Los Angeles, CA · Member since 2016 · 7 posts · 3 votes
Hello BP Community,
I recently relocated from Philadelphia to Los Angeles and, needless to say, I was shocked with the prices of property in and around LA. I am sure that this has been discussed before (if yes, please include a link in your reply).
As a new investor looking for cash flow from rental properties, what areas do you think would be the best to look in and research that would offer both reasonable pricing and cash flow? Ideally duplexes, triplexes and overall multi-family housing.
I guess it wouldn't be encouraging to tell you that I work with a lot of LA-ers who are buying in Philadelphia, huh?.... :)
You're going to be hard-pressed for cash flow anywhere in SoCal. Some folks are bound to chime in here and say you can find it, but I've not actually seen them present anything to support it. The only areas I've heard of potentially cash-flowing are Bakersfield and Fresno (all more northern). Other than those and maybe a couple of others, you'll be getting into extremely sketchy areas to make cash flow projections work here. Most people I know around CA that want cash flow are buying out-of-state. That's what I have always done myself.
Maybe some wholesalers or flippers can chime in about any options for buying a dumper and fixing it up as a way of making cash-flow happen here.
I guess it wouldn't be encouraging to tell you that I work with a lot of LA-ers who are buying in Philadelphia, huh?.... :)
You're going to be hard-pressed for cash flow anywhere in SoCal. Some folks are bound to chime in here and say you can find it, but I've not actually seen them present anything to support it. The only areas I've heard of potentially cash-flowing are Bakersfield and Fresno (all more northern). Other than those and maybe a couple of others, you'll be getting into extremely sketchy areas to make cash flow projections work here. Most people I know around CA that want cash flow are buying out-of-state. That's what I have always done myself.
Maybe some wholesalers or flippers can chime in about any options for buying a dumper and fixing it up as a way of making cash-flow happen here.
Jacob Baboun Hey Jacob, I think it's a great idea for you to invest in rentals. With that being said, Ali Boone is correct with her analysis as she suggests possibly getting into out of state investments. You're better off getting a solid cash flow by avoiding the SoCal market at this moment. Unless of course you find a deal through a wholesaler as Ali also suggested.
--I am a Philadelphia Suburbs native as well. I moved to Santa Barbara last year to attend college and pursue my goals. It is great to meet another brother of Philadelphia with RE interests in the SoCal area. I myself am actively finding deals in the Lompoc - Ventura area for cash investors who usually have plans to fix & flip the properties etc.
I will certainly keep an eye out for any MF homes that I come by. Feel free to send me a colleague request or message if you would like to chat my friend.
Best,
Blake Dalessio
There are cashflow opportunities but you would need to travel inland or into the central valley. High desert communities, or central valley (Bakersfield, Fresno) it is still possible to get cashflow. All of CA has expereinced some appreciation and prices are higher than the bottom. But there are areas which have recovered less quickly and could have more upside appreciation potential.
Hi @Jacob Baboun. There are opportunities in CA as @Gene Hacker said and plenty out of state. Look for cities in safe and economically diversified areas with above-average income and population growth. It's can also be safer to diversify your investment properties across the country.
I recently relocated from Philadelphia to Los Angeles and, needless to say, I was shocked with the prices of property in and around LA. I am sure that this has been discussed before (if yes, please include a link in your reply).
As a new investor looking for cash flow from rental properties, what areas do you think would be the best to look in and research that would offer both reasonable pricing and cash flow? Ideally duplexes, triplexes and overall multi-family housing.
Thank you,
You can find cash flow all over SoCal. Some others maybe are not aware of all the areas and it is a big place with 18 million residents. Many example initial cash flow SoCal locations have been presented on BP. Today many of those areas are an hour or more outside LA/OC proper. How does the Palm Springs area suit your fancy or check oceandevelopment .com in South LA. Keep in mind initial cash flow is one investing metric and long term profits especially for Socal, the exact location might be much more critical. (Rent growth, redev, gentrification etc.) Generally speaking it takes more vision or creativity in LA for investors to locate and or create initial cash flow vs the non competitive areas.
