First Time Buyer - Now a Good Time? (Santa Monica, CA)

[Lance Knapp]

Hi All,

This is my first ever post on Bigger Pockets and marks an exciting time for me. I am a commercial real estate analyst living and working in Santa Monica, CA. For about 6 months now I have been absorbing any educational information I can regarding real estate investing. Also, I have analyzed and viewed 50+ deals in my surrounding areas.

I am mainly looking at single family, duplex, triplex and fourplex properties. Many of the deals I see are cash flow negative after expenses and debt service (principal and interest on the mortgage). I have found a few deals that are cash flow neutral. On these neutral deals, I basically make $0 a month, but I get the benefit of my tenants paying off my mortgage, interest write offs, and the potential for appreciation.

Trust me - I want more than anything to buy an investment property, but I am a bit discouraged by the lack of cash flow and high prices in my surrounding areas. Also, I have my concerns regarding the US economy. One could argue that years of quantitative easing and low interest rates have masked underlying issues that could lead to a magnified and painful recession somewhere down the line.

Can anybody provide me with some advice and words of encouragement OR caution?

Really appreciate the support and help. Thank you all.

Best,

Lance

[Alex Craig]

@Account Closed @Roger Poulin  I don't know if "on fire" is the term to describe Memphis, but certainly not cold.  Memphis is having their own boom too with over $4 billion dollars in construction projects either just wrapping up, in progress or about to start.  These projects will certainly improve the economy and quality of life here.  When I think of "on fire" I do think of Nashville as the downtown is remarkable-crane's are everywhere. I can't wait for GNR to announce their concert date so I can get up there.  That being said, when a city is "on fire", so are the housing prices.

I have been very aggressive the past 3 years adding to my portfolio that I started in 2007 and took a break early in 2009.  I network with a lot of local investors and we are all doing well.  It is a matter of buying in the right area and managing the property right.  If you need a concealed carry permit and a Kevlar vest, then unless you are some sort of Property Manager Warrior with a thrill for adventure, then you will lose 95% of the time.  The other 5% where you can make money is broken out in 2.5% change the house burns down shortly after you buy it and the insurance payout is far more then you have into it or the 2.5% chance that you get that tenant that has a fixed income and can afford the $595 in rent and is to lazy to move.

Here is the 4 billion dollar Memphis project article: http://www.commercialappeal.com/business/developme...