New investor based in Los Angeles, looking at markets elsewhere!

New Member Introductions

New investor based in Los Angeles, looking at markets elsewhere!

Alexander Jones

Los Angeles, CA · Member since 2017 · 9 posts · 5 votes

Hey BP!

I'm Alex and I'm a professional commercial cinematographer living in Los Angeles. I've spent the last 6 months or so absorbing as much information as I can about REI and feel ready to start taking some actionable steps. Because the LA market is so insane right now I've started looking in central California (Fresno, Merced, etc), the Sacramento area, and have also considered out of state (I've already read @David Greene's great book on out of state investing). I understand the California markets are generally considered appreciation plays whereas the out of state markets can offer better cash flow; I'm still trying to figure out what works best for my situation. Cash flow interests me but I'd love to hear your guys' opinion on a newbie starting his career out of state (so far the Dallas TX and Jacksonville FL markets seem interesting). I'm looking at SFH or perhaps a duplex to get my feet wet.

I just wanted to introduce myself to this great community and start using this platform as a way to network with others both in LA and abroad.

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Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes

8y

I have 122 front doors in Northeast Ohio and you can get the 1.5% rule. I have Zero vacancies in 8 apartment complexes and 4 single family there. We continually push rents higher and higher. Duplexes rent for about $800.00 each side and you can purchase for about $90,000-$110,000. In 2014 I could get these duplexes all fixed up for about $60,000-$80,000. Who says you can't get appreciation in the Midwest?.

Swanny

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Tony Han
Torrance, CA · Member since 2015 · 54 posts · 8 votes
8y
Welcome to BP @Alexander Jones. LA is extremely hot right now, do you have a criteria on number of bedrooms/bathrooms? Any specific location? For the out of state markets, have you considered turn-key providers or are you looking to fix/add value to a property? Good luck!
0 Reply
Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
8y
@Alexander Jones
Start with below article from Realtor.com top 100 metros ranked for 2018. I would do your analysis with the top 10 cities and what fits best for you.
https://www.biggerpockets.com/forums/712/topics/51...
Terry
0 Reply
Max Keller
Bedford, TX · Member since 2018 · 53 posts · 14 votes
8y
Hi Alex,

I am coming out to LA in April to meet with one of my investors. You are not alone in looking for other markets. Dallas still has good cash flow. I will be building some duplexes in Q3 and Q4. In our market right now builders are creating apartments or large homes. We are adding about 300 new families a day to the Dallas Fort Worth area.

Originally posted by @Alexander Jones:

Hey BP!
I'm Alex and I'm a professional commercial cinematographer living in Los Angeles. I've spent the last 6 months or so absorbing as much information as I can about REI and feel ready to start taking some actionable steps. Because the LA market is so insane right now I've started looking in central California (Fresno, Merced, etc), the Sacramento area, and have also considered out of state (I've already read @David Greene's great book on out of state investing). I understand the California markets are generally considered appreciation plays whereas the out of state markets can offer better cash flow; I'm still trying to figure out what works best for my situation. Cash flow interests me but I'd love to hear your guys' opinion on a newbie starting his career out of state (so far the Dallas TX and Jacksonville FL markets seem interesting). I'm looking at SFH or perhaps a duplex to get my feet wet.
I just wanted to introduce myself to this great community and start using this platform as a way to network with others both in LA and abroad.
0 Reply
Tim Ryan
Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes
8y
Cool. I’m in the Pasadena area. I do flip/development projects in the San Gabriel Valley and North East LA area and own several apartments out of state. Send me a message or email if you want to meet up and discuss more. Networking is what it’s all about.
0 Reply
Matt Motil
Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
8y
Welcome to BP @Alexander Jones! Cash Flow is king. Good luck on your REI journey!
0 Reply
Matt Moreland
Realtor · Lubbock, TX · Member since 2016 · 165 posts · 155 votes
8y
Hi, Alex! Welcome to BP!

Speaking as a resident of Texas and former resident of Dallas, there are definitely deals available if you're willing to look for them. I'm not an expert of Florida so I'll refrain from speaking on it, however, Texas as a whole has lots of great cash flow opportunities across the state.
If you're looking at cash flowing SFH or possibly duplexes, I might suggest looking at some of the other markets in Texas or even honing in on one particular focus, like college housing. Duplexes around universities in College Station/Bryan, Austin, Lubbock, San Marcos, etc. are good for older college students who want to live off-campus and pay less than they would for a brand new apartment, and provides you with a steady stream of cash flows. Another benefit of student renters is that they'll oftentimes encourage younger friends to rent their place once they move out/graduate, which is really convenient when it comes time to get it leased.
Good luck on your investing journey!
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Alexander Jones
OP
Los Angeles, CA · Member since 2017 · 9 posts · 5 votes
8y
@Tony Han Thanks man! I have not yet seriously considered turnkey as I'd like to be a little more hands on (at the risk of taking on more trouble). Do you have any experience with turnkey companies?
0 Reply
Alexander Jones
OP
Los Angeles, CA · Member since 2017 · 9 posts · 5 votes
8y
@Terry Lao I'll take a look here appreciate it man.
0 Reply
Alexander Jones
OP
Los Angeles, CA · Member since 2017 · 9 posts · 5 votes
8y
@Max Keller That's awesome man, sounds like you're killing it. Any particular neighborhoods in the Fort Worth Area that interest you from an investing perspective?
0 Reply
Alexander Jones
OP
Los Angeles, CA · Member since 2017 · 9 posts · 5 votes
8y
@Matt Motil Appreciate your welcome and your perspective man!
0 Reply
Sarah Nowak
Realtor · Grapevine, TX · Member since 2017 · 23 posts · 13 votes
8y
I’m an agent in Dallas/Fort Worth and there is definitely a great market for investors here but because of that it has become very competitive. Staying on top of where the deals are is challenging as it can change quickly but right now I’m seeing good deals in the West and Southwest areas of Fort Worth.
0 Reply
Alexander Jones
OP
Los Angeles, CA · Member since 2017 · 9 posts · 5 votes
8y
Thanks @Sarah Nowak that's a helpful starting point for me.
0 Reply
Sarah Nowak
Realtor · Grapevine, TX · Member since 2017 · 23 posts · 13 votes
8y
If you're looking at flips I found an excellent one in that area that has a great spread. I've already walked it with my GC and researched comps.
0 Reply
Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y
Welcome, @Alexander Jones.
Yes, SoCal can be a tough nut to crack for newbies.

