Are San Diego and Orange County too expensive for a beginner?

Buying & Selling Real Estate
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Are San Diego and Orange County too expensive for a beginner?

Bernard Royal
Irvine, CA · Member since 2016 · 10 posts · 3 votes

Hello! First and foremost I want to say how much I appreciate all of your advice ahead of time. It has been about 2-3 months that I have been obsessing over the knowledge and practice of real estate investing. Basically to make a long story short I recently just moved from San Diego to Irvine California for a new job opportunity in which I will most likely be making lower six figures at start, and at the moment do not have any capital to invest. In a years time I'm hoping to have a decent down payment to invest into my first place to live which I have been extremely interested in perhaps a duplex or triplex using an FHA loan as a start to my long term investment career. Now a lot of the books and other material I read, when showing examples of situations of certain purchases I easily know they are not speaking of these purchases in San Diego or Southern California really in general as the price is dramatically different than the price point of many So Cal real estate. I mean many duplex, triplex, foreplex in my area are easily 600k-2m which is almost discouraging for a beginner investor as myself. I mean I'm not to sure what to even do at this point. Not that I wouldn't be able to afford it but that would take much time as well as pretty creative financing to even begin to my understanding. Any advice PLEASE would be absolutely great THANK YOU. (Excuse spelling or grammer as I am currently squezzing this post in while at work on my phone)

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Manolo D.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
10y
Bernard Royal If you buy a multiplex, then the income on rents will be part of your income during the evaluation, if you are earning 100k, and 3 of your 4 plex is earning 2000/mo, then your income will somewhat be 172k/year. Or, at least that is what I understood from it, I am not an investor yet. Ask Logan A, he has a few blogs on house hacking.
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  • Glenn Humphreys
    Real Estate Agent · Laguna Niguel, CA · Member since 2016 · 29 posts · 8 votes
    10y

    @Bernard Royal

    Welcome to Orange County! As you have already noticed, Orange and San Diego counties are home to some of the most expensive real estate in the country. For investment purposes you might want to check out Riverside and San Bernardino counties which are relatively close to Orange County, but potentially offer more affordable opportunities where the ROI is more attractive. I hope this helps.

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  • Joe HomsBusiness Member
    Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Bernard Royal  Welcome to BP. There is a local meetup in Lake forest every month that you should check out. http://meetu.ps/2QWCkh

    If you would like to meet up before then and talk about investing let me know. I am in Mission Viejo and can meet at a Starbucks.

    I just finished purchasing my next project at the court house steps and will get started with the rehab soon.

    To answer your questions quickly I think you should focus on purchasing your first home. More tax advantages there. You can buy in Orange County, just depends how aggressive you want to be? I recently met with a couple that is flipping homes in Orange County with HML's and some expertise they learned. I met with another flipper from Los Angeles that has flipped over 60 homes in the last three years and only uses OPM. It can be done!

    [email protected]949-625-4533
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  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    10y
    Bernard Royal If you buy a multiplex, then the income on rents will be part of your income during the evaluation, if you are earning 100k, and 3 of your 4 plex is earning 2000/mo, then your income will somewhat be 172k/year. Or, at least that is what I understood from it, I am not an investor yet. Ask Logan A, he has a few blogs on house hacking.
    1Reply
  • Polar Prutaseranee
    Flipper/Rehabber · Tustin, CA · Member since 2015 · 433 posts · 103 votes
    10y

    Hello @Bernard Royal. Welcome to the club. I'm a local investor in your neck of the woods. I flip homes in Orange and LA Counties. I've used both hard money lenders and private money lenders. Yes, southern California is pretty darn expensive, but so is California, in general, when compared to most other states. 

    If you're looking for something down here that's more feasible with a tight budget, you can look in the Inland Empire. You'll find more properties there that have a "reasonable" price for you to pick up and flip easily. Demand isn't as high since most people like LA and Orange County a bit more, but that's probably part of the reason why the prices are a bit easier on the eyes. 

    I think if you want to invest down here, at your entry level, you'll probably benefit from a hard money lender. Sure, they take a big chunk out of your check, but 50% of something is better than 100% of nothing. I say you get your feet wet and get in there. 

    Let me, or anyone else here, know if you have any concerns or questions. I've found homes through acquisition companies and through agents. I tried door-knocking but I didn't feel like it was worth my time..not to downplay those who do it..it's a tough job, but finding homes through acquisitions company make it a bit easier..but just make sure you run your own numbers. 

