All Forum Posts by: Luis Cruz

welcome to bigger pockets @Phillip Chang! let's connect

Ever get any luck with this @Paul Lakatos?

Hey @Saman Jafari! I'm an REI also in California, based in Los Angeles. Similar to SF area property prices here are very high, if you're looking at a pathway to cashflow then you will likely need to think outside the box, whether it's rent by the room, blend of STR or some form of value add (construction / ADU). Cashflow isn't impossible, but it's definitely way harder. The cities in CA are often viewed as an appreciation play.

My personal advice for you would be to house hack your next property for 2 years, look for something that has a bonus room or opportunity for a value add. You'll be saving money in rent while building equity in the property. When it's time for you to move on you can then utilize the 2 out of 5 rule for the sale.

Hey @Jas Raw give Kate Zieverink a try

@Matt Caresco it starts with your goals and what you're looking to achieve. Every single market has a real estate strategy that works for it, though they might not match with what you're working towards.

I've been doing the same thing and used the following quant data;

• Population growth
• Job growth
• YoY Rent growth (AGR, 3+ years)
• YoY Price Appreciation (AGR, 3+ years)
• Rent to Price Ratio
• Rent to Income Ratio
• Diversified economy (not relying on one industry)
  
• Housing provider friendly laws

Those will all be median numbers but give a good starting point before focussing in on specific neighborhoods.

Subjectively then ask yourself what will your competitive advantage be? "Why am I going to be better than someone else in that market?"

Most of this data is available online, BP insights also offers a lot of the raw data, Dave Meyers who is part of it was also on a couple of podcasts which I'd recommend (BP Podcast 186, Rookie Podcast 16)

@Kenneth Ryan Interesting edge case, I wasn't aware the eviction moratorium also applied to owner move-in evictions, which seems strange as it then potentially puts the owner out of a residence.

When in doubt, always connect with a real estate lawyer, especially in the current environment. Also, confirm/speak to your lender so you can get certainty, it may also be something they've been encountering.

@Martin D. really does sound like you have a great deal! IMO start running some numbers and see what the impact/difference would be in your expenses, as well as cash on cash return vs current investments. 

Say hypothetically your expenses each month right now are $1k (including housing), and you're able to save $1k per month what are you using that money towards and what return are you getting on that money?

On the flip side (hypothetical again) if you were to purchase a 3bd condo in the valley for say $475k, 3.5% - 5% down, and put $25k of repairs into it for a target ARV of $500k+, then rented out 2 of the 3 rooms at market rate what would your rate of return look like then? How would it impact your expenses? Also, what would your equity look like (loan paydown, forced & natural appreciation)?

Get a really clear understanding of what your goals are, what you're looking to achieve, and how active/passive you want to be. If you feel that you have a great setup right now which you don't want to sacrifice then perhaps OOS is a great way forward for you, again there are various methods to do that based on your goals.

I'm still relatively new to this all myself! The biggest impact I've had personally is from a mindset perspective, focus on a culture of learning/education vs culture of advice, "What can I learn?" vs "What should I do?"

Happy to connect if you wanted to share any wisdom I've been picking up along the way from other investors.

@Martin D. and to also answer your final questions, it's always useful to increase your knowledge! Providing value to others in order to do so is always a great way to do that.

To me, it seems your main pain point is around purchasing power, so try to get creative around it. Question for yourself would be; How can you lower your expenses, increase your income, or leverage other people's money?

Hey @Martin D.

I'm also based in Los Angeles and you're right in that it's a very high-priced market. 

Have you considered house hacking and using rent by the room strategy? This would enable you to access an owner-occupied loan with a lower down payment. You could then rent out the rooms of the property (condo or SFR), though it's unlikely you'd be cash flowing, you'd be saving money on rent while also building equity in the property through loan paydown & appreciation.

Craig Curelop wrote a great book on it called the The House Hacking Strategy (BP podcast episode 252, 350), in which LA's very own @Rick Albert has a case study in it too.

Out of state investing is also an option for you, and I'd suggest reading David Greene's "Long Distance Real Estate Investing" as a starting point, though it would make sense to eliminate your largest expense, rent, to help you increase your saving potential. You can also access your built-up equity in the form of the HELOC to help fund OOS, which is something a lot of investors do.

Always happy to connect, hope this helps!

I'd also be interested!