Rookie investor in California, is it still possible?

Question

Looking to buy my first investment property in CA, a long term rental. Prices are rising and hitting any where close to the 1% rule on a rental is not seen very often. Does anyone have experience and success investing in SoCal recently?

Kiera Underwood · Answer

@Kesean Diamond Curious what's making you stick to SoCal?

Dan Portka · Answer

@Kesean Diamond you won’t be hitting the 1 or 2% rules in SoCal, but that’s not to say that cash flowing isn’t possible. If you find a great below market deal where you can add value through rehab or maybe economically add a unit, it’s possible to break even or maybe make a little money. Lots of investors look at multi family since the cash flow is better.

Where id challenge you to is find how you can have a competitive advantage - that could be by doing diy renovations, or learning how to be a landlord/PM, etc. Maybe find a beat up home for 3% down and while you’re living in it fix it up. By the time you go to sell it a year later you’ve forced in equity and can make the decision to either sell with a nice profit or if it will cover PITI rent it out.

House hacking is also another good strategy to consider. You won’t be able to cash flow a house hack but you might be able to significantly reduce your housing payment and then invest the savings for a nice return.

There are plenty of mom and pop real estate investors in California and Palmdale seems to have more attractive prices than many other markets. Why not try to find a local meet up and see what is working for other investors in your area?

Dan M. · Answer

Just want to throw out there the 1% rule is not a rule its just a guideline and yeah in this market its tough to do. In other parts of the country you can get 2%. Just because the market is crazy doesn't mean you cant try. Are you preapproved? How many offers did you put in?