A couple years ago I mailed out lots of letters to homeowners in LA County with no luck.
Then I tried rural Kern County and got a deal from a distressed homeowner in California City.
The margins were not as large as they would've been in LA or OC, but I was able to rent it out for 2 years before fixing it up and selling it for a decent gain.
Also, have you considered an owner-occupied small multifamily for your first deal?
You only need to put 3.5% down, so cashwise it won't get in the way of other real estate goals you may have.
My first deal was a 4-unit up I bought with FHA 3.5% in Santa Clarita.
I lived for free (as opposed to paying rent) + enjoyed cash flow + built equity. It was a great investment (and still is).
Good luck!

Clarita CPA Group516 Reviews
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Michael Swan
Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
8y
I have 122 front doors in Northeast Ohio and you can get the 1.5% rule. I have Zero vacancies in 8 apartment complexes and 4 single family there. We continually push rents higher and higher. Duplexes rent for about $800.00 each side and you can purchase for about $90,000-$110,000. In 2014 I could get these duplexes all fixed up for about $60,000-$80,000. Who says you can't get appreciation in the Midwest?.
Swanny
3 Reply
Brett Goldsmith
Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
8y
I primarily do out of state MF's for cash flow, and LA for rehab projects or buy and hold appreciation plays. Depending on how much money you have, you can likely still do projects or find a MF in some city's in LA county or the IE.
0 Reply
Ben HowardPro Member
Real Estate Agent · El Dorado Hills, CA · Member since 2017 · 160 posts · 67 votes
8y
Welcome Alex, let me know if you need a contact in the Sacramento area. I am happy to setup a MLS search for you.
[email protected]916-390-7060
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
8y
Originally posted by @Alexander Jones:
Hey BP!
I'm Alex and I'm a professional commercial cinematographer living in Los Angeles. I've spent the last 6 months or so absorbing as much information as I can about REI and feel ready to start taking some actionable steps. Because the LA market is so insane right now I've started looking in central California (Fresno, Merced, etc), the Sacramento area, and have also considered out of state (I've already read @David Greene's great book on out of state investing). I understand the California markets are generally considered appreciation plays whereas the out of state markets can offer better cash flow; I'm still trying to figure out what works best for my situation. Cash flow interests me but I'd love to hear your guys' opinion on a newbie starting his career out of state (so far the Dallas TX and Jacksonville FL markets seem interesting). I'm looking at SFH or perhaps a duplex to get my feet wet.
I just wanted to introduce myself to this great community and start using this platform as a way to network with others both in LA and abroad.
Welcome to the site Alex.
It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
Good luck to you & don't be a stranger. If you have any other questions post them here on the forums. Tons of combined knowledge here on BP with all the members.
1 Reply
Joey Hamaoui
Real Estate Agent · Jacksonville, FL · Member since 2016 · 406 posts · 163 votes
8y
Hey @Alexander Jones,
welcome to the BP Community!
If you're interested in the Jacksonville market I'm happy to connect and help out however I can. Jacksonville is a great cash flow market right now. We are seeing some appreciation together with most of the country but I feel that buy and hold investments are the play right now in Jacksonville. I've developed my business around that model here.
A few things to think about if you do decide to invest out of state:
- How involved in the process do you want to be? If you're not interested in being involved with any of the problems it may make sense for you to invest your money in a fund. If you want a bit more involvement you can go the turn-key route. If you want a bit more you can get a project manager and oversee big picture decisions. If you want more you can hire an agent to purchase the house and get contractors to perform the work under your supervision. If you want a bit more you can find the deal yourself and do the work yourself. In my opinion, having worked with tons of investors, this is the first thing you need to decide. If you're not clear on your role in the process and what your process is you will experience a lot of setbacks.
- How will you finance your purchase? Conventional financing is great for first time investors but it does have a couple cons to consider. If you go the conventional financing route you will have a much higher acquisition costs. Typically in Jacksonville I'm seeing $2-3K higher on acquisition costs. It will also make your offer less competitive against cash offers that can close quicker without third party approvals. On the other hand conventional financing can earn you a point or two more typically on your cash on cash returns than we're seeing if you purchase cash.
Anyways feel free to reach out if I can help in any way.
0 Reply
Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
8y
Alexander Jones good man. I did the same thing. Let me know if you need any advice.
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y
Welcome Alexander! I'm a bit late to this thread but thought I'd chime in.
I'm also in LA (Venice) and I've....well, until about 2 weeks ago I would say I only buy out-of-state, but I did just buy a property in LA. But for the most part, I've always done out-of-state. For cash flow.
Dallas and Jacksonville have cash flow, but they are on the low side compared to other markets. There's perks to both of those, but definitely higher cash flow elsewhere.
Ignoring logistics of which market and what market has what right now....what would you ultimate goal for a property be? Price point, cash flow or appreciation, property type, etc.
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