New investor looking for some honest advice/help

[Jonathan Larios]

Hello, my name is Jonathan Larios, and I am wanting to begin to invest in real estate. I am located in Southern California (greater la county) and was wondering what type of investing I should look into. I work a full time job and own a business as well, so I am pretty busy, but have always wanted to invest in RE. I was considering next year buying a multi-family home in the Bakersfield area, but not sure if thats the best thing to do. I do have a descent amount of financial reserves, so thats the reason I was considering doing the conventional put 25% down and rent out the units, but again, I am not too knowledgable of the RE investing world. I have heard about wholesaling (have heard it is very difficult to find leads and follow through on them, etc), fixing/flipping (have heard I should buy cash as market for investors with this is flooded, but don't have that much in reserves), and preforclosure (I am pretty interested in this method as I heard it is not too difficult to learn about?). But anyway, if there are any investors who could help me out and provide some insight for me as to where I should begin and likely succeed. Thanks in advance, and have a great day!

[Sanjeev Advani]

@Jonathan Larios welcome to the community!  Great place to get advice and start investing!  I hope it helps you learn and grow.  

As far as your question, I am in a similar boat to yours in that I am very busy but still need to continue investing.  

Bakersfield, in my opinion, is one of the next opportunities in CA because of our changing world and job requirements.  We have seen a historical growth rate in Bakersfield that is pretty strong, but what I am interested in is our future.  

Bakersfield is projected to 3x growth in the next 10-15 years, and is now being discovered by the MNC's as the transportation hub of CA.  We can reach 90% of CA population within less than 4-5 hour drive of Bakersfield.  

You can see that our growth is looking strong because we now have Amazon bringing their fulfillment center to Bakersfield, along with L'Oreal, Ikea, Ross, Target, Caterpillar, etc.  

On top of that we are looking at one of the largest development projects in Bakersfield history (10 years in the making) starting this year.  The East Hills mall is being renovated into a higher scale mall, which if you see it now, you will be surprised at the current condition of the property.  

Where else in CA can you go and purchase a decent house for yourself and your family for less than $250,000, in a neighborhood with low crime, decent schools, less than 20 years old, etc.? 

Now, looking at your investment strategies I would recommend a more passive buy and hold strategy.  It seems like your income is at an increased level, but now you need to start building in more passive growth so eventually you can retire.  

If you can get an absentee investment property that earns you are 5-6% cash on cash return then you will be in good shape with a steady growth rate on your investment.  Those properties can be found in Bakersfield.  

Looking at Flipping or Pre-Foreclosure, I would say those are more time intensive, unless you are REALLY good at building systems.  The process of the flip isn't necessarily the hard part, it is more the human capital variance that you will have a problem with.  Being that you are already busy, probably not a good idea to take time away from an already steady and growing business, and put time towards a new business that would have a large learning curve and hurt your overall income in the beginning, and therefore your overall return in the long run.  

This is not to say that people don't flip from a distance and do very well with it. 

In my opinion, at the end of the day it seems like you have your base income figured out and you are learning how to grow a business which will give you a higher return on investment, so you need a safe place to park your money in a location that has good potential for growth, and given the terms I have stated above, coupled with the fact that CA is always going to be CA and therefore more valuable than some other places around the country, buy and hold in Bakersfield is a good strategy.  

Hopefully that helps!

If you would like to chat further feel free to PM me as well!