Aspiring Real Estate Investor in SoCal

[Jon Khalil]

Hello BP! My name is Jon Khalil, and I am a 21 year old aspiring real estate investor based in the Orange County area. I am new to the community here and am looking to create meaningful, and long lasting relationships with other professionals in the Real Estate industry. More specifically, I am seeking individuals who would be willing to mentor, and guide me to the right decision making as I start my journey in Real Estate Investing. My current interest is buy and hold real estate, and developing a portfolio of cash flowing rental properties to achieve financial freedom. For anyone who might share the same interests/goals as me, please contact me! I am looking to do whatever it takes to achieve my financial goals, and would enjoy collaborating with others to meet their goals as well.

[Dan H.]

@Jon Khalil I wanted to clarify something that @Ali Boone indicated.

She indicated that "you aren't likely to find any {cash flow} in SoCal". The more accurate statement is that it is challenging to find initial cash flow investing in coastal So Cal with high LTV numbers.

Here are why I go with the clarification:

1) If you purchased virtually any buy n hold property in coastal So Cal 5 years ago and are getting market rent today it would be cash flowing quite lucratively.

2) If you have low LTV virtually any property will cash flow. Your Return on Equity (ROE) could be horrendous and you would not be leveraging your assets but your cash flow would be fine.

3) It is possible in many coastal So Cal areas to achieve small cash flow on retail duplex to quad units.  I see them semi regularly but most do not meet my purchase criteria.

4) There are a lot of SFR. With so many SFR there are people who acquire these properties significantly below retail. So if you can purchase significantly below retail you can obtain positive initial cash flow.

Most So Cal buy n hold RE investors are relying on continued property and rental appreciation.  Historically this has proved very reliable long term but especially the property prices have experienced short periods of depreciation (virtually always less than 5 years) and longer periods of stagnation.

I make no claim as to continuing property appreciation as I could make a decent case for the RE market entering a period of stagnation, the market continuing to appreciate, or the market to depreciate some.

However, I am still confident of rent appreciation in my purchase area (San Diego) for at least the next few years:

1) rents lag property appreciation. 2) vacancy rate is real low. 3) cost to add more than ADU is high - it costs around $100K to break ground for residential in San Diego (permits, surveys, etc.). 4) Minimum wage increases already approved. 5) one of the best weather climates in the US. 6) rising population: one recent study had San Diego as 13 highest population increase of large US cities. 7) geographically constrained: Constrained by Mexico to the South, Pacific to the West, Camp Pendleton to the North, and the East quickly gets harsh. 8) good and varied employment: Hard to imagine an employment category melt down that could impact the range of employment in San Diego. 9) environmentally diverse from mountains to desert to beach to happening urban center.

Last weekend I sent out 2 rent increase notices. Both are under market and even with the increase will still be under market (they will still be more the $100 below market). The property (both increases are two units at the same property) already cash flows pretty good but will cash flow even better in a couple months when the rent increases go into affect.

Good luck