Hello from SoCal, game producer starting his multifamily journey
New to Real Estate · Los Angeles / San Diego · Member since 2026 · 5 posts · 5 votes
Hello from SoCal, game producer starting his multifamily journey
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votesSan Diego is my market. It historically has been one of the best markets in the US. I am willing to debate this with anyone using either historical stats or my own experience on my investment properties to show this.
However, I have been investing for a while and this is the most challenging RE market in decades if not ever. A couple years ago there were 2 separate studies comparing cost of renting versus owning. Both studies came to the same conclusions , that it initially is cheaper to rent than to own in virtually every large city in the US. Now apply that to rentals realizing that owner occupied (OO) does not have vacancies, tenant flips, PM, book keeping, etc. what this shows are the average mls purchase will be cash negative everywhere if using market financing and without a value add.
The challenge is clear. Solution, not have one of those conditions. My personnel favorite takes some insight and understanding and that is sophisticated value adds. If you go through my posts, you can see I provide the secret sauce on a rare occasion fully expecting that virtually no one will actually act on the information (I would be thrilled if someone PMed me saying they hit a HR via a sophisticated value add that they got from me). In this post I am not providing the secret sauce. So that leaves off market purchases, below market financing, or traditional value adds. Better yet, combine them. Many of these will still result in negative cash flow. However, negative cash flow is a lot easier to tolerate if you have earned significant sweat equity. For example if I made $100k in sweat equity, how much do we care if cash flow is negative $1k/month? What is the typical appreciation in San Diego? What if I told you that on purchases this decade the average is ~$5k/month? Does that make the $1k negative cash flow more palatable?
I am at BPCon today until 1 day after it ends. I typically come back from BPCon feeling more generous. Two years ago I came back and had an open house on all aspects on my then current project. Lots of interest, poor turnout which surprised me. I made over $1m in 3 year stabilization on the effort. I covered purchase, initial rents, rehab items and cost, finance choices, post value add rents, etc. most important, I answered any questions. if I was smart, I would have loved such an opportunity when I was starting out.
Do you reside in inland north county? You can see my city; it is inland north county. I have a protege doing their first flip (I told him to start at lower price point, he ignored that advice and purchased in Bay Ho). I expect to be swamped when I come back. If you PM me AFTER the end of BPCon, I may be generous to give you 2 sophisticated value adds to consider (one is OO only, for after you get a job again). I suspect you will do nothing with either of them but I hope you show I am wrong and somehow make a fortune doing them (and I am not taking Midwest cash flow pittance but 6 figures)..
San Diego has been an incredible RE buy and hold market. It is also a good flippers market. It currently has large negative cash flow purchasing off the mls without a value add using market financing.
Good luck
16 Replies
- Accountant · San Francisco, CA · Member since 2026 · 92 posts · 48 votes1w
Welcome Aurelien/French. You have such a cool background. I come at this from the underwriting and tax side, so two thoughts on what you raised.
On the capital: if a San Diego fourplex needs 40 to 45 percent down just to break even, the capital is not really the problem, the deal is. Break-even at that much equity means the rents do not cover the debt at today's rates, so you are buying zero or negative leverage and hoping appreciation bails it out. That is a bet on the market, not cash flow, and it is exactly why property #2 feels out of reach: #1 is not throwing off cash to fund the next one. I would underwrite until I find one that pencils at 25 to 30 percent down rather than stretch to 45 on one that only breaks even.
On the tax side, one thing that trips up a lot of people chasing passive income: the depreciation and cost seg benefits everyone talks about only help right away if you can use the losses. For a passive investor, rental losses are suspended and carry forward until you have passive income or you sell. They are not lost, but they do not shelter your other income the way the YouTube videos imply. The one real exception is real estate professional status, and since you were just laid off, that is worth understanding now. If real estate becomes your main activity and you meet the hours tests, those losses can open up against other income. It changes which deals actually make sense for you.
Happy to be a second set of eyes on how a deal pencils after tax as you underwrite. What down payment and rate are you running those San Diego fourplexes at?
- New to Real Estate · Los Angeles / San Diego · Member since 2026 · 5 posts · 5 votes6d
Thanks, I appreciate it! Both points are really helpful.
