Multifamily Markets in Southern California

[Tara Faulks]

Hello!  I am looking to invest in Multifamily Units with value add potential (12 or less units to start).  I live in Santa Monica.  I have been reading forums entries on markets and things to look for and am trying to narrow down the market I will focus on.  My goal would be to remain local enough (drive with 4-6 hours but preferably 2 or less) while maximizing Cash flow and return.  I am using the calculator and struggling to see opportunities in Southern California.  I am new to this and understand i need to network and find off market deals to get the true gems, but i would love to hear from current investors near Southern California, Arizona or Nevada.  Do you have any markets you would suggest that i look in for multifamily?  We are looking to narrow it down to 2-3 markets and then do more extensive research to see what works best for us.  Any thoughts or advice would be great!  Thanks!  Tara

[Dennis Maynard]

@Tara Faulks First, I would add that using a Cap Rate as a Cash on Cash is incorrect.  Two different equations.  Be careful there.  8% Cash on Cash in California is super tough.  @Enrique Huerta is correct that getting outside of the city is paramount to finding Cash Flow Deals, but the concepts and guidelines they teach here are really meant for middle America where you can pick up a house for $150k and then rent it out for $1000 / mo. I think it's best before going market hunting to establish your goals, your investment, and criteria for investing. Then back into your locations based on those stated goals. Food for thought. BTW. CoC is NOI / Initial Investment. Cap Rate is NOI / Purchase Price (or Sale Price). Brandon is referring to CoC not Cap Rate if my memory serves correct.