Affordable Investment properties Buy & Hold near San Diego, CA

[Denny Moody]

Hi all,

I'm just starting to dive into all the great info here and I would like to start looking for properties to buy and hold for cash flow.

I live in San Diego, CA and from what I can tell, it seems almost impossible to find a property around here that you could rent out and be cash flow positive. (Median home value is around $500K and median rent is about $1300).

I was wondering if anyone has any advice on more affordable real estate opportunities within a 5-6 hour drive of San Diego. That radius covers most of Southern CA and parts of Arizona.

I would like to find a property in the $30-60K range. I've been looking at places like Phoenix, Lancaster, and Bakersfield.

Any thoughts?

Thanks,

Denny

[Aaron Mazzrillo]

Originally posted by @Jay Hinrichs:

@Mike D'Arrigo
the borrower was taking cash out.. so these were cash flowing and getting CASH out at close..

I've done that right here in California many times. It is all a function of becoming a better buyer. People see a 3/2 bath home priced at $175,000 that rents for $1,500 and throw their hands up. "That just doesn't pencil out!" they protest. Sure, but why would any (real) investor ever pay full price for a house? Buy that same house for $81,000, borrow $106,000 against it from a private lender and how does that look? (Real numbers. Send me a private message and I'll give you an address and you can look it up.)

People jump on the soap box and rant and rave about cash flow, but what are they really defending? Going out and signing their name on the dotted line (press hard, make 2 copies!) for a conventional loan (risky) for $100-200 net per month? I just had a busted sewer line under the slab at one of my rentals. 10 months of cash flow literally flushed down the drain. What can a person even do with $200? It costs me $75 to fill up my truck and I do that several times every month. So what, I get 2 free tanks of gas because I own a house 1,500 miles away that will appreciate at hopefully 5%.. some years. That house mentioned above is now worth $225K. That's the type of investing that makes a lot of sense to me. It also makes a lot of cents... actually dollars. Lots and lots of dollars. And I've done it again and again.

Just because you aren't looking for it locally, doesn't mean it doesn't exist.

When I ran a local REIA, I used to put a garbage bin by the door and I put a big sign on it that read "Out of State Investment Deals." If anyone came in and tried to pitch their out of state crap, I threw them out. We live in California where the is literally gold in the streets, but I'd meet all these people who tell me they want to be investors, but can't afford it locally so they are thinking of investing out east. So instead of mining gold l locally, they collect scrap aluminum thinking they're getting good deals because they can buy a $50,000 house that rents for $900. I used to work very hard to break people out of that moronic mentality.

Unfortunately, people like you and @Ali Boone, such pro out of state investors, (or would the correct phrase be 'sellers of out of state investment deals'?) using your radio show (I listened to it online), webinars and blogs (I read it, even watched the videos) to sucker newbie investors into your out of state cash flowing deals. Hyping it up by throwing around catch phrases like "Affordable Large City, Rated #1 Market, CAP Rate, Stable Home Prices, Landlord Friendly State." <- copied right off your sites.

The reality is, we all know none of that means squat. Need proof: California has what, 20% unemployment, home prices rise and fall faster than the tides, it's so tenant friendly (whatever that even means), is totally unaffordable, BUT, I can name so many people in my network who started buying property just 4-5 years ago and are still buying property, who are now multimillionaires. And many of them are former victims of the out of state investing scam. My former business partner (invested in Colorado) lost 3 or 4 houses to foreclosure, had to file BK, and then got serious about buying locally and today is worth over $1M. Even I own property out of state and they are by far the worst deals I've ever done because they just linger in value like stale bread lost behind some container at the back of the fridge. To this day I feel trapped by them.

What I'm really trying to figure out is, is there really any difference between the California person who pockets a fee getting people into out of state 'investment' properties and the guru who comes to town hawking $40,000 coaching programs with promises of future riches....