California City, CA - is this town going downhill?

[Logan Allec]

So I recently sent out some marketing pieces to all of the Antelope Valley.  But strangely enough, of the 10 people who called me in response, 9 want to dump their properties in California City.  Hardly a peep from Palmdale or Lancaster, which are much larger cities to which I marketed much more heavily.  What's the story here?  Is California City on the way down?

[Logan Allec]

@Julio Arana and @Josh Domingo, I did end up buying in California City.  I bought a 3/2 cash from a distressed seller.  You can read about my most recent experience here.  I am seriously considering selling the property as soon as the tenants are out.  In hindsight, I wish I would've taken that money and used it toward a down payment on a property in a better area--say, a fourplex in the Valley or even some of the parts of South L.A. that are on the up and up.  Live and learn, right?  But like everything, your mileage may vary.  Julio might do better out there since he's already used to the I-live-in-the-middle-of-the-desert crowd.

It's a weird town, guys.  14,000 people out in the middle of nowhere.  Not a whole lot of jobs out there, so you end up with a demographic that isn't exactly stable.  And those who do end up learning marketable skills generally leave, eventually, for Bakersfield, Lancaster, Palmdale, L.A., etc.  The exceptions are the military folks from Edwards, but they're far and few between.  Apart from family ties, California City is not exactly a place where people settle down.  Take away the dirt cheap real estate, this town isn't really desirable to anybody, and I think this is a huge distinction between Cal City and Desert Hot Springs, Julio.  Not saying it'll be a ghost town, but I don't exactly see anything changing in Cal City anytime soon--or ever.

Buy good property.  That's what I'm taking away from this experience.  Not property that cash flows well on paper.  Not property that's super cheap affordable.  Good property.  Property in desirable areas with a stable, well-employed demographic.  Property that will have qualified applicants lining up whenever I have a vacancy.  Property next to good jobs and schools and entertainment.

We're young.  I'm 28.  You guys look around my age if not younger.  We have decades to bet on appreciation in more desirable parts of Southern California.  I don't know about you, but in 30 years I'd rather be sitting on a million-dollar asset that I own free and clear (because someone else paid it off for me) that is generating multiple, multiple times the rent I was collecting when I first acquired it and in which I can fill a vacancy with a qualified tenant within two weeks because the area is so desirable that it can't keep up with housing demand than on some boondocks asset that I only purchased because it was the cheapest thing around and "cash flowed" $200 per month on paper but barely appreciated over the years and whose rent appreciation has marginally kept up with inflation and takes me three months to fill a vacancy with a "qualified" tenant who even then might get behind on rent because his hours were cut at the gas station 30 miles away (true story; my tenant worked at a gas station in Boron--only job he could find).

Personally, I'm keeping my 4-unit in Santa Clarita and investing in development deals and notes until an incredible off-market deal lands in my lap (keep dreaming, Logan) or the SoCal market cools.  But that's just me.  Let me know what moves you guys make.  I like to hear about what other young investors are doing in the LA area.  And good luck--especially if you invest in CalCity.  I kid.  Kind of.

P.S.--and this is especially for Josh since Julio's already been in the game--I am still very much a rookie, so please take what I say with a grain of salt.  Two years ago I was desperate for real estate wisdom.  So I posted on BP, got some answers from all across the cash flow vs. appreciation spectrum, and developed my investing strategy.