New Los Angeles RE investor living in the Bay Area

[Robin J.]

Hi BiggerPockets!

I've always been surrounded by family and friends who advised me to get into real estate investing early in my career, but never quite took the plunge. However, over the past few months, my interest in real estate investing grew as I learned more about the potential for financial freedom via real estate and how I could use this freedom to better support my family and goals. Since this realization, I've been actively analyzing deals for my first purchase and trying to learn as much as I can. Given all the amazing people and success stories from the people on BP, I figured it was time that I introduce myself to the community.

Brief introduction:

I was born and raised in Los Angeles, but currently live in the SF Bay Area in my mid-twenties. I currently work for a Silicon Valley tech company and previously worked in investment banking, where my initial interest in finance and investing began. I'm looking to make my first real estate purchase this year, despite being a "new investor", as a means of learning as quickly as I can by getting my hands dirty and having skin in the game. A large part of my motivation for joining BP is to meet other like-minded investors, both new and experienced, who I can learn from and hopefully team up with in the future.

Real Estate Investing Goals:

My longer-term goal is to have a portfolio of managed rental properties that brings in enough cash flow to have the option to retire from a typical 9-5 career job and pursue my goals in tech entrepreneurship with financial freedom.

My strategy and path towards my longer-term goal begins by starting with residential multifamily properties. By starting in multifamily investing, I believe that this initial experience will lay the right foundation for the necessary skills to grow and manage the large number of units for my longer-term goal. I also believe that MFRs pose less risk (compared to SFRs) due to better cash flow and less vacancy risk that will allow me to buy and hold with positive cash flow long enough for appreciation.

I'm starting with Los Angeles because I am partnering with a family friend who is acting as a mentor and is more comfortable investing in Los Angeles. I am hoping that the experience of my first purchase will give me the confidence and knowledge to eventually pursue deals in the markets of my choosing (whether it be in LA, SF Bay Area, or out-of-state). For now in the near-term, I am focused on learning as much as I can about the market and location I'm most familiar with, Los Angeles, to build my foundation. My ambition is to continually invest in properties with more units/doors as I progress in my journey and eventually own commercial properties. Given the capital-intensive requirements of my longer-term goal, I believe the key to my success will be to build my own knowledge and credibility to become a trusted investor with whom others would partner with.

Current Progress:

I've made a goal to analyze 5-10 MFR deals per week as well as focus on certain locations within Los Angeles. I've made my very first offer just a few days ago (made a ton of newbie mistakes on the purchase agreement my mentor quickly pointed out!), but understand that this is just one very tiny step of the larger journey. As of today, I'm continuing to ramp up on the South LA region (near USC, Inglewood, Vermont-Square, Vermont-Slauson) as this falls within the budget range (less than $1M) of where I'm comfortable with. Couple key questions I have include:

1. For Los Angeles investors of property sub <$1M, why do you choose Los Angeles over other markets (e.g. out-of-state)?
2. What are the key metrics and characteristics you look for? Can you share specific numbers or benchmarks you use (e.g. certain cash flow per door, cash on cash return %, etc.)?
3. What is the best advice you have for beginner investors investing in residential MFRs in lower-income neighborhoods?

Any advice of investing in residential MFRs in Los Angeles would be very much appreciated. I'm always eager to meet new people and helping in any way I can. I believe genuine relationships are built through providing help and knowledge to others, and started by reaching out to people who are willing to share their stories and advice. If you are a local investor who would not mind sharing your story over a quick coffee chat/lunch, I'd be very interested in meeting and hearing about your experiences.

Thanks for taking the time to read my introduction, and am looking forward to becoming an active part of the BP Community!