How to create a cash flowing investment in Los Angeles with 100k?

Question

Hello there everyone I’m new to investing in real estate I have some money saved up by now about 100k and want to invest this hard earned money in the best way possible here in Los Angeles that can cash flow and help me grow my investment, should brrrr a triplex or is there anything better I can do, iM in Los Angeles and it’s very expensive or should I wait for prices to drop???

Lee Ripma · Answer

@Daniel Orozco

Couple ideas off the top of my head:

1. House hack a SFH (I like this option much better than a MF here due to rent control and tenants rights). Add value by fixing it up, adding an ADU, renting out rooms or Airbnb on rooms/ADU (learn Airbnb regulations if going that route)

2. Invest passively or team up with someone else to do a flip, larger rental deal, basically use passive investing as a way to watch and learn from others who are successful in LA

3. Learn about niches in LA that work, network, you’ll find the right thing!

There is no right answer this to the question of what should I do with 100k. There is only the right answer for you right now based on what you want to learn, your risk tolerance, and your goals!

Craig Curelop · Answer

@Daniel Orozco - I agree with my friend @Lee Ripma. Investing $100k in LA may not get you what you want. If you want to house hack, I would suggest moving out of the city to some place more affordable.

If you do not want to move, I would suggest spending $50 to $100 of that money on David Greene's books Long Distance Real Estate Investing and BRRRR. These will equip you with what you need to invest out of state. Your $100k can go very far in some of the mid-western and other markets where you can purchase properties for $50k and fix them up for $30k then refinance for $120k.

Lee Ripma · Answer

@Daniel Orozco

You’ll find versions of this question posted daily. Do you actually want cash flow or are you looking to grow that 100k into more cash? Spend time educating yourself and the right answer for you YOU will become clear.

Ali Boone · Answer

Out-of-state. Cash flow is basically non-existent in LA.

Lee Ripma · Answer

@Daniel Orozco

You still need to define your goals. With 100k I’d be much more focused on growing that 100k than generating cash flow. Cash flow is your margin of safety, it makes it so you won’t go under if the value of your property goes down. I was very sold on cash flowing investments starting out, because everyone talks about it. However, I now only view cash flow as my margin of safety on not losing a property. I’m very focused on building equity. I won’t debate cash flow vs appreciation (appreciation blows cash flow out of the water) I will only say that my goal is to get very high cash on cash returns and most of all equity in my properties. When I buy something I think how can I make the value of this property 25-100% more valuable using only what I can control. The answer for me is value add MF properties where I can raise the NOI. I also do development projects where I create a ton of equity. All of it is work but I started with less than you have now 3 years ago and transformed my networth. So think if cash flow is really what you want!

Ali Boone · Answer

I don't agree with the househacking suggestion. I don't see how that could be profitable for you in the short-term in LA. Here are things to think about with househacks-

https://www.biggerpockets.com/...

Have you considered buying out-of-state? Whatever you're thinking of doing, you should make sure it lines up with your goals. Which are....what? If it's positive monthly cash flow, no joy in LA. If it's future appreciation, LA might be okay (although not sure what you'd buy with $100k that you wouldn't be paying out on every month). If you decide to stick with LA, just be very intentional in why you are investing in a particular property. Specifically, how exactly do you plan to profit from it? If you can intelligently answer that, then go for it. But LA is a really expensive place to just take a wag at things.

Daniel Orozco · Answer

@Ali Boone thank you so much for your opinion yes I respect that I will be very careful on my choice thank you for helping me reasure, do you invest out of state or there’s is good cash flow on properties where you live??

Taylor L. · Answer

I hear you. I'm not an expert in SoCal real estate, but I have found that most people I run into who live there have found they can't find decent investment opportunities there. Just stay open minded and committed and you'll find something that works for you! Commitment comes first!

Daniel Orozco · Answer

@Matthew Forrest yes I will keep looking maybe I’ll try to buy a triplex or fourplex and see if I get cash flow there””

Craig Curelop · Answer

@Daniel Orozco - I do and it has been quite the disaster... or should I say... learning experience lol. I am going to continue to invest out of state. However, this time, I will be sure to do much more diligence!

How to create a cash flowing investment in Los Angeles with 100k?

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