All Forum Posts by: Kyle Weckesser

I too have been researching SoCal, in particular the Inland Empire which comprises San Bernadino and Riverside counties. The reason for my inland focus is A) 25% down in costal markets is too much for me as a new investor, and B) inflated costal markets do not offer opportunities to adhere to the 1% rule. I have been finding opportunities to hit the 1% within "C" markets of Riverside County. The tenants in these areas are C at best so longevity will be an issue, but you can achieve 1%. Furthermore, as the market moves east over the next few years there should be appreciation capture. Finally, because of the C nature there are also value add opportunities. I hope to pull the trigger in one of these markets with my first investment property this year, so it shall be determined as to whether the rational hold true. Good luck with your first investment.

@Sharad M.,

Sharad, I am new to BP and just heard show 155 a few days ago and I must say, super inspirational, hands down one of my favorites thus far. I commend you on your accomplishments and hope to follow in your footsteps. 

Jo-Ann, Hemet values did suffer from the downturn, but the rebound has not been as fast as other IE markets along the I-15 & I-215 corridors, which is one reason why I like the area.  I did some quick research to better answer your question and found that comparing Hemet peak values (2006) to 2015, resales are 65% of peak, and new home is 70% of peak.  I don't contend that we will ever reach 2006 numbers again, but I do believe that something bought inland that is only 65% of peak will incur 10% - 15% in appreciation as people become priced out of coastal markets and the demand moves east. Furthermore, because I can get these 4-plexes for $350K they generate solid cash flow at +/-$800 per unit per month in rent. 

To answer your question on volume, resale activity is almost 3/4 of peak, but new home activity is less than 10%.  Affordability of resale in A/B inland markets (Temecula, Murrieta, Menifee, Corona, etc.) reduces new home demand in C inland markets because most buyers will choose to live in a in 10-15 yr-old home within a better market rather than buy new in a lesser market (ie Hemet, San Jacinto, Cochella Valley, etc.). The table below shows the data I pulled from Real Estate Economics. Please chime in on my assumptions.

-	Resale	Resale	New Home	New Home
Period	Closings	Price	Closings	Price
2006 AVG	287	311,220	217	383,457
2015 AVG	207	201,026	16	265,748
Delta	80	110,194	202	117,709
% of Peak	72.17%	64.59%	7.21%	69.30%

Finally, yes, I am looking at units that are 2 bed 1 bath, with a few exceptions that include a second bath. 

My parents exposed me to residential real estate investment at an early age through their rental property retirement vehicle. I am well versed in the conservative investment strategy they have adopted which can be defined chiefly by investment in Class A Property, and finding Class A Tenants. The painfully slow pace in which they grew their portfolio has turned me off from investing to date despite my understanding the benefits of holding real estate. Recently a friend recommended I read “How to Turn $5,000 into $1,000,000 in Real Estate,” by William Nickerson and upon completing the first chapter, the veil of ignorance was lifted as I was enlightened with a different real estate investment strategy characterized by significant portfolio growth over what I deem a short period (10 years). I now realize that real estate investment comprises numerous strategies and believe that BP is the perfect space to learn, deploy, and capitalize on these strategies. I have professional real estate experience from working in homebuilding with both public and private homebuilders, but no personal investing experience.

I currently have $20,000 in cash and a $100,000 equity line and am looking use both to build a portfolio of 8+ properties in southern California that generate $8,000 per month in passive income (and then quit my day Job!!!!). The value of real estate in my market makes entry challenging, and I am currently looking at 4-plexes in a C- market (Hemet, Riverside County). If anyone knows southern California and would like to chat please reach out.