All Forum Posts by: Nick Hedberg

@Mitch Anderson - I'm currently working with @Peter MacKercher and highly recommend him. Give him a call and he will help you out.

I invest in South City and there is a variety of good and bad neighborhoods. It can be block to block. What seems like a great deal, might be a bad deal if you buy in the wrong area.

I think the size of your down payment is dependent on your business model, personal situation and your level of risk aversion.  A small down payment increases your level of risk during a down turn, but also increases your cash on cash rate of return. A large down payment reduces your level of risk, but you will have a lower cash on cash rate of return and more cash locked up in a property. 

Having cash reserves are critical. I would outline several scenarios that could negatively impact your situation and set a minimum cash reserve for each property to safely get through these scenarios. An eviction + a major repair can go through a cash reserve very quickly.

HELOCs can quickly dry up during a crash leaving you with a property that you have to sell in a down market to access the money. The flip side is not having a mortgage payment will make it much easier to survive vacancies and other issues. As real estate investors we need to think about long term market trends and how are business models will be impacted by rising interest rates and changing economic conditions.

@Account Closed - I'm also starting to invest in St. Louis and it would be great to compare notes. I'm looking for multi-families with 4 units, preferably not the shotgun style units.

On paper many of the areas can look fantastic, but St. Louis has high crime rates so you need to understand the area you are investing in. I was in St. Louis a couple of weeks ago to look at a property and to get to know the area. In the rougher areas they lock the AC units in cages so they can't be gutted for parts. Much different then living in Santa Monica, CA!

@Matt Kauffman - Great work Matt!  You have hit the ground running and you have been able maintain solid momentum.  What kind of commercial properties are you looking for?

Are you going to hire a 1031 specialist? It would be interesting to follow this process to see what the hurdles are.

@Joshua McGinnis How big of a lot are you looking for? Any locations in particular?

@Julian L.@Manolo D.@Mike J.@Vanessa Vandervalk@Brad Srutowski@Logan Allec  - There is a BP meetup on 10/31. Hopefully you guys can make it. It would be great to network and make some deals happen.

https://www.biggerpockets.com/forums/521/topics/237617-los-angeles-meetup---october-31st-2015?page=1#p1565424

@Julian L.– We are in the same boat. I live in Santa Monica and am looking at expanding more into REI. I pulled some extra cash out of the stock market and want to diversify into real estate. I'm looking for long term buy and hold and it's tough in the LA market. Especially when you don't have a large amount of cash to put down.

What @Sterling White said is 100% correct. If you are flipping then LA and surrounding areas has potential. If you are looking for long term buy and holds, then LA could be tougher then out of state markets. I’ve pretty much ruled out LA for myself for 3 reasons:

• 1.Low cash on cash return for buy and hold investors
• 2.The high cost of properties means I would have to sink my cash into one property versus multiple smaller ones.
• 3.The places that can cash flow are in high crime areas (Compton, Huntington Park, etc.) and I prefer to minimize evictions and turnover.

The cheaper CA cities I’ve looked at (Fresno, Bakersfield, etc.) have high unemployment and crime rates. I’m hoping to buy in CA, but out of state looks more and more likely. I’m searching looking around CA and any insights would be appreciated.

More about my thoughts and where I am: https://www.biggerpockets.com/forums/55/topics/237637-your-help-needed-analyze-my-getting-started-plan

I'm also rolling over my IRA (and maybe my Roth) into a Self Directed IRA (SDIRA). This allows you to invest in real estate, notes or tax liens. Lots of potential with a SDIRA but also a lot more complexity and risk.

@Doug N. - I appreciate your advice on the books. I'm normally not a big reader, but I've gotten hooked on these real estate books. I just found a free PDF version of the Depression of 2008, and it looks promising. I've also added your other suggestions to my list of books to read.

Thanks for the tip on the lower Central Valley. I drive through Bakersfield at least once a month to go to backpacking in the Sierra's.  Tt would be easy to swing by and check on the property.  I'll definitely check it out.

The more I learn about the CA real estate market, the more I keep learning that there are still plenty of places to invest.  Just because the averages don't make sense, it doesn't mean you can't still find deals. If you can add value and help someone, there are always options to make money.

@Jo-Ann Lapin - I appreciate the vote of confidence. Do you have any recommendations for mortgage brokers and loan officers in Santa Monica?

Hi @Steve Hoghe,

I feel like we are on the same life track! 2 1/2 years I picked up everything and moved out to Santa Monica to affect a major change in my life.  You should come to the below meetup in a couple weeks. It would be great to meet you and chat more.

https://www.biggerpockets.com/forums/521/topics/237617-los-angeles-meetup---october-31st-2015?page=1#p1565424 

@Matt Motil - I was recently sent a deal for a premier beach front property that is way outside my comfort zone and financial abilities.  I thought of this conversation and decided to go for it. I will need to network, get a team and financing in place. There is no better motivation then the excitement of a good deal!

Good point about a tax write off to visit the place. There are a couple places I travel to on a yearly basis and will make sure they make it on the short list. Thanks for all of your wisdom and advice, it is much appreciated. 

@Brent Coombs - Glad to hear it, it sounds like you have a good team going. Thanks again for your insights and best of luck!