I've been running everything at about 6.75% on a 30-year DSCR loan, and that's where the 40 to 45% comes from. So far I haven't found anything in San Diego that works at 25 to 30% down, but that's a good target to hold myself to instead of stretching on a breakeven deal. What I'm seeing after reading some of the comments is creating value add is one of the keys to making the math work.
The tax side is something I hadn't really thought through. I didn't realize the losses would just carry forward for a passive investor. Real estate professional status is interesting given my situation right now, though I'm guessing it gets a lot harder once I'm back at a full-time job. I will look into it.
I'd definitely take you up on the offer to look at a deal after tax once I have one that's close. Thanks again!
- 1wDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 361 posts · 135 votes
Welcome, @Aurelien Danglejan —and sorry about the layoff. You’re asking a smart question: in an expensive market, the first deal needs to leave a realistic path to the second.
Putting 40%–45% down just to reach marginal cash flow could make scaling difficult, so there's nothing wrong with waiting for a better fit. It may also help to broaden the search to nearby submarkets, smaller properties, a clear value-add opportunity, or a carefully structured partnership. DSCR financing may solve the qualification issue, but the key is choosing a deal that preserves reserves and creates a repeatable source of capital for the next purchase. Your production background should serve you well here—good underwriting is all about testing assumptions, planning for setbacks, and staying patient. Best of luck as you keep building your buy box.
- 6dArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 939 votes
Quote from @Aurelien Danglejan:
Hi BiggerPockets!
I'm Aurelien (most people call me French), and I'm new here after reading a couple of books on investing and property management. I've spent about 15 years producing video games and I'm working toward retiring in 10 years with around $120k/year in passive income from real estate.
I own a condo rental in San Marcos and I'm now looking for my first multi-unit property, ideally a fourplex. I've been underwriting deals in San Diego, and I'd like to stay in SoCal since my family is here. I was recently laid off, so I'm looking at DSCR loans, which unfortunately rules out house hacking.
I'm working through two challenges. First, the cash required feels out of reach. I see some people on YouTube getting started with around $10k, but at today's rates, most San Diego fourplexes I've looked at need 40 to 45% down just to break even (usually above 400k). Second, even if I made that work, I'm not sure how I'd get to the next one in a year or two. Tying up that much capital in one property makes it hard to see a path to property #2.
I'm here to learn from people who've grown their portfolios in expensive markets. If you've found a way to keep building past property #1, I'd love to hear how you did it. Thanks!
I'm glad to be here and excited to learn.
Welcome, Aurelien! I think the biggest challenge is exactly what you pointed out, getting that first property without tying up so much capital that you can’t move on to the next one. If you’re open to investing outside SoCal, I’d definitely compare Midwest markets, where lower entry prices can make it easier to spread your capital across multiple properties.
- New to Real Estate · Los Angeles / San Diego · Member since 2026 · 5 posts · 5 votes6d
Thanks for the welcome and the suggestion! For now I'm focusing on finding something local I can self-manage. If nothing works out locally, I'd consider looking out of state, but I'll admit I'm a bit hesitant. Buying sight unseen and relying on a property manager feels like a lot of risk for a first multifamily.
- 6dDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
San Diego is my market. It historically has been one of the best markets in the US. I am willing to debate this with anyone using either historical stats or my own experience on my investment properties to show this.
However, I have been investing for a while and this is the most challenging RE market in decades if not ever. A couple years ago there were 2 separate studies comparing cost of renting versus owning. Both studies came to the same conclusions , that it initially is cheaper to rent than to own in virtually every large city in the US. Now apply that to rentals realizing that owner occupied (OO) does not have vacancies, tenant flips, PM, book keeping, etc. what this shows are the average mls purchase will be cash negative everywhere if using market financing and without a value add.
The challenge is clear. Solution, not have one of those conditions. My personnel favorite takes some insight and understanding and that is sophisticated value adds. If you go through my posts, you can see I provide the secret sauce on a rare occasion fully expecting that virtually no one will actually act on the information (I would be thrilled if someone PMed me saying they hit a HR via a sophisticated value add that they got from me). In this post I am not providing the secret sauce. So that leaves off market purchases, below market financing, or traditional value adds. Better yet, combine them. Many of these will still result in negative cash flow. However, negative cash flow is a lot easier to tolerate if you have earned significant sweat equity. For example if I made $100k in sweat equity, how much do we care if cash flow is negative $1k/month? What is the typical appreciation in San Diego? What if I told you that on purchases this decade the average is ~$5k/month? Does that make the $1k negative cash flow more palatable?
