600k cash...how to allocate in sky high market for investment properties in LA area

[Amy Wei Ru Chang]

Hello!  First post for long time forum reader.  Had a succesful investment with College friend 10 years ago and now we are cashing out and going our separate ways.  The property is in Texas and has been handled by the friend for the most part and I was working abroad for the majority of the time of the past 10 years, so sadly to say I am just starting out on my own.  Right now, I am anticipating 500+k cash soon and is trying to find the best place to put it to work before the interest rate goes down, i.e. acquire worthy assets and hold.  I have been looking around the LA county area with an agent for months and 600k can only get me a 2b2b condo for the most part, if I want to stay away from San Bernardino or other ghetto areas.  A friend who is a mortgage borker has been telling me to split the capital into 2 and buy 2 condos with mortgage instead, paying 50% downpayment.  I didn't like the idea at first but after the tiring search with no good targets at sight, I am beginning to toy with that idea.  If you were me, what would you do?  Newbie desperately needs some advice!  TIA!! 

[Jake Andronico]

@Amy Wei Ru Chang

Congratulations!! Great problem to have ;) 

Are you doing a 1031 or cashing out and paying the tax? That's the most important first question to answer. 

If Texas treated you so well, why would that not be an option? I'm of course bias, but I grew up in NorCal, went to school in SoCal, and ended up in Reno, NV to invest. 

Favorable landlord/tenant laws, taxes do NOT reassess on the sale, land constraints with lots of demand, tourist destination (Lake Tahoe) right next door, consistent job/population growth, very minimal amount of pests, etc. 

It may not make sense for you, but with $500-600K in cash you can buy a property outright and probably cash flow $2-3K per month pretty easily. 

Whatever you decide, I wish you the best of luck!!