Cherry Valley, CA 路 Member since 2016 路 30 posts 路 11 votes
Hi BP family!
I'm new here to BP and exited to share my journey and also gleen any knowledge I can from the more experienced. I'm a realtor in the Inland Empire of Southern California (my brokerage services all over SoCal) and I have "house hacked" my first small multi family property. I'm very interested in flipping, wholesaling and renting out properties. Just trying to get my portfolio started. I've heard that it's quite the challenge to invest in SoCal so.....challenge accepted! This is where I'm from and I know it's possible to yes, even "cash flow" here!
Real Estate Coach 路 Venice Beach, CA 路 Member since 2012 路 6k+ posts 路 3k+ votes
8y
I'm intrigued to hear what you think cash flows here. But also, welcome to BP and just in hearing you talk on here...you'll do great! I love the challenge accepted part. And very cool you're in Riverside...my parents are in Redlands so I am over there quite a bit.
Loan Officer 路 Tustin, CA 路 Member since 2015 路 3k+ posts 路 713 votes
8y
Welcome and thank you for your intoduction. Have thought about joining any local meet up and attend an investment club. The Central Valley is a good direction for you.
Real Estate Coach 路 Venice Beach, CA 路 Member since 2012 路 6k+ posts 路 3k+ votes
8y
I'm intrigued to hear what you think cash flows here. But also, welcome to BP and just in hearing you talk on here...you'll do great! I love the challenge accepted part. And very cool you're in Riverside...my parents are in Redlands so I am over there quite a bit.
Real Estate Agent 路 Redlands, CA 路 Member since 2017 路 199 posts 路 487 votes
8y
Welcome to BP! Fellow Socal'er here in Redlands. It is awesome that you are starting with a House Hack and with such passion and goals. My unsolicited advice would be to pick a strategy and focus and perfect that strategy, don't try to do it all at once. And since you are also from California let me echo the often repeated (and so, so valuable) advice...
"Live where you want, invest where it makes sense."
Cherry Valley, CA 路 Member since 2016 路 30 posts 路 11 votes
8y
Thank you everyone! You are all great! @Ali Boone if I can cash flow at least $200/mo that's fine with me! Eventually I'll have enough rentals that it'll all add up to a nice chunk of change. However, I really liked what @James Gates suggested. I will definitely find a strategy for focus on and go all in and add the other strategies later. Also, @Jo-Ann Lapin I think I will start attending the meet up in Riverside and Redlands. I wish I could go to Orange County where my association is (Laguna Hills) but it's a bit too far. Gotta start in my own backyard right? Thank you all!
Thank you everyone! You are all great! @Ali Boone if I can cash flow at least $200/mo that's fine with me! Eventually I'll have enough rentals that it'll all add up to a nice chunk of change. However, I really liked what @James Gates suggested. I will definitely find a strategy for focus on and go all in and add the other strategies later. Also, @Jo-Ann Lapin I think I will start attending the meet up in Riverside and Redlands. I wish I could go to Orange County where my association is (Laguna Hills) but it's a bit too far. Gotta start in my own backyard right? Thank you all!
Well that's what I'm curious to hear if you find. And if you do find $200/month cash flow, what is the purchase price of the property?
Cherry Valley, CA 路 Member since 2016 路 30 posts 路 11 votes
8y
@Ali Boone.....I have a 4 unit multi family property where we live in one unit and rent out the other three. If I moved out of my unit, I could rent it out and make a cash flow of $1600/mo. The property is in Cherry Valley and we purchased it for $740k. Multi families cash flow for more than SFR's but if I purchased a modest 3/2 in Cherry Valley for $280k with 20% down and rented it out I could cash flow for $200/mo
Real Estate Coach 路 Venice Beach, CA 路 Member since 2012 路 6k+ posts 路 3k+ votes
8y
Cherry Valley! I LOVE Cherry Valley! When my parents first moved to CA, they stayed in an adorable AirBnB there for about a month before they bought their house. I loved hanging out there :)
Okay, so on your numbers... you are hitting that $200/month cash flow goal but have you run cap rates or cash-on-cash returns on those? That 4-unit comes out to about a 2.5% cap rate and the SFR comes out to about a 0.9% cap rate. So with financing, both of those will end up being a negative cash-on-cash return on the money you put into them. And those cap rates could quickly go negative if those general numbers you gave don't include maintenance or vacancies or any improvement costs.
If you're comfortable as long as you're getting $200/door/month, but always keep in mind how much money you have to put in to get that. For example, there's a big difference if you can get $200/month on a $80,000 house versus getting $200/month on a $300,000 house. Ultimately what you want is a return on the money you put in.
Cherry Valley, CA 路 Member since 2016 路 30 posts 路 11 votes
8y
@Ali Boone Thank you! That really helps! We didn鈥檛 put a lot of money into the 4 unit. 100% financing and our interest rate is 2.765% Does that help our cap rate? I鈥檒l really have to learn these figures! Can I come to you if I find a deal to flip for 70% below market value to check my figures? You seem to know your math!
@Ali Boone Thank you! That really helps! We didn鈥檛 put a lot of money into the 4 unit. 100% financing and our interest rate is 2.765% Does that help our cap rate? I鈥檒l really have to learn these figures! Can I come to you if I find a deal to flip for 70% below market value to check my figures? You seem to know your math!
@Ali Boone Thank you! That really helps! We didn鈥檛 put a lot of money into the 4 unit. 100% financing and our interest rate is 2.765% Does that help our cap rate? I鈥檒l really have to learn these figures! Can I come to you if I find a deal to flip for 70% below market value to check my figures? You seem to know your math!
Nicole
I've never flipped so I'd be hesitant to look over numbers on one and say anything for certain. I can try, but I'll let you know my confidence level in what I say.
Financing has nothing to do with cap rate and isn't included in that calculation. It's only included in the cash-on-cash.
Here's the basics of the equations, and you can use them on your properties as you go forward-
@Warren Currier.....neither of these were from that Craigslist guy, thank goodness
Nicole, Thanks for the great energy you bring to the game, to the pages here! Really nice. I'm interested in assisting in your search, if you want some help. Given the application of a few minutes a day I may be able to find you something. I'm south of Boston (just under 3000 miles away from you guys!) and have no interest in owning anything in California right now. We sold wonderful home there in 2014! If you are interested in having a look at some properties you may not have otherwise seen, let me know. It could be fun to assist you and your husband. I'm guessing Cherry Valley may be your desired epicenter. Inland Empire sounds huge, I do not know it too well as I my turf for 40 years was Westside of LA, Santa Monica, Brentwood, Pacific Palisades, Malibu. Let me know and if you want help I'll apply some creativity and send you some stuff. W,
You are definitely starting off on the right track. It is definitely possible to cash flow out here in California.
Your approach is also admirable. Take advantage of all the resources BiggerPockets has to offer. Network with fellow investors on here. And above all, do not let frustration get to you.
Happy to help further. Feel free to PM me. And best of luck in your REI career, Nicole!