BRRRR possible in Southern California?

[Jordan Avne]

Hi there!

A business partner and I have a goal to purchase a single-family home with no to low money down to be kept long-term as a cash-flowing buy and hold investment in our local market - Southern California (Inland Empire area). We are strategizing around how to find properties, analyze to ensure it cash flows, and line up financing (possibly to use the BRRRR strategy). We realize that Southern California is a challenging market to find cash-flowing properties, especially with low money down.

Our strategy will be to market to find off-market deals, and then use hard money (or an investment partner) to BRRRR. We're looking at primarily direct mail marketing, but we are open to (and researching) other strategies, such as driving for dollars, working with wholesalers, etc.

Before we start investing some capital into direct mail marketing, I wanted to see if anyone here had any advice for us about embarking on this goal.

> Is anyone having success finding cash flowing rentals using direct mail marketing in Southern California anywhere?

> What additional considerations should we have in analyzing potential deals given California's tenant-friendly legal environment?

> Are there unique techniques you all have used to find off-market deals in this specific market?

[Chris Mason]

I'd say at least 80% of the transactions that cross my desk wherein the buyer is getting it for >25% below the value indicated by the independent appraisal that we order, the buyer/investor has non-trivial professional sales or marketing experience. Note that I didn't say real estate sales or marketing, I just said marketing or sales in general. It seems to be a highly transferable skill. If you're buying for >25% off market value, that basically solves every other problem you might have. A lot of these folks take for granted what they're able to leverage from that relevant professional experience, they're just like "yeah, of course I did that, who wouldn't?" not realizing that the answer is "most people that are paid only a base salary or hourly wage, ie the majority of the American workforce, would NEVER have thought of that."

If you don't have that professional full time sales or marketing experience, and you will be "cutting your teeth" with this undertaking to try to be one of that 20%, I'd suggest buying 3 or 7 books on sales or marketing, and reading them all. $200 in books to make sure you aren't wasting $5000 of direct mail marketing dollars seems like a prudent choice, and even if all of your real estate undertaking still fail, at least you will be better prepared the next time to ask for a pay raise or prepare for a job hunt. Here's a good book to get you started (boom, I just sold you a book, didn't I? And if you call me, you may just find yourself $600k in debt a month later, so don't say I didn't warn you. :P ).