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Updated almost 11 years ago on . Most recent reply

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40
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1
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Harry Campbell
  • Los Angeles, CA
1
Votes |
40
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How Should/Could my friend invest in RE?

Harry Campbell
  • Los Angeles, CA
Posted

So I get questions from people from time to time asking me about how they can invest in real estate? I live in CA and so do most of my friends that ask me about this and I'm not sure what to tell them.

I bought a condo in San Diego at the bottom of the market, no cost refi'd twice and now rent it out for $300/month cash on cash return. There's nothing like that available where my friends and I live now in SoCal - LA, OC, SD, SF, etc so should I tell them to look for SFH's or 2-4 unit properties in other states?

Personally, I'm looking at investment opportunities in other states but I know a lot of my friends who are doctors, lawyers, etc don't have the time/interest to do that. They are basically looking for someone to give their money to and make money off real estate?

Now I know these people exist but how do you find someone like that that's good at what they do and also trustworthy? I'm sure there are plenty of people willing to take 50-100k off your hands :)

I think most of my friends also want to invest in something relatively local since they aren't big time RE dealers or anything like that. They're probably more comfortable being able to drive by the property once in a while knowing that they own a piece of it even if they don't have to do any work for it.

So what would you tell someone like this?

Most Popular Reply

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1,318
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704
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Darrin Carey
  • Lender
  • Dayton, OH
704
Votes |
1,318
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Darrin Carey
  • Lender
  • Dayton, OH
Replied

@Harry Campbell The hardest question is "Who do you trust?" Trust is built over time. I know I am trustworthy, but you don't know me, and should not assume I am.

Referrals will help, and so will doing your own due diligence about deals. I sold a property to a new landlord last month. He was going to skip the Inspection, but i encouraged him to get one. (cost me $906 to make a repair a flashing leak). It was the right thing to do, and I hope he comes back for another property.

I just posted a property for sale in the forum. http://www.biggerpockets.com/forums/517/topics/124641-updated-single-family-rental--dayton-ohio

You should not believe anything listed except the price. I said the rent is $700. You should talk to a local Prop Manager or 3 and get their opinion. I might be high, I might be low. If they say the rent is $450, then I'm just lying. You should get answers from $675 to $750.

I also said the property taxes are $119 per month. You can check the Auditor to verify. Insurance at $34 per month. Get a quote, or ask for mine.

If you find someone whose initial information is good, you've found someone you may be able to work with.

Local in SoCal is harder. I lived out there, and it was a struggle to try to find numbers that work. Rehabbing was better, but that's time intensive.

For cashflow, it seems like the midwest is the place to be. To invest out of the area requires some time to build a team you can trust.

So it's a question of comfort with the trade-off. Lower return, but local comfort, or a higher return on a non-local investment.

Either answer is right, it's just a question of which is right for you and your friends.

  • Darrin Carey
  • Loading replies...