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Updated almost 16 years ago on . Most recent reply

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Patrick H.
  • Sacramento, CA
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Is California SFH investing really just speculation?

Patrick H.
  • Sacramento, CA
Posted

I have read through several posts on real estate investing. This site has a lot of helpful information. I am currently a stock market investor and want to evaluate investing in real estate. I am based in California, and there is some suggestion that it is best to start investing in an area close to where I live. I don't mind managing my first investment to gain the valuable experience.

I would first like to evaluate a 3 bedroom purchase, in a middle-class neighborhood, in the $150k range. But from what I read about the 2% and 50% rule, rentals in California (at least my area) do not seem to support cash flow. So do investors in California's middle-class neighborhoods really just rely on speculation?

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Will Barnard
  • Developer
  • Santa Clarita, CA
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Will Barnard
  • Developer
  • Santa Clarita, CA
ModeratorReplied

If landlording is what you are after for RE investing, your better bang for your buck is to loacte cash flow markets in other states such as TX, IN, and other midwest states. Las Vegas has also now become a cash flow area (assuming you buy right).
Wanting to invest in your own backyard is certainly reasonable, but if your local does not support cash flow, why spin your wheels?

The investments I do in CA right now are flips and they can be done if you have the right contacts and perform the proper due diligence.
See my blog post on this topic here:
http://www.biggerpockets.com/blogs/63/blog_posts/1548-rehab-flipping-in-southern-ca

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