All Forum Posts by: Account Closed

@Matt R. Geez. So much to think about! lol. Many rabbit trails to follow it seems.

So I see you are an active LA investor. If you were in my shoes and going to start to buy in the greater LA area or SoCal in general, where would you start? I am considering inner city LA and more remote places like Palmdale and the IE. I don't know of any other way to achieve cashflow here. 

@Matt R. Unemployment is actually much higher than the bogus 5% numbers we are getting. Many are saying it is upwards of 11%. There are also the hordes of millennials and others who aren't making any money due to unnecessary/outdated skill sets or knowledge (I refuse to use the term "underemployed" lol).

And I could be wrong about this, but aren't Los Angeles and many other parts of SoCal bad places to look for speculative building or over development? It is infamously difficult to build in California and it has only gotten worse over the years, even the past 5 years. However, in places like Nevada we are starting to see developments which aren't selling and are resorting to no money down deals again. 

The factors I see right now are:

1) High unemployment and low wages among traditionally prime home buying populations.

2) Inflated market due to low interest rates and investment money from real estate syndicates/corporations/i.e. non "mom n pop" investor types and groups.

We are all just speculating here, so I'd love to hear other's perspective on this. Predicting the future is impossible. There are economists predicting a huge bust, and there are economists predicting more growth. I don't know how pertinent someone's past predictions about the market are, given that there are always experts predicting particular future scenarios. It is inevitable that someone will be right. An analogy would be having 50 people in a room guess what number I am thinking of from 1 to 20. Someone is going to be right. They might even be right twice because there are only so many choices. 

I am getting into "A Random Walk Down Wall Street" territory now so I'll stop here lol. 

The short of it is that LA is not in the dumps right now, but it will be again at some point. I also think that many have already identified the seeds, and possibly saplings, of the next bust. 

@Matt R. I am very skeptical after reading that entire article. There are too many variables unaccounted for to reach the "not in a bubble" conclusion. For example, the interest rates. They cannot stay this low indefinitely.... well, at least it is unlikely they will stay this low indefinitely. We must assume that this will have a tremendous affect on home prices not only in California, but everywhere. Additionally, he discounts his own data when he states that the rent-home value ratio is high in LA but that "doesn't worry" him. He cites San Francisco as an example to buoy his "non-bubble' assertion - probably the worst example in the country! San Francisco prices are astronomical and their real estate bubble has been well documented, at least to my eyes. 

Even if we aren't in a bubble, the prime time to buy in SoCal and particularly LA is still a few years out, methinks. 

@Logan Allec Hey man, totally agree about your comment with regards to studies. My expertise is in education and assessment. If I am trying to explain test results to someone who doesn't understand standard scores, grade equivalents, T scores, etc. it won't mean anything if I give them every possible piece of data and every possible permutation. It's all gibberish. This is why BP is so important. To me it is akin to the scientific journal system. Information from experts (i.e. successful investors) is discussed and vetted by other experts. Then newbs like us can take it all in and add these perspectives to our other sources of information in the form of local experts we might know, and even anecdotal information, like my El Monte, CA "duplex" story I wrote about above. If you grew up in the area, you don't need to be an expert to know that a box like that shouldn't cost the same as 2 Ferraris. 

@Ben Leybovich@Mike D'Arrigo Thanks to you both for commenting on this thread. I wanted to get your take on this... I may not be an expert on real estate yet, but I am learning... and I learn very fast. I saw a property in El Monte, CA a week ago. It was a duplex, and I use the term incredibly loosely. It looked to be a converted store of some kind, with 2 single unit studios sharing a common wall. It was trashed. It was sandwiched between a truck yard, low cost apartments, across the street from a metal shop. Price... 400K. I grew up around this area and I know my own back yard. No way in HECK this thing is worth 200k, not with the crime and gangs and the area. 

That isn't the best part. The best part is people were looking at it when I drove by! 

This is purely anecdotal, but put together with the rest of the information I am gathering, something is amiss! These prices are not sustainable. 

@Mike D'Arrigo @Ben Leybovich I couldn't agree with you more. The irony is that @Josie Roman is pouting in such a way so as to embody the very stereotype she is objecting to - quite ineffectively I might add. How she herself generalizes and stereotypes others tells you all you need to know about her. 

@Matt R. Thanks for the reply. I have seen the charts and we are heading up, and as another post stated, not yet past the level of hysterics we saw before the mid 2000s crash. Nonetheless, history tells us a correction is coming. Perhaps smaller than the last one... but when reading up on the nature of the causes our current bubble (foreign money, incentives to get broke millennials to buy properties they can't afford - why by the way sounds horrifically familiar) it has the makings to be even more extreme. History tells me I won't have to wait more than another 4-5 years at most (again, not a guarantee, just history) for another prime opportunity. 

May I ask where you got the information in your post from? I have seen many charts and articles, but your post here is the most succinct form I have seen this information in. I'd like to know where you got it. Thanks!

Grrrr! -1. I completely blanked that this is the one game of the year that the team I coach plays at 1 PM. All other games are at 7PM. Next time!

@Chris Reeves Thanks for the reply... Superman! Haha. I know, I know. Ultra lame and completely predictable and I'm sure you've heard it before. 

Thank you for verifying my instinct about SOCAL real estate right now. I have never been in the position to purchase any kind of property before now. However, I  have grown up here and lived here all my 27 years. So I am aware of the boom and bust nature of our fine state, even if only by way of news reports and seeing my grandparent's home go up and down in value. 

As I replied to @Josie Roman, I am weighing the pros and cons of investing in an area like Palmdale, the IE, Victor Valley, etc. and waiting for the bust (which local investors I talk to all think is fast approaching) or starting to accumulate properties in the midwest. 

Seems like you did both! Seeing as how cheap homes in places like Ohio are (I found a duplex for around 50K lol) I don't see why couldn't invest in both places from a monetary perspective. However, I know that I am not experienced enough to spread my investments like this.

I've been thinking about this day and night and will continue to do so. It's precisely this ability to think about something constantly that makes me good at my jobs... it's also one of the reasons I'm not married ;-)

@Josie Roman Thanks for the reply! I am evaluating all of the information I am gathering and am in the stages of developing my business plan. It is true, I am interested primarily in cash flow. 

The picture I am gathering is that investing out of state will get me cash flow. Investing in state will get me appreciation, liquidity, and SOME cashflow if I look really really hard. 

The question is... what game do I want to get good at? From what you argue, a person should get good at investing here in sunny so cal because the upside can't be matched. The best case scenario when out of state investing can't beat the best scenario when investing in CA. Indeed, as you say, CA creates billionaires. 

When I look at it this way, it seems that the best play is to find a cashflow market here, albeit modest, and wait for the next bubble to burst before buying in high demand areas like Glendale, Burbank, etc.

However, I am also drawn to the high cashflow markets in the midwest. 

I am weighing the pros and cons of each perspective. I think a good middleground would be finding the cashflow markets CA. I think I have identified a few, including Palmdale, Lancaster, Victor Valley, the IE, etc.

My next post will be my business plan. Feel free to tear it apart :-)