Starting out in Los Angeles, where/how to invest?

Question

Hello everyone. Would like to ask the community for some advice on starting out. I live in Los Angeles, have about $75k, excellent credit, and great W2 income. I am looking to start out in REI and could use some guidance. Of the different options I've read buy and hold is most appealing. I'm not sure I would have enough capital to build a strong portfolio of rentals just yet, so I'm considering flips as well. The problem is everywhere I read Los Angeles/Southern California aren't the best choices when it comes to either option. Investing out of state seems appealing because of the cash flow possibilities. Obviously the down side is being so new I'm not sure it'd be a wise thing to do. One other possibility I've looked into is investing in not-so-desirable areas (i.e. Compton, Inglewood, Watts, etc). Can anyone chime in on this option?

Any advice/guidance would be greatly appreciated.

Jon Huber · Answer

@Jon S.  I have to agree with @Matt Rosas . This is why I bought my primary in LA, but invest out of state. There are exceptions, and you will find some people that are investing in LA. If you attending the meetup tomorrow ( Jan 25th - LA Meetup ) you may find the chance to discuss in more detail.

Elizabeth Colegrove · Answer

Welcome!

This is an amazing and vocal community. You will find TONS of different opinions. Everyone has their own strategy and style.

We are buy and hold investors with more expensive houses who love leverage and personal properties. I had an amazing opportunity to talk all about our strategy in podcast 103. The one thing we all agree about is the fact we invest in real estate. Beyond that everyone disagree in the method. So poke around in the podcast, blogs and forums!

If something strikes you fancy check out their signature (oh and don't forget to fill out yours). This is a great way to leaner more about heir resources and what they offer!

Jon S. · Answer

Thank you everyone for the great advice.

@Elizabeth  Colegrove I will definitely check out that podcast, thanks!

Matt R. Thank you for the tips!  Also, great website and I love the name.  Any advice on great locales for flipping?  IE, OC, etc?  Also, do you manage your own properties or do you use PM companies?

Ali Boone · Answer

I don't have any recommendations because I've never flipped. There's plenty of people on here though I'm sure could help out if you post towards them.

I always use PMs. No desire to be a landlord!

Matt R. · Answer

Right on Jon. Flipping in LA is a remarkably tight market but could loosen up IDK. Repositioning properties is also an option in LA. Keep in mind 1/2 of LA in the SFV.

The idea of getting two is awesome.

There was a surfer dude I met 15 years ago. I restored some of his classic surfboards. I looked him up the other day as I remember he did real estate. Turns out he has sold over 4000 reos in Socal since 2002. Perhaps see if he has any flipable or others. Leo Nordine is his name. If it is the right time he will tell you if not he will tell you as well. Happy hunting!

Ali Boone · Answer

Hey Jon, good questions!

I think flipping can actually be pretty lucrative around LA. There are people around who do it. It's higher capital flipping than most other markets, but I've always thought flipping is one of the best methods out here to do. The only other potential would be to invest for appreciation, as Matt was alluding to.

If you do want straight cash flow though, out-of-state is where it's at. I've only bought out-of-state personally and it's worked out fine. I wouldn't sweat about it just because you're new either....it can be done really easily and a lot people I know who are doing it are newer and doing fine with it.

It completely depends on what you want- cash flow, appreciation, immediate capital, etc. I'd watch out for Compton and places. That is a whole different animal that can be successful, but requires a whole extra layer of experience and knowledge....would be a really tough route for anyone new to investing.

Matt R. · Answer

Welcome to bp. Will you better off investing long term in LA vs most out of state cash flow markets? Based on historical data that answer is clearly yes. If you think using historical data is for suckers then fortunately cash flow markets are a dime a dozen. You can find a cash flowing property in many states with ease unlike LA.

Many experienced investors are looking outside of California and many more wish they never did. There is not one right answer necessarily for everyone. 75k down could get a nice cash flowing property with some effort in LA. Keep in mind one or two parking spaces in that LA property could make more cash flow than the entire out of state cash flowing property. When you tell your kids one day where you made your real estate investments....what area do you think they would hope you picked? Good luck with your search!

Starting out in Los Angeles, where/how to invest?

Most Popular Reply