Seeking advice, investing in California.

[Carlos Villalobos]

Hello BP community, I am seeking to discover what is a profitable investing strategy in California, Los Angeles county or other similar counties are excellent at. I want to find out what is working in town, connected with investors and talk real estate. Thank you in advance for reading this post. 

-Carlos

[Jon Schwartz]

Originally posted by @Carlos Villalobos:

Hello BP community, I am seeking to discover what is a profitable investing strategy in California, Los Angeles county or other similar counties are excellent at. I want to find out what is working in town, connected with investors and talk real estate. Thank you in advance for reading this post. 

-Carlos

Carlos, welcome to the fun!

Los Angeles is a unique, dynamic, and expensive market. A lot of investors here on BP poopoo Los Angeles and other expensive markets because they don't cashflow. It's true: you're never going to find a 10% cash-on-cash building in LA, not even 5%! But LA is an expensive market, meaning equity-building and appreciation are huge wealth-builders.

So here are a few strategies that work well in LA, maybe even better here than in lower-cost, cashflowing markets:

Flipping! A 3-bed, 2-bath house costs a lot more in LA, but if you can find a good deal and renovate it appropriately, you can make a lot back. I was just commenting on a post by an LA investor who flipped a house in Ladera Heights for a $300K profit in 11 months. Impressive. If you have the time and dedication, flipping can be great here.

With multifamily properties, the way to build equity is by increasing rents. It's like flipping a house, but instead of renovating and selling, you renovate and re-tenant and sell. LA has very tenant-friendly laws regarding relocation of existing tenants, so this is a tricky business to get into, but it's very profitable to those who know it. It's also possible to buy a multifamily building, wait for natural tenant turnover, and then sell.

I think the absolute best strategy for a starting investor is to househack a SFR or, more to my liking, a duplex. I'm househacking a duplex now, and the bottom line after all the number-crunching I did is: it's going to pay my daughter's college tuition. Nothing certain, but I ran out some very conservative projections, and that's where I landed.

You mention househacking in your profile. Is that something you're looking to do? Where in LA are you considering?

Best,

Jon