All Forum Posts by: David Faulkner

Oops! 2014, not 2015 ... since my time machine is currently out of service, I won't be attending this meeting.

I'm in! Just me. I buy-n-hold SFRs in Antelope Valley (Palmdale, Lancaster) CA and Phoenix AZ. Looking to learn and branch out into other long term, cash flow investments (notes, MHPs, etc.) since SFR buy-n-hold numbers don't seem to be adding up these days in the markets I'm familiar with and have trusted boots on the ground in. Please message me location in Irvine when determined. Thanks!

Hi Joel,

Normally I'd advise starting small, in your backyard, doing all the work yourself, and focusing on cash flow. This let's you learn the business while the stakes are low, then scale up once you know what you're doing (and prove it).

In your case, though, because of where you live this may be difficult. If you like Texas and have friendlies on the ground there, I'd start by looking there. If you can find jobs there, even if you have to take a pay cut, what about moving before you retire? You could likely buy a house for cash from proceeds from your CA home, and the gains (up to $500k) will be tax free if this has been you and your wife's primary residence for more than 2 yrs. Living mortgage free will allow you to save like mad and invest in rentals in your new, better cash flowing, Texas backyard. A big move, to be certain, but a low risk, potentially high reward option for getting started. As an added bonus, when you leave your CA jobs, you can roll your 401ks into a self directed IRA and invest in RE as well (notes and/or rentals, tax free income if you turn it ROTH).

@Arien Chou, I like you're strategy ... I use a similar strategy here in SoCal. The only challenge for me is cash flow. Do you accept negative cash flow when you cash out refinance and bet on future appreciation and rent increases to carry the day, or do you only cash out as much as you can and still cash flow? In many places in California, positive cashflow means you need to leave ~40% of the equity untouched in the property, no? On the other hand, negative cash flow adversely affects your staying power if the market takes a dump, as it sometimes does in CA.

Prices go up, prices go down (but mostly up) ... so long as 1)the rental is behaving as expected in terms of cash flow AND 2)you have enough margin in positive cash flow and equity to have staying power, then I would hold onto it and stop worrying so much about prices. If 1 and/or 2 is false, you should sell ... but then you are selling because you're in a bad investment, not because of prices. If 1 and 2 are true and prices fall below what you paid, buy more just like it!

Apologies if I offend ... no insult meant to AZ or Nevada ... what I meant is that moving away from your family, job, social network, and loved ones is a sacrifice, regardless of where you are moving to or from.

Apologies if I offend ... no insult meant to AZ or Nevada ... what I meant is that moving away from your family, job, social network, and loved ones is a sacrifice, regardless of where you are moving from or to.

I would start out investing close to home, or move, or both. Personally, I have successfully invested in buy-n-old SFRs both locally (Palmdale, CA) and out of State (Phoenix, AZ) ... cash flow out of state seems much better, but better be darn sure you have 1)a good real estate agent, 2)good contractors, & 3)a good prop manager (most important) because you will be highly dependent on them as your experienced eyes & ears on the ground. Problem is there are a lot of thieves and incompetents, and when you are 1st starting out you won't likely know enough to be able to pick out these 3 and get them all right, and may suffer as result (believe me, I know from painful experience).

I started by moving from Glendale, CA (nice neighborhood, but horrible for cash flow investing) to Palmdale, CA (not so nice, long commute, but cheap and much better cash flow). Yeah it sucked, but it allowed me to: 1)save a ton of money, 2)buy a SFR for what the down payment in Glendale would've been, 3)familiarize myself with neighborhoods enough to know which ones to avoid, 4)learn by doing (instead of being solely dependent on other professionals). In your case, if you're in Costa Mesa, look to move to the Inland Empire ... or better yet, if you can swing it, move out of SoCal (Phoenix?, Vegas?). It is a sacrifice, but well worth it in my opinion if you're serious about learning real estate investing by doing (the best & only way). Feel free to PM me if you want more details.