I am at BPCon today until 1 day after it ends. I typically come back from BPCon feeling more generous. Two years ago I came back and had an open house on all aspects on my then current project. Lots of interest, poor turnout which surprised me. I made over $1m in 3 year stabilization on the effort. I covered purchase, initial rents, rehab items and cost, finance choices, post value add rents, etc. most important, I answered any questions. if I was smart, I would have loved such an opportunity when I was starting out.
Do you reside in inland north county? You can see my city; it is inland north county. I have a protege doing their first flip (I told him to start at lower price point, he ignored that advice and purchased in Bay Ho). I expect to be swamped when I come back. If you PM me AFTER the end of BPCon, I may be generous to give you 2 sophisticated value adds to consider (one is OO only, for after you get a job again). I suspect you will do nothing with either of them but I hope you show I am wrong and somehow make a fortune doing them (and I am not taking Midwest cash flow pittance but 6 figures)..
San Diego has been an incredible RE buy and hold market. It is also a good flippers market. It currently has large negative cash flow purchasing off the mls without a value add using market financing.
Good luck
- New to Real Estate · Los Angeles / San Diego · Member since 2026 · 5 posts · 5 votes6d
Thanks for taking the time to write this out, really helpful perspective. The framing of needing at least one edge and ideally stacking them clarifies a lot. It explains why every MLS deal I've run comes out negative.
The sweat equity point got me thinking. I've been treating negative cash flow as a dealbreaker, but if I'm building real equity upfront, a small monthly loss is a lot easier to live with. Being between jobs makes me a little nervous about carrying it, so I'd want solid reserves, but I'm open to it.
To answer your question, I live in Culver City, but my family and my rental are in San Marcos, so I know inland North County a bit and I'm definitely interested in that area.
I really appreciate the offer to share those two value adds, that's generous of you. I'll PM you after BPCon. I'm actively underwriting deals right now, so the timing is good to learn how they could fit into my search.
Enjoy BPCon!
- 6dStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 508 votes
I'm seeing more California investors investing out of state due to the lower cash amounts needed for the down payment and the easier ability to cash flow. As someone who has worked in the CA market for decades, it's worth considering all potential options for investment properties. Besides cash needed for the down payment, it's also worth researching local, county and state landlord tenant law as that can come with its own set of issues for real estate investors. Happy to connect to discuss further.
Bright Skyline518 Reviews- New to Real Estate · Los Angeles / San Diego · Member since 2026 · 5 posts · 5 votes6d
Thanks for the comment, for now I'm focused on finding something close enough to self-manage, since I'd like to learn the ropes hands-on with my first multifamily. That said, I'd be happy to connect and hear what you're seeing from other California investors who've made that move.
- 5dDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Do what ever you have to do to meet with @Dan H. and learn from him.
Otherwise, there's close to a ZERO percent chance you'll make your 10-year plan.
Logical Property Management4.9459 Reviews - 4dBrad SeidBusiness MemberLender · Licensed in 28 States · Member since 2026 · 161 posts · 45 votes
@Aurelien Danglejan Welcome, French! San Diego is definitely a challenging market, especially when you're trying to preserve enough capital for the next deal. I work with real estate investors on financing and can help explore DSCR and other lending strategies that may improve the numbers and help you plan for property #2. Happy to connect!
West Capital Lending5125 Reviews - 4dDiana KhanPro MemberAttorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 479 posts · 177 votes
Quote from @Aurelien Danglejan:
Hi BiggerPockets!
I'm Aurelien (most people call me French), and I'm new here after reading a couple of books on investing and property management. I've spent about 15 years producing video games and I'm working toward retiring in 10 years with around $120k/year in passive income from real estate.
I own a condo rental in San Marcos and I'm now looking for my first multi-unit property, ideally a fourplex. I've been underwriting deals in San Diego, and I'd like to stay in SoCal since my family is here. I was recently laid off, so I'm looking at DSCR loans, which unfortunately rules out house hacking.
