I want to buy in California

[Mel Rosario]

Hello, I am an inefficient newbie. I want to buy in California, but after all expenses accounted for, I still have to make a downpayment of 30-40% to even generate a small positive cash flow. i'm currently looking at a SFR 2bd/1bth for 380k. Rental market is about 1500 but hoping for 1600 for similar size. No HOAs.

estimated expenses:
Insurance 60/mo
property tax maybe 380/mo

I think i have to negotiate this property down to about $350k, 40% down to just break even. I like this property since it's less than 5 miles to the beach, should be easily rented (i have multiunits closer and rents fast). I'm planning on holding it and hoping for some type of appreciation. With these numbers, i'm not too negative where i'm bleeding.

Any way this may be a good investment for California?

or use the downpayment money, buy a condo cash? (this may generate more money in the short term 5yrs)

[Steve L.]

Mel -

That sounds like a very bad investment from the numbers you have given. You will have other expenses (management, vacancies, maintenance, etc) and be lucky to net $750/mo with the huge $350/mo tax bill.

I would suggest branching out into other areas of California where the waters are much more friendly from a cash-flow position.

You'd be a lot better of investing in hard money loans if you do not want to own far away.