Cannot find cash flowing deals in CA

[Sahil Rajput]

Hello BP community. 

I am a newbie to real estate investing and located in the bay area. I am looking for my first deal around Freno, CA area (want to start local). I have spoken to few realtors. 3/2 SFHs are priced around 400k and rents are around 2.5k. I am looking at numbers and cant seem to have any cashflow unless I do a ~75% down payment. Is this the reality or I am missing something? For those who say we can still find cash flowing deals in Fresno, what are those strategies?

[V.G Jason]

You won't find cash flow even if you go to the Midwest. It may pencil on paper, but you'll likely be underwater net of all costs of truly owning a physical asset. Don't just look at excel, look at the cost of owning and the real intention with it. @Becca F is a good example of that in her big post.

Your better bet is to go after a really high quality properties--maybe not Cali--but other areas like Tennessee, Carolinas, pockets of Texas, etc., if Cali is too rich for you. At $350-$400k you'll be hard pressed to find much, no asset is truly intrinsic. In the yester-years that made sense and assets were intrinsic. That's just not going to work when you add up higher rates, less supply, and net population growth. Your better bet is to get in front of entry-level starter homes in a good to great areas, and hold the asset for it's investment strength not it's Day 1 intrinsic properties.