How to Start in SoCal?

Question

I'm new to all of this, but am so very willing to learn.

I have vision... at the moment I've two specific properties near me (Pasadena) that I'm interested in investing in (one or the other) to develop/build new homes (7 houses or 10 condos) and then sell.  However, I'd have to partner with other investors (I'm on the "Poor Dad" circumstance of the spectrum with a growth "Rich Dad" mindset for the moment) in order to make it happen (the goal being to use funds from this first experience to put towards next property... to be rental... and continue in creating a portfolio).

My question to those of you who may have started in similar circumstance (no money, seeing great potential with a zillow opportunity with land for sale for residential development nearby, etc.). how do take the next step?  Literally.  How do you find investors that would be willing to go in on such a deal with you?  And I mean the plural... investors... because SoCal area is a bit pricey.  Yet, great opportunity brings about more great opportunity.  So what did you do?  How do you find worthy investors that see the potential, too?  How do you contact them?  How do you connect with them?

[am open to learn, am open to be mentored]

Bruce Woodruff · Answer

I would not recommend starting off (as a complete newbie) with a project that makes you, essentially, a developer.....that is a huge accident waiting to happen. Sure the scope is huge and you can make a lot of money...what newbies never think about is that you can lose a lot of money too.

Instead, take on a SFH or Duplex first and learn the ropes.

And since you have no money (none?) you need to think about why an investor would want to partner with you. Do you possess some incredible construction skills? Do you know an insane amount about Real Estate that makes you valuable? Are you a business phenom with a Masters?

Theoretically speaking, why would I, or anyone else on this forum, want to give you a million dollars to play with? That is the question.....

Noah Bacon · Answer

Hi Kristina! Welcome to BiggerPockets and thanks for joining!

Here are some tips for networking and making the most of your account.

1) I'd fill out your profile fully before you do anything else! As that will at least help folks that you reach out to know that you are a real person, with a picture and professional bio. Particularly be sure to include your goals for real estate investing so that folks can help you.

2) Go to the Search bar, and look for some local members in your area! Reach out to a few of the folks, perhaps those with hundreds or thousands of posts in this forum, and connect. You can do that here.

3) Check out some of the local meetups that you can find in this forum! There are so many so be sure to filter by your location.

4) Review this comprehensive 64 page deck on the state of the 2023 housing market (in your resource page as a member of BiggerPockets!) for real estate investors put together by Dave Meyer and available for all BiggerPockets members.

5) Consider meeting with a few agents in your area even if you are just getting started! An investor friendly agent can do all sorts of helpful things, like setting you up with a search for properties or connecting you with folks who have recently done deals like the ones you want to do.

Scott Mac · Answer

You want to build them yourself?

Or are you talking about engaging the services of an Architect and a General contractor?

Lenders may balk at not having a GC experienced in this.

How did you come up with 7 houses and 10 condos?

Why not all condos or all houses?

These are questions that investors may ask?

Is the area Brownfeild?

Is the area not officially Brownfeild, but a Phase I Enviro will flag it as Brownfeild from things during WWII (for instance).

Did you know about doing a Phase 1 Enviro? If not what else are you missing that could come up to bite you and drive this project into bankruptcy and foreclosure?

I say this because it seems like a big bite for a newbie who has never constructed before.

Maybe control the land and find a GC as a partner to develop it--but beware of Brownfeilds.

Drawing up a budget (and timelines) with no experience in this, from due diligence to sale of the final home -- is an awful big bite even for an experienced developer with a good team in place--its still hearding cats.

just my 2 cents.

Sebastian Marroquin · Answer

The short:

You have to bring something to the table:

1. The Deal (good property with good numbers and good potential) usually off market.

2. The Money (Hard money, private investors, HELOC on your personal home, qualify for a loan, or CASH)

3. The experience/ knowledge to put it all together

* Right now: I am sorry to be blunt and hopefully you take my comment in stride and learn from it: You lack all 3.

You can find deals on Zillow and or MLS (but every other investor can also... ) so, why do you think 1000 other investors have not made an offer on that property?

It's not always black and white and maybe that is a good deal, but based on scope of work or timeline, investors see the opportunity cost and choose to go elsewhere.

To recap :

1. Find a good deal or

2. Find the money or

3. Learn the know how and put it all together

Books, YouTube, mentors, partners

Hamp Lee III · Answer

Welcome to BiggerPockets!

I'm doing this now with a group of friends. We each are putting in about $5K. I've formed the LLC and am waiting for the operating agreement to be reviewed by an attorney and for the bank account approval. Hopefully, we'll start looking at properties in the next few weeks.

We're using two of J. Scott's books and will use our experiences toward the fix and flip.

With the money we've raised, we're not doing a full gut job, but it will provide some experience and hopefully, a few dollars as well.

I have a video that explains the project details.

I wish you all the best.

Michelle Crochet · Answer

Hi Kristina!

It's great to hear that you're eager to learn and explore opportunities in real estate investing! Finding investors can be challenging, but there are several approaches you can take:

-Network: Attend local real estate investing events and meetups to connect with other investors who may be interested in partnering with you. Joining online forums and social media groups related to real estate investing can also be helpful.

-Reach out to family and friends: You may know someone who is interested in investing or who may be willing to introduce you to potential investors.

-Consider crowdfunding platforms: There are several online crowdfunding platforms that allow you to pitch your real estate investment opportunity to a large group of investors.

-Hire a mentor or coach: A mentor or coach can provide guidance and help you connect with potential investors in their network.

When contacting potential investors, it's important to be clear and concise about your investment opportunity, your goals, and your track record (if you have any). Be prepared to answer any questions they may have and provide a detailed plan for how the investment will work. Also, make sure to have an attorney review any agreements or contracts to ensure that everything is legally sound.

Remember, finding investors takes time and effort, so don't get discouraged if it takes a while to find the right partners. Good luck, Kristina!

Dan Portka · Answer

@Kristina Rogers Whenever I see properties sitting on the market/zillow for awhile, I have to ask "why... Is there something wrong with this property?"

To answer your question. Finding the deal is always the hardest part. If it really is that great, take it to a local meetup, post in facebook groups, throw it out on BP. But you're going to need to convince everyone that your vision is profitable, is it? I'd recommend connecting with some local developers to get their thoughts/potentially partner with.

Becca F. · Answer

@Kristina Rogers

Welcome to the world of real estate investing! I think building 7 homes or 10 condos is very ambitious for a first time investor.  I agree with Bruce on this one - buying a SFH or duplex is much more do-able. If you don't have a primary residence you could house hack (rent out rooms in SFH, buy a duplex and live in one side, rent out the other) and get an FHA loan at 3.5% or conventional at 5%. When you said you have no money does that mean literally no money for a down payment?

With partnering with someone I think you need bring something to the table, like Bruce and Sebastian commented. I'm just now starting to be a little okay asking someone to partner and I have 4 properties. I've used my own money, leveraged with cash out refinances so I have some skin in the game. I could show my prospective partner how my investments are performing and here's my proposed deal. If I had $0 or no skills (I'm not a licensed contractor) would someone trust me to invest thousands or a million dollars of their money?

You could also look into out-of-state investing where prices are much lower than California but you would need a good trustworthy team in place and get to know the local market there. Keep on learning and networking. Good luck!

How to Start in SoCal?

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