All Forum Posts by: Sebastian Dombrowski

Hi Biggerpockets members,

I'm from Southern California where real estate is just ridiculously expensive. It seems impossible to find rental properties that fullfill the 2% or even the 1% rule.
However, I found the Coachella Valley that is 2-3 hours away from where I live. Prices seem to be more reasonable there and from what I've seen it seems like if you find a good deal there you might hit the 1% rule.
My concern is though that there is a lot of undeveloped land around there (from what I can tell). So if I invest there now and prices go up a little, more houses/appartment complexes might get built which will put pressure on prices and potentially rents as well.

So my investment would probably not appreciate in value and even the cash flow might be in danger.
Does my reasoning make sense or am I making wrong assumptions?
Does anyone have experience investing in that area?

Thank you very much for your help,

Sebastian

@Robert Leonard Thank you :)

@Account Closed Thank you so much for your feedback. It is very helpful and appreciated. I find the suggestions about the CA tax rate and what to look for in a specific neighborhood especially helpful. Your linked post is also very interesting but I think I will try landlording first and see how that goes. Again, thank you very much for your feedback.

Hi BP members! 

I’m a newbie to real estate investing. For the past 6 months I’ve tried to educate myself on the topic. I’ve read some books, started listening to the BP podcasts (I’m close to episode 100), and read some articles and posts here and there. Now I would like to find an area for a buy-and-hold investment. My problem is that I’m living in the middle of Los Angeles and as some of you might know, real estate is just insanely expensive here. So I have to find another place for a buy-and-hold. Optimally, I would like to manage my first rentals myself to get the learning experience, so finding something within driving distance would be great. Here is my approach to finding an area:

1. I search by zip code and filter for zip codes where the population grew and the unemployment rate declined in the past 5 years.
2. For the left-over zip codes, I look for low price-to-rent ratios. BP often talks about the 1%/2% rule which can be translated into the price-to-rent ratio (1% (or 2%) of home-price per month = price-to-rent ratio of 8.33 (or 4.167))
3. Check left-over zip codes for low crime rate.

That’s how far I am right now. Next I would try to find a smaller area within the zip code and then start searching for individual properties.

If I can’t find anything in California, I would start looking elsewhere using the same steps.

In your opinion, is that a good approach? Which important factors am I missing? Am I making any wrong assumptions?

Thank you so much for your feedback.