Would this be a good investment for a first time buyer? I’m currently living in Los Angeles County and its pretty expensive here. I’m thinking a 3bedroom townhouse would be nice to start with since everything else is so expensive?
Investor · Winnipeg, Manitoba · Member since 2016 · 92 posts · 40 votes
6y
Depends on your goal. Most people who are real estate investors ultimately want to build cash flow to retire so they escape the rat race. In expensive markets this is very limited . So you are betting on appreciation which goes against one of the laws of surviving any real estate market. If you study the townhouses in the area in question very well and find that the deal is let’s say 0.70 on the dollar and you know it needs between 5 to 15 percent on the dollar and the after repair value is 1.10 - 1.15 then that is a good deal for flipping. Flipping is good for building cash but it’s not a great strategy for cash flow. If you are building money to save up for a buy and hold sure try it out. If you want to buy and hold a good investment like a lot of people eventually want to do I would suggest finding a deal that cash flows much better like a tripleX or more In a less expensive area. I’m in Toronto so I look within one to two hours away for better deals as they benefit from the ripple effect, expansion of transportation from Toronto to these smaller cities, massive immigration that is occurring and lots Of companies moving here increasing significant jobs.