Someone told me that if it doesn't cash flow when it is 100% financed, then it means it did not cash flow, in another note, if you finance only 1% of the property, then your cash flow is enormous. Cash flow in LA? What's that? hehe.
@Ali Boone first off, I love your company's name! and thank you for your input. For me, out of state is not yet an option since this will be my first property and I want to give it my full attention. Ideally it will be close to where I live but finding a good deal is proving to be a hard task.
@Gene Hacker thanks for your input, I'm open to suggestions about areas that haven't recovered quickly. I am trying to buy sooner than later.
@Leslie Pappas the plan for the long run is to diversify. My main parameters for LA and around LA is decent school zones and above average income, but this houses come with a high price tag that kills your cash flow (unless a good deal is found and there's always a good deal somewhere).
Thanks everyone for your input, please feel free to message me suggestions and send friend requests
@Jacob Baboun did you think about buying a 2-4 plex and living in one of the units?
You could look for something in an area that you want to live and make it cash flow in 1-2 years. Search for something that is not in a rent control area and with rents below market.
It won't be easy to find the deals, but there are some out there from time to time. You have to be prepared to jump on them when they come on the market.
I see them once in a while, and they disappear fast :).
I have a couple clients looking for cash flow in the LA area as well. We have found some deals in San Bernardino County with 1% rents. Some commercial deals are better as well. Do you have any downpayment funds? An investor purchased property would need 20-25% down typically. Try looking a niche markets, and farther out of LA. Let me know if you ever want to chat about MFR.
I have a couple clients looking for cash flow in the LA area as well. We have found some deals in San Bernardino County with 1% rents. Some commercial deals are better as well. Do you have any downpayment funds? An investor purchased property would need 20-25% down typically. Try looking a niche markets, and farther out of LA. Let me know if you ever want to chat about MFR.
Yes they do exist and even on the MLS. I don't know the odds but somewhere around 1 out of 100+? Understand some out of area sellers create a false dilemma as part of their sales pitch so sort of REI deniers for SoCal cash flow as this would be obvious competition if their potential clients knew better. Here is one picture below of a 1% rent to price ratio I am looking at today or Monday. It is pretty much turnkey condition as is and rents easy...very low rental inventory. This is not in a ghetto or Beverly Hills. It is almost exactly 60 mins from my LA front door. Is something like this easy to find...for me medium easy....but I am native and know many locations in Socal that probably 99% of non natives don't. After I pick up a couple I can share the exact location and others can follow if they like or at least know you can get the same cash flow in SoCal as these far away places offer.
One thing I know for sure, the taxes will be much lower and the area will be many levels better than the average POS hood I see the out of state sellers try to trick these Cali uneducated buyers in. There is nothing wrong with investing far away, I have before. Is it more profitable than SoCal? Historically speaking on average absolutely not.
Jacob Baboun, you really have to know SoCal to know where those cash flow properties are. I've live here all my life and know where those areas are.
PM me. We can team up.
@Jacob Baboun I am an agent working California area. There are definitely opportunities in all sectors here in CA from commercial to residential income. The problem is access to the deals you like. For example, I know of pockets where people are still pulling 7+ cap rates and cash on cash can be in the double digits.
We are working with investors right now that are very pleased with their returns, however, instead of finding the deals they like on a regular basis, the deals are much farther and few between and when they do pop up they go quickly, or they don't even reach the market before they are being sold.
I have been working heavily with multi-family investors lately, and we are still finding deals in the LA area and all through Southern CA.
If you are interested, I would like to talk more. Please feel free to contact me through BP and we can speak further.
If your making more money here in California I would recommend purchasing out of state rentals but what ever you do try to buy free and clear with out leveraging, dont go out and buy 10 properties, buy 2 free and clear.