Good Morning; Good Evening Bigger Pockets family.

[Terron Winn]

Hello all, 

My name is Terron and i have a background In Business Management with little to no experience in Real Estate investing. 

Currently I am living in my home that I have purchased in 2011 and now it has accumulated about 200K in equity but I do not know what to do with it. I would love to be able to buy and hold or flip a house; however, the county that I live in is really expensive and my income from my job wouldn't allow me to purchase another home in San Diego at the market prices they are at now. My thoughts are to look into another state for a buy and hold or a flip and eventually work my way back to being able to buy in my own backyard eventually. 

What I hope to gain from being a part of the bigger pockets family is knowledge and to be able to meet some great like minded individuals.

[Dan H.]

I realize you indicate that you do not have the money to invest in San Diego but out of state REI are risky, require a great team, and traditionally do not have the ROI of San Diego REI.

I am a big fan of So Cal investors investing in So Cal. All you need to do is look at 10 fastest appreciating markets for last decade and compare them to the national average. So Cal not only has been the superior investment but it would not even be close compared to the average locale. Of course past performance is not necessarily an indicator of future performance but history indicates long term the property and rent will appreciate. One thing to note about San Diego properties is the supply is finite. The demand seems to be infinite.

So here is my case for San Diego REI:
- Advantages of local including expertise, cost to get to property, able to self-manage if desired (typically ~10%). The family had an out of state duplex hit by 2 hurricanes. Even though we hired contractors, because we were not present we were the property getting the least attention with the slowest work.
- Appreciation: Property and rent appreciation.  Do the research. Use your own knowledge of the supply/demand. It really is simple Econ 101. I am not stating that it is certain to appreciate like it has but econ 101 and history tells me that excluding something catastrophic it will continue to appreciate in the long term (there are cycles but long term it has always appreciated). 

- Prop 13: My family suffered from this big time on a property on Gulf Shores Alabama. The taxes went up faster than the rents (until the hurricanes). We sold this property even though it was awesome (on the sand).
- I have no problem finding cash flow properties in my chosen area in So Cal. These properties cash flow using a $300/unit per month cap expense and 5% vacancy (our vacancy rate is less than this) and 5% maintenance expense. This cash flow does not include equity gain from making the payment which is in effect additional cash flow that can be obtained with a little effort. They may not cash flow with other parts of the country but the effort is less than out of state REI and so far the appreciation has more than made up for any reduced cash flow (Each property I have owned at least 3 years has gone up at least $100K - I have one property that has been owned only 1.5 years and is probably up $30 to $40K).
- The equity gain for rehabs is larger than many other parts of the country. Nice properties are greatly valued over neglected properties. This implies that I can purchase neglected properties, rehab, and have additional appreciation (more per unit than many other parts of the country).

So my recommendation is you look again at San Diego REI before considering out of state. My family has only sold 2 REIs. One in San Diego county that was used to get all of the equity out to purchase a San Diego (mission beach) beach duplex (so because we needed the cash to purchase another San Diego REI) and a beautiful duplex in Gulf Shores Alabama because it was too difficult for us to own long distance and had turned into a non cash flow property due to increases in taxes and insurance. The San Diego properties cash flow increase almost every year.

Good luck.