.biggerpockets.com/renewsblog/2013/01/1...)

Reach out anytime if you ever have questions!

Ali makes a great point here, it is very very hard to cash flow here in SoCal. It's best to look out of state for cash flow deals. As for appreciation, it can be done, you just have to get in in the right areas. Make sure you do your research. Good luck to you. Look forward to learning about your journey.

Jim BlackburnBusiness Member

Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes

8y

Ralph Naval Welcome! Nice to e-meet you Ralph Naval One of the best ways a new investor can get started, in my opinion is by purchasing a 4 unit property as their very first purchase. LA County ... Here the county loan limit for a 4 unit property is 1.3m. That enables you to buy and control 1.3m of real estate with just 46. The seller can cover the closing costs & escrows. Plus we need to have another 3 months in reserves. Call it 18k.. So all together you need about 70k total saved right now. We live in one unit, and rent out the other 3. In some cases the rents from 3 may be enough to cover the living expense in unit we live in. In most cases, the rental income will make our cost of living in our unit much cheaper than it ever would be if we bought our own condo or single family house. This is an FHA loan. Typically you can only use FHA one time. Unless you have a really good letter of explanation that details the reasons why you are moving out of your current primary and into a new house using FHA a second time. (Ie. having a baby, moving to other side of town for job, etc.) If the exception is granted, then we get to use FHA twice allowing us to control more real estate with only 3.5% out of our pocket! Where many investors make a big mistake, is buying single family or condo first... then trying to acquire a 4 unit later. It's much more difficult to convince the underwriter that you are moving out of a comfortable private space , and into a building shared with 3 other families. Then you are stuck putting down 25% to acquire that 4 unit as investment VS the 3.5% FHA as primary residence. Long story short.. by purchasing the 4 unit as your first property, you're able to acquire, control, and benefit from the appreciation of 4 units with just about 46k down (3.5%) vs about 325k down payment (25%) later. How long would it take us to save up 325k? Plus, when you buy and investment, you also need 6 months cash reserves as well. Super happy to have you in the group and I’m excited to continue talking!

954-993-1625

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2 Reply

OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

Hello! @Ali Boone Thank you so much for your insight. I agree with you, I have really, really been considering investing some money out of state. If you don't mind me asking.. what states did you consider or choose for some of your first investments? In the meantime, doing a lot of practicing calculating numbers, analyzing potential deals and also trying to view properties in my spare time. I'm taking my time with this, I can't mess this up.

Also, Greetings to @Fernando E. and @Michael S. , it is a pleasure to get in touch with you all on BP.

@Jim Blackburn , Thanks for reaching out and for your insight as well. Is that county loan limit of 1.3M only applicable if you intend to purchase a 4-unit? I received your LinkedIn request and will respond by EOD.

Thank you all. You all are so kind, and it is a pleasure meeting you guys here.

Vincent Pace

Lender · Northbrook, IL · Member since 2014 · 198 posts · 50 votes

8y

Welcome to BiggerPockets and best of luck to you!

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

Well, don't focus on "not messing anything up". You may make yourself so paranoid with that thought going into it that you end up messing something up. Think positively, and be educated and know what you are getting into. It's unlikely any real estate investor doesn't goober something up at some point, or get goobered up...it's kind of how the industry works. So try to stay positive.

Markets are always changing and my recommendation for markets is always changing with them. My properties are in Atlanta but I don't necessarily advocate Atlanta now. It's not the worst place you could invest by any means, but I think there's better opportunity elsewhere right now. Baltimore, in my opinion, is the most up-and-coming with the best cash flow, Philly, Indy and KC are always steady, and Chicago. I'm working with companies in all of those cities right now.

Feel free to reach out anytime if you want to chat more!

OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

Thanks for sharing! @Ali Boone . You are right, I don't want to be paranoid, but I do want to be educated.

I guess that I should also say, for my long term future, I'm thinking that practicing managing my own property is a more immediate goal than generating cashflow. Basically meaning, I am willing to make rental income that only makes the mortgage payment on an owner/occupant multifamily (in California) for a year while I acquire skills and knowledge.

Sorry if I'm stealing so much of your time, but would you mind sharing your thoughts on this plan.

Thanks again!

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

Originally posted by @Ralph Naval:

Thanks for sharing! @Ali Boone . You are right, I don't want to be paranoid, but I do want to be educated.

I guess that I should also say, for my long term future, I'm thinking that practicing managing my own property is a more immediate goal than generating cashflow. Basically meaning, I am willing to make rental income that only makes the mortgage payment on an owner/occupant multifamily (in California) for a year while I acquire skills and knowledge.

Sorry if I'm stealing so much of your time, but would you mind sharing your thoughts on this plan.

Thanks again!

No worries, that's what I'm here for!

So my thoughts on it are... for you and for anyone getting into REI and trucking along through REI, it's all about what you ultimately want to do as to what you should do now.

I'll give my own situation as an example. From the minute I started investing, I used property managers and never landlorded any of my properties directly. The general response to me doing that, and to people talking about whether to use a property manager or not, is that everyone should landlord their own property first so they learn how to do it. Then after that, they can go to a PM if they want. I completely see why that idea makes sense to most people. But for me, my ultimate goal is to...more or less...run and manage empires. (lol) If I want to run empires, whether that be real estate empires or business empires or any kind of empire, the ultimate skill required to do that is to know how to manage people. I can't have an empire if I do all the dirty work myself--I have to outsource in order to build (and to be hands-off, which I also want to be). So it is actually most beneficial for me to have property managers and to learn how to manage THEM, rather than to learn how to manage a leaky toilet. Me learning to fix toilets and deal with tenants and all that jazz really does me no good for my ultimate goal. People argue that the only way to know if a PM is good or not is to understand their job (the toilets, tenants, and turmoil). I don't think that's true at all. In order for me to gauge PMs and manage them and hire and fire them, that's all basic people management and business principles.

That is just an example using myself and my goals. So for you, and anyone reading this, it depends what you want to do.

So my question for you would be- what is your long-term goal? You said you want to practice managing your own property. What will doing that get you? (actual question, not rhetorical)

Hope that helps!

Logan AllecBusiness Member

Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes

8y

Hi @Ralph Naval. I completely agree with @Jim Blackburn.

I "house hacked" a 4-unit in LA County, living in one unit and renting out the other three. It can be done.

Remember, the younger you are, the more time you have to play the appreciation game, and LA is one of the best markets in the country for appreciation.

I'm not saying cash flow isn't important. I'm just saying it's not the only thing.

Take everything around here with a grain of salt. Good luck.

Clarita CPA Group516 Reviews

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OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

Wow! Thank you guys so much. I know you guys could totally be spending your time doing other things but here you are. Thank you @Ali Boone , also want to let you know I am subscribing to your mailing list on hipster investments to help me stay in tune with other markets/deal opportunites.

And thank you @Logan Allec , I definitely haven't ruled out the possibility of making this work while I am living in California.

OP

Rental Property Investor · Diamond Bar, CA · Member since 2017 · 27 posts · 2 votes

8y

@Vincent Pace Thank you for your well wishes! Great to meet you via this site.

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

Cool! If you want, shoot me an email at my email below and I can send you more in depth stuff there. We don't put all the goods on Hipster's site ;)