    Good luck on this new journey..it's fun and filled with rewarding experiences..and sure..some stress =). 

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  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    10y

    @Bernard Royal

    Welcome. 

    Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Find them through Google and meetup.com

    Two Great reads, I bought both J. Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbook

    Consider checking out HUD homes for small multi's owner occupied gets first crack.

    Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

    http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

    Good Luck

    Paul 

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  • Brad Rust
    Lender · Ladera Ranch, CA · Member since 2011 · 6 posts · 0 votes
    10y

    Hi Bernard - I would also throw out that while both San Diego and O.C. are competitive, from an investment perspective, I think San Diego is even harder to find attractive opportunities.  San Diego is loaded with seasoned investors that have strong acquisition platforms in place, and margins for investments are tight.  You may have an easier time getting something in escrow in the O.C. or Inland market areas.  Regardless, go for it, utilize local investor clubs (and BP!) and good luck in your endeavors.

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  • Bernard Royal
    OP
    Irvine, CA · Member since 2016 · 10 posts · 3 votes
    10y

    I want to say thank you to all of you thus far and keep the advice coming! I woke up this morning to all of your replys realizing how much of a support system I am so fortunate to have here on bigger pockets and in San Diego/ Orange County alone! As you can tell I am quite new to the page so don't know how to reply to a lot of you on here but I have sent a couple of you private messages sending my thanks. Would love to network with many of you in the OC area and pick some of your brains in exchange for coffee or lunch my treat. Thanks guys you have no idea how much this has helped.

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  • Justin R.
    Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    @Bernard Royal No, I don't think SD or OC are too expensive for a beginning to start IF you're planning to house hack.  If your property is owner occupied, you have two advantages over other investors: (1) your financing will be cheaper and (2) you'll have access to lower down loans.  Properties that won't work for people like me can work for someone in your situation for those reasons.

    The price for those advantages is that you're combining two separate parts of your life: where you want to live and where you want to invest.  You'll probably have to compromise on at least one of those.

    You may want to chat with @Jake Thompson about his experience as he went through this exercise locally quite recently.

    Good luck!

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  • Jake ThompsonPro Member
    Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
    10y

    Hi Bernard, Justin is right, house hacking can be a great route whether you live in san diego or a tiny town like Aberdeen, WA (Where Brandon Turner is from). I just bought my first property in san diego using VA loan. I ended up with money back at closing and I pay less per month to live in my 3 bedroom house than I was paying to rent my 1 bedroom apartment. Feel free to message me if you'd like more details. Just know it is possible, although it might take a little patience to find an acceptable property!

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    10y

    If you are planning on house hacking it sounds like it either has to be OC or you need to work/live somewhere else (unless you like a long commute).   I like the idea of house hacking and agree with @Justin R. that you have advantages over typical investors that would allow you to purchase and profit where a investor that is not house hacking cannot.

    I am also big fan of So Cal investing in general and have posted before on the advantages of So Cal residents investing in So Cal. They include Prop 13 protection, increased values due to high demand and limited supply, benefits of investing local rather than remote (including repairs, expertise of neighborhoods, etc.), ability to cash flow, etc. My family has tried the out of state investing and no longer look for out of state REI (we have one unit left in Alabama - Lake front).

    If I were much younger I would house hack entry level then house hack when I moved up to something a little nice, etc.   Repeat until you reach a quality of home that would be difficult to find that quality as a multiplex.  At that time you may have 3 or 4 multiplexes and have significant net worth and monthly revenue.

    Good luck.

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  • Jo-Ann LapinPro Member
    Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
    10y

    Welcome  neighbor. There is terrific group in Irvine called Women's invest group that meets once a month. Great for learning and networking.

    [email protected]
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  • Aaron Kan
    Irvine, CA · Member since 2015 · 3 posts · 0 votes
    10y
    Originally posted by @Jo-Ann Lapin:

    Welcome  neighbor. There is terrific group in Irvine called Women's invest group that meets once a month. Great for learning and networking.

     Is that group only women allowed? 

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  • Jo-Ann LapinPro Member
    Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
    10y

    No not at all

    [email protected]
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  • Bernard Royal
    OP
    Irvine, CA · Member since 2016 · 10 posts · 3 votes
    10y

    @Jo-Ann Lapin I've seen your group before on Meetup. When is the next gathering?

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