All Forum Posts by: James Tran

Eldar, how much do you have available for a down payment?  I'm not sure if you meant you have $150k to $350k cash or if that is the range you think a lender would pre-qualify you for.  

Assuming you are prequalified with a lender for up to $350k, I would look at duplexes in El Sereno, Long Beach, and Highland Park.  You'll be lucky if you can find a triplex in that range, but its doable.  There are pockets of "not so good areas" in these parts, but if it were me, these would be the areas I would be comfortable living in, and bank on long-term appreciation.  Sure beats all these properties located between the Santa Monica and Century Freeways!

The San Fernando Valley will probably not have very little options for you in this price range if you have looking for a 2 unit and up.   

Hi Eldar,

For your first time property, I would definitely look into duplexes, triplexes, or quadruplexes.  If you don't mind managing a tenant or two, this direction is relatively safer for you in the long run.  You'll have the opportunity for cash flow, market appreciation, and forced appreciation with the multis.  The 2 to 4 units make for a great investment and will make it a lot easier to purchase subsequent properties after your first. 

If you are going to use traditional bank financing and plan to live in one of the units, you can try to qualify for an FHA financing and purchase with as little as a 3.5% down payment and a relatively lower interest rate compared to a conventional loan. Of course you will also have to consider paying additional for private mortgage insurance every month.

You can also purchase using a conventional loan where you can buy with a 20% down payment and not worry about the extra PMI. This option will be available if you are looking at duplexes. If you want to look at a 3-unit or 4-unit with a conventional loan, you will need a minimum of 25% down.

I suggest you get the 2 to 4 unit property because of the relatively higher income they produce per dollar of purchase price. This is important because if you plan on purchasing a second, third, or fourth property through traditional bank financing, the two to four unit properties as your first purchase, won't set you back as much for your next purchase as an SFR in qualifying for future loans (the relative impact to your debt to income ratio).

This allows you to buy more properties and put more money in your pocket. I did this for my first purchase in Los Angeles and its worked out great!

Hi Shari,

I have a property in the San Pedro area and all my tenants are Section 8. One of my tenant's portion of the rent is $7 per month while the housing authority is paying over $1,000 per month directly to my bank account for the balance of the contract rent. The rent is always on time (at least the housing authority's portion).

As Phil mentioned, Section 8 can be good, but you have to pass annual inspections and meet Housing Quality Standards. You get the hang of it after awhile. Just make sure you screen well and don't acquire a tenant that doesn't take good care of there unit.

-James

Hi Vivian,

If you want long-term cash flow with very little management, you may also want to look into commercial properties, such as those that are long-term absolute NNN leases (i.e. Walgreens, fast-food credit tenants, etc.). There are a lot of foreign investors for single family in my area (San Gabriel Valley), as well as in Ontario, Riverside, etc. who are driving up the market very rapidly with cash purchases and little due diligence. I know many people trying to buy their first homes in these areas that don't stand a chance with conventional financing.

It sounds like you may just be looking for relatively safe real estate investments with little to almost no management responsibility, especially if you're looking to go out of state. If so, national credit tenant NNN properties might be a viable alternative for you. You wouldn't need to worry as much about whether those out of state property managers or brokers are looking out for your best interest.

Thanks for the welcoming @Karen Margrave. I used to work out of Mission Viejo. I think I've listened to just about all the podcasts (I can't think of any better way to be productive in this Southern California traffic!). Looking forward to meeting more members!

Thanks Ellis Jose. Nice meeting local investors!

Hi everyone,

I signed up with BP awhile back, but never introduced myself. I am a relatively new investor from Los Angeles, CA and purchased my first four-plex earlier this year. I have been in the real estate industry for about eight years and have recently gathered enough courage to pull the trigger on this first purchase. The first one is always the hardest and now that I got the ball rolling, I'd like to continue buying up these properties. I also decided that I'd like to become more engaged in the community and network with everyone here, as I'm starting to realize the value of surrounding yourself with like-minded individuals with similar goals. Hi everyone!