Newbie living in San Diego

[Nick Allen]

Hello BP Team,

My name is Nick and i'm originally from Memphis, TN. I'm active duty Navy and my wife, two daughters and I are currently stationed in San Diego, CA. I came to this website via a real estate investor friend. I have always admired him for his entreprenurial spirit and I'm now determined that I can do it too. I've never bought an investment property but I have used my VA loan to purchase a home in TN (last duty station- bought for 194k and sold it two years later for 230k. After all I put in it (new hardwood floors, appliances, Interior Painting, fixtures and TLC) I came out ahead by maybe 8k. Overall, I felt pretty good about it as my first experience in home ownership. I'll be honest, I've always had doubts that I could ever do housing investments based on the perceived risks. I guess thats the psychology for how most of us were raised. But, the last few years, the idea of passive income has become what I think about most throughout each day and investing in my IRA and TSP just isn't enough anymore.

*side note* I think it's funny but if I told my family (at large) my plans, they would probably discourage me (directly and indirectly) from ever investing b/c of WXYZ reasons. I've also discovered this from most friends as well. Why is that? 

So, for now i'm just a student of the craft and keeping it to myself so i'm not surrounded by negativity. Just being upfront and honest of my situation.

I've been scouring this website to soak up as much intel as possible and already have been getting more excited every time I come back. I have a bunch of questions and I know most of what I will ask will be somewhere on this site but i'm throwing myself out there anyway and looking for some guidance. I'll keep my questions general for now because i'm having trouble linking all the puzzle pieces for how it works in my head. 

1. As a family man starting out i'm leaning toward the strategy of single family homes that I can buy and hold. Long term I want to build a portfolio that brings in enough cash flow that is paying me more than my day job. I'm not too interested in buying and living in a multi unit place with my wife and 2 kids based on this local market and the necessity of being in close proximity to my daughters school. With that in mind, how does one afford to buy and place a downpayment on properties in this area (median cost of 600-800k). Even if I could afford it, the fear of not having it rented out for one month would be detrimental in my head since the rent would be around 3500-4k. Interested to know how the pros justify this even if the cash flow works out on paper.

2. Is it better to purchase a low income single family property in TN (25-35K) that has a 9-10% Cash on cash ROI or a single family home in CA which is much more expensive but the demand for renting is very high? I'm just curious how the experienced justify the risks of purchasing any type of expensive property regardless of ROI.

Thank you for enduring this diatribe as my intent is to just put myself out there and humbly ask for your guidance. Thank you to this invaluable site and those who give up their time to lead others. Thanks in advance.

V/r

Nick 

[Elizabeth Wilson]

@Nick Allen - that's all super exciting! Welcome to the world of REI! You will find lots of differing opinions on where and how to invest in RE here. And that is great because there are SO many ways to do it! I feel like I learn something new almost every day! (Which makes it a fun challenge!)

We are local Memphis investors so I can't advise about the SoCal market. But i always suggest that if you can find a deal locally that is better than one farther away.  With the market as hot as it is almost everywhere, it's the deals that are harder to find.

I'd suggest finding any local REIA or REI meetup near you to talk about these things and network with local folks. That is where you will learn and find deals.

Also don't bother worrying about why others think REI is a bad idea. It isn't for everyone. And some just think it is speculative instead of investing.

Best of luck!  Keep us posted!