I'm working through two challenges. First, the cash required feels out of reach. I see some people on YouTube getting started with around $10k, but at today's rates, most San Diego fourplexes I've looked at need 40 to 45% down just to break even (usually above 400k). Second, even if I made that work, I'm not sure how I'd get to the next one in a year or two. Tying up that much capital in one property makes it hard to see a path to property #2.
I'm here to learn from people who've grown their portfolios in expensive markets. If you've found a way to keep building past property #1, I'd love to hear how you did it. Thanks!
I'm glad to be here and excited to learn.
@Aurelien Danglejan, after reading your replies, I actually like that you’re not forcing yourself into an out of state property just because the numbers look easier. If your goal with the first multifamily is to learn hands on, there is real value in being close enough to understand the property, the tenants, and what actually goes into operating it.
I work with real estate investors, and one thing I’ve seen is that the spreadsheet is only part of the deal, especially with value add properties. Before putting that much capital into one property, I’d want to understand the leases and tenants, title, contracts, ownership, and whether the value-add plan I’m counting on can actually be carried out. Sometimes those details change what looked like a great deal on paper.
I like the way you’re thinking about property #2 before you’ve even bought #1, @Aurelien Danglejan. I’m a real estate attorney and investor in Maryland, so I see a lot of deals from that side of the table. Happy to stay connected and follow along as you work toward your first multifamily. - 3dAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Welcome to biggerpockets @Aurelien Danglejan
Good work on getting started . Tons of investors from LA and the bay area usually tend to buy real estate in the midwest because it is cheaper, land-lord friendly, and tech companies investing has boosted the economy.You should do some research and find a good market that has good potential and connect with an investment realtor who can connect you with their team of contractors, lenders, and property managers.
They will also send you off-market and on-market deals that you can buy. Start with turnkey rentals then shift to the BRRRR model and you can recycle your capital and grow your portfolio. Eventually, do a 1031 exchange when you have enough units and exchange it for a large multi-family complex without paying capital gains.
Feel free to reach out if you need help. I own 30 units in Columbus. Happy to answer any questions or hop on a quick call.
ReafCo | Ahmed Group 536 Reviews - Woodland Hills, Los Angeles County · Member since 2026 · 17 posts · 2 votes2d
Welcome, French. That 40-45% down number is really the market telling you that a fully priced, retail fourplex in San Diego is an appreciation play, not a cash flow play. That's not a reason to stop, it's a reason to change where your equity comes from.
A few things that work for SoCal investors trying to get past property #1:
Buy the problem, not the property. Small multifamily with deferred maintenance, below-market rents from a long-time owner, an inherited or estate situation, or an unpermitted unit that can be legalized. Those deals let you create equity on day one instead of writing a check for it.
Look at the lot, not just the building. A 2-4 unit property with room for an ADU or JADU can move the numbers more than any rate buydown. Confirm zoning, setbacks and utility capacity with the city before you write the offer, not after.
Plan how the capital comes back out before you buy. If you add real value and the property reappraises, a cash-out refi or a later 1031 is what funds #2. If there's no realistic value lift, that cash stays trapped.
Protect your reserves. Coming off a layoff, I'd rather see you buy a smaller value-add deal with six months of reserves than stretch into a perfect fourplex that leaves you thin.
We run Cash Home Buyers CA out of Woodland Hills, and most SoCal deals we see that actually pencil right now involve a motivated seller and a fix, not a clean MLS listing. Patience on deal selection is part of the strategy.
- 2dAshley RigsbeePro MemberCustomer Success & Onboarding Specialist at BiggerPockets · Charlotte, NC · Member since 2023 · 85 posts · 33 votes
Welcome, Aurelien! Congrats on the San Marcos condo and your retirement target.
- 2dBrad SeidBusiness MemberLender · Licensed in 28 States · Member since 2026 · 161 posts · 45 votes
@Alev Sharma Welcome, Aurelien! Sounds like you’ve already done a lot of the homework. In an expensive market like San Diego, finding the right financing structure can make a huge difference, especially when you’re thinking about preserving capital for property #2. If you’d like, feel free to reach out and I’d be happy to discuss some lending options that may fit your situation. Best of luck!
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