Live in a Expensive Market?

Question

Hello BP community, my name is Jorge. I am located in the city where dreams come true: Los Angeles, California.

I am currently looking for my first property MFH (2-4 UNITS) Duplex, Triplex, Fourplex, I have been looking for properties in the Los Angeles area and would like to know your point of view.

Should I move to a cheaper market and have more buying potential and more units therefore or should I focus on the local market and get fewer units but higher income?

Thank you

Brock Mogensen · Answer

I think it depends on your investment goals but you can always invest in other markets while living in LA.  You will want to ensure you have a good PM connection in that market but it is definitely doable.

Darius Ogloza · Answer

We do fix and flips in Marin County.

Jorge Ramsés García · Answer

I completely agree, investing out of state could seem like a more advanced version for expert investors in Real Estate. What is your strategy right now, do you invest in California?

Darius Ogloza · Answer

We have invested in cheap market and in expensive ones.  After many years, we now focus only on expensive ones. In our market, minimum purchase price these days is about $800K-$1 million for a fix and flip.  Cost of entry is high but benefits from being in the market for a while are, in my opinion, unbeatable.  For example, a paid off single  family residence 1,800 square feet on a, 8,000 square foot lot in a good school district can throw off $50,000+ in free cash annually.  Appreciation has been a huge plus because people want to live here.  Where else are you going to find that kind of result?  Elsewhere, you will have 5 roofs and water heaters and HVAC systems to worry about instead of one.

Robert Chuang · Answer

@Jorge Ramsés García Hey Jorge, I think is more so a personal question for yourself. I had to purchase a property in Milwaukee and ended up burning down to realized I didn't want to invest out of state lol. Or the experience horrified me. Even then, I am still okay with investing out of state if I come across any good deal. You should expect to work out the kinks (people and resources) when you are investing out of your area. Investing in LA is expensive, however, you can feel, see, and touch your properties. Although sometimes the numbers don't work, there is always a deal out there.