25 year old looking to invest in my first property
San Diego, CA · Member since 2018 · 1 post · 0 votes
25 year old looking to invest in my first property
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Originally posted by @Ramon Flores:
@Alex Olson I live in Los Angeles and I would love to purchase MFH here but there is no cashflow. It pretty much all about appreciation here.
My advice is to house hack. Get a rental with lots of rooms and charge your roommates. Save all the cashflow and purchase your own SFH with lots of rooms and house hack there as well. Rinse and repeat. Hope this helps!
I see the claim that LA, San Diego, OC, or San Francisco do not have decent cash flow but historically this is incorrect. It is incorrect because of the appreciation. Examine the BP market spreadsheet that used for its long duration 2010 to 2018. Look where it places the cash flow of these cities. This is a relatively short period of time and it has a flaw in its calculation related to prop taxes. what do you think it would have depicted if it used 15 years or 20 years? Use Case Shiller to look at various durations to see what it shows. a quick examination of Rent Jungle would enlighten why the cash flow is so great in these cities. Examine the rent increase since 2000.
Cash flow is not defined by the initial cash flow. Actual cash flow is the cash flow achieved over the entire hold period and is not finalized until the property is no longer owned.
My guess is each of the 4 cities I listed would be top 5% for cash flow for holds of 20 years or longer. In the BP spreadsheet, you can see the trend and project it out for a longer duration.
I believe virtually all markets can have RE investment opportunities for smart investors. I believe newbies should start local, where they have some advantages. This includes newbies not from coastal Ca should not start in coastal Ca. However, when a post indicates the cash flow is bad, when historically it has been outstanding with every resource showing this, I feel that the error should be pointed out.
Every one of our San Diego properties currently has a rent to purchase ratio over 1%, many over 2%, one LTR over 3%, and one STR (prior to Corona) over 4%. Seems like they cash flow just fine.
Good luck
6 Replies
- Rental Property Investor · Los Angeles, CA · Member since 2016 · 172 posts · 122 votes6y
@Alex Olson I live in Los Angeles and I would love to purchase MFH here but there is no cashflow. It pretty much all about appreciation here.
My advice is to house hack. Get a rental with lots of rooms and charge your roommates. Save all the cashflow and purchase your own SFH with lots of rooms and house hack there as well. Rinse and repeat. Hope this helps!
- 6yTwana RasoulBusiness MemberReal Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
@Alex Olson I highly recommend house when hacking starting out, before deciding to go out of state. Contrary to popular belief, investing in San Diego is just as much within reach as investing in alot out of state markets. In out of state markets you'll have to come up with around $20k-$40k for your first 20-25% investment down payment. If you purchase a duplex here for instance with fha financing (3.5% down), even on a 700k property for instance, it is only around $25k down. It is tempting to go for the instant satisfaction of initial cashflow but for the average investor, you can build more wealth here in San Diego in the long term starting out with neutral or even slightly negative cashflow than investing in alot of other markets. Of course I'm more biased towards San Diego but I believe in it that's why most of my investments are here.
P.S. it is much easier to qualify for a high loan amount on a duplex than one would think since the rent from the second unit can be used as your income in the eyes of the lender.
Compass5122 Reviews - Member since 2019 · 21 posts · 10 votes6y
@Alex Olson
Hey there,
I’m 25 and in the east coast that went from NYC to Connecticut so I’m right on par with your situation. Really interested in hearing about what route you decide to follow through on. Good luck!
Originally posted by @Ramon Flores:
@Alex Olson I live in Los Angeles and I would love to purchase MFH here but there is no cashflow. It pretty much all about appreciation here.
My advice is to house hack. Get a rental with lots of rooms and charge your roommates. Save all the cashflow and purchase your own SFH with lots of rooms and house hack there as well. Rinse and repeat. Hope this helps!
I see the claim that LA, San Diego, OC, or San Francisco do not have decent cash flow but historically this is incorrect. It is incorrect because of the appreciation. Examine the BP market spreadsheet that used for its long duration 2010 to 2018. Look where it places the cash flow of these cities. This is a relatively short period of time and it has a flaw in its calculation related to prop taxes. what do you think it would have depicted if it used 15 years or 20 years? Use Case Shiller to look at various durations to see what it shows. a quick examination of Rent Jungle would enlighten why the cash flow is so great in these cities. Examine the rent increase since 2000.
Cash flow is not defined by the initial cash flow. Actual cash flow is the cash flow achieved over the entire hold period and is not finalized until the property is no longer owned.
My guess is each of the 4 cities I listed would be top 5% for cash flow for holds of 20 years or longer. In the BP spreadsheet, you can see the trend and project it out for a longer duration.
I believe virtually all markets can have RE investment opportunities for smart investors. I believe newbies should start local, where they have some advantages. This includes newbies not from coastal Ca should not start in coastal Ca. However, when a post indicates the cash flow is bad, when historically it has been outstanding with every resource showing this, I feel that the error should be pointed out.Every one of our San Diego properties currently has a rent to purchase ratio over 1%, many over 2%, one LTR over 3%, and one STR (prior to Corona) over 4%. Seems like they cash flow just fine.
Good luck
- Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes6y
@Alex Olson
I’m from Seattle too, but now live in LA. My first deal was a house hack duplex in Burien. I went with a house hack because at the time it was my only option. I had $10,000 to my name and my credit was ok, but not great. Looking back I’m glad I didn’t try to buy out of state for my first property.
- Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes6y
@Alex Olson
For your first investment, I’d recommend not investing remotely. Look up how that works for others and you’ll find out that it doesn’t work so well. House hacking is a great way to start, you’ll find out quickly if you like landlording or not.
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