Anywhere near San Diego that still Cash Flows?

[Kyle Fanene]

I'm relatively new to REI, so I've got plenty to learn here...

I've been looking into several properties more or less within driving distance of San Diego (including Phoenix, Riverside, etc.) and literally nothing seems to cash flow.  Best case, maybe a couple hundred bucks per door.

Is there nowhere left without going truly long distance? 

[Dan H.]

Originally posted by @Kyle Fanene:

Originally posted by @Aaron K.:

Nowhere in San Diego proper will cash flow with a low down payment.  Because the market is deemed low risk investors are comfortable taking lower returns and obviously owner occupants want to live there.  There is cash flow in some parts of the IE but it isn't much.  Nationwide you won't see cash flow much above a couple hundred bucks a door though

 Hm I had a feeling.  So if you had a little money lying around, would you just go for what you can?  Or (though I'm not a fan of trying to time the market) wait it out for an inevitable correction?

I would earn some more money first.  In the San Diego market, do you know who looses money on RE?  It is those that sell in a depreciation cycle.  Do you know who sells when the market is down?  Those that do not have the resources to weather the down cycle or "unexpected" expenses. 

Regardless of market, with the margins on RE being what they currently are, an RE investor must be in a position to not be forced to sell due to market downturn or "unexpected" expenses.  This requires capital reserve.  A little money after the purchase is less than the little money prior to purchase and does not provide the type of reserve that I would want a less experienced RE investor to have. 

Save until you can purchase a good investment and have an adequate reserve.  I recognize you may be anxious to start and if this was a couple of years ago when the margins were greater my advice may have been different.  Today with the exuberant market that has so many RE investments being at best OK, my advice is make sure you are prepared to handle virtually anything that can come your way and IMO the best way to be in such a position is to have adequate reserves.

Good luck