All Forum Posts by: Sam Choi

Hello BPers,

Thought I'd post this in the LA forums as well to get any advice from local LA investors

My wife and I recently purchased our primary residence in Silver Lake and did a pretty extensive remodel, however, I am now in the market for an investment property, as a SF residence does not provide any cash flow!

I have been reading books, the BP forums, as well as listening to different podcasts, however I have been having a hard time deciding what I should do for my first deal. I've been in contact with several agents and wholesalers from the Los Angeles area as well as the Dallas / Fort Worth area to look at the various opportunities.

My wife and I have about 150k that we can invest as well as additional funds for any rehabs. Here are the different strategies I've been leaning towards.

1. Hard Money Flips - I've been talking to one of my dad's realtors and his strategy is pretty solid. He essentially finds rehab homes, mainly foreclosure properties, connects you with his hard money lender (20% down, 2 points, 10% interest), connects you with one of his contractors, and then will list the property for sale. He provides a rehab estimate as well as ARV comps. From the listings I've seen, typical purchase prices are right around 500k, with an average profit of about 50k after all rehab, holding costs and agent commissions. With the hard money loan, it would be closer to 25k.

2. Out of State - I've also been in contact with several wholesalers in the DFW area. One of my friends has been quite successful there, starting only about a year ago. He has purchased 2 single families as well as a multi and has done quite well with them. I would either flip or buy and hold with his connections, depending on the property. However, because the DFW market is on fire right now, so it has been quite difficult finding any properties that meet my criteria. I have been on the forums quite a bit lately and have read about many other cities with higher cash flow and flips with better potential.

3. Buy and Hold Multifamily - The last strategy I've been considering is to buy an hold a multifamily, preferably a 4-plex, near the Los Angeles area. However after analyzing many 4units, they have mostly been negative cash flow even if I purchase rehab properties. With this, I have come across a few issues as well. First of all, I only have limited capital. I do not really want to sink all of my capital into buying a multi family, as it would take quite a while to save up to do another deal. Secondly, the rent control issue in Los Angeles. I have been looking mostly at post 1978 properties due to this as well as unincorporated matters, but the prices definitely reflect that they are non rent controlled. I have also been looking into non rent controlled areas such as Inglewood, San Bernardino, and Long Beach, however, I don't the area as well.

I have been researching and thinking about the following for quite some time, however due to the wealth of knowledge on the forums, I wanted to ask to see everyone's thoughts. I would love to hear any feedback on the following strategies or if there is anything that I might be missing. Thank you for reading through the long post, and would greatly appreciate any advice!

Hi @Nick C. Thanks for the reply!

1. Yes, that would be correct. It would be on average 50k profits for full cash, however with the hard money costs, the profits would be approximately 25k on average. So with a 500k prop, I would be putting in 100k towards the purchase price. But now that you mention it, the profits are extremely low compared to the risk.

2. Yes, I do have a friend that currently invests in Dallas right now. But it is getting quite difficult to find decent there as well. But have been consistently analyzing deals.

3. That would be a great strategy. Perhaps I can BRRRR after a year or so. Will definitely have to research that out of state multifamilies more.

Do you invest in Tampa currently?

Hello BPers,

My wife and I recently purchased our primary residence in Silver Lake and did a pretty extensive remodel, however, I am now in the market for an investment property, as a SF residence does not provide any cash flow!

I have been reading books, the BP forums, as well as listening to different podcasts, however I have been having a hard time deciding what I should do for my first deal. I've been in contact with several agents and wholesalers from the Los Angeles area as well as the Dallas / Fort Worth area to look at the various opportunities. 

My wife and I have about 150k that we can invest as well as additional funds for any rehabs. Here are the different strategies I've been leaning towards.

1. Hard Money Flips - I've been talking to one of my dad's realtors and his strategy is pretty solid. He essentially finds rehab homes, mainly foreclosure properties, connects you with his hard money lender (20% down, 2 points, 10% interest), connects you with one of his contractors, and then will list the property for sale. He provides a rehab estimate as well as ARV comps. From the listings I've seen, typical purchase prices are right around 500k, with an average profit of about 50k after all rehab, holding costs and agent commissions. With the hard money loan, it would be closer to 25k.

2. Out of State - I've also been in contact with several wholesalers in the DFW area. One of my friends has been quite successful there, starting only about a year ago. He has purchased 2 single families as well as a multi and has done quite well with them. I would either flip or buy and hold with his connections, depending on the property. However, because the DFW market is on fire right now, so it has been quite difficult finding any properties that meet my criteria. I have been on the forums quite a bit lately and have read about many other cities with higher cash flow and flips with better potential.

3. Buy and Hold Multifamily - The last strategy I've been considering is to buy an hold a multifamily, preferably a 4-plex, near the Los Angeles area. However after analyzing many 4units, they have mostly been negative cash flow even if I purchase rehab properties. With this, I have come across a few issues as well. First of all, I only have limited capital. I do not really want to sink all of my capital into buying a multi family, as it would take quite a while to save up to do another deal. Secondly, the rent control issue in Los Angeles. I have been looking mostly at post 1978 properties due to this as well as unincorporated matters, but the prices definitely reflect that they are non rent controlled. I have also been looking into non rent controlled areas such as Inglewood, San Bernardino, and Long Beach, however, I don't the area as well.

I have been researching and thinking about the following for quite some time, however due to the wealth of knowledge on the forums, I wanted to ask to see everyone's thoughts. I would love to hear any feedback on the following strategies or if there is anything that I might be missing. Thank you for reading through the long post, and would greatly appreciate any advice!

@Jo-Ann Lapin Thank you very much Jo-Ann, will definitely let you know if I have any questions. 

@Connor Maloney Thanks a lot Connor! Happy to have found BP!

@Manolo D. Yes, that is exactly right. A house that doesn't show well, so we can at least purchase at somewhat of a discounted price. And yes, I am in the process of meeting with a few agents at the moment. And yes, I will be getting the approval sometime this week. But thank you so much for all your advice! I really do appreciate that. I will definitely let you know if I have any other questions. Thank you!

@Manolo D. Yes, that is the issue. And I believe after we do purchase the house, we will be living there for a number of years. So if we do end up purchasing a house that needs some work, we will definitely go all out, to make the property as beautiful as possible, as we will be the first residents for several years. So hopefully I'll be able to find the perfect property!

@Ali Boone Thank you very much Ali! And I actually graduated from Pepperdine, so I'm quite familiar with the area! At the moment, I'm simply trying to find a home for myself. It would be nice to have that extra income with a Multi Family, but a Single Family will do just fine. So for this property, I am looking at it through an investment point of view, but it won't be an investment property. From everything I'm hearing, it seems it will be very difficult to find the right house in the Silver Lake and Echo park areas. However, in the future, when I do start investing in properties, I will definitely have to purchase out of state. Maybe I will ask you for a little advice then! 

@Jerry Padilla Thanks for the Info Jerry! That actually does help a lot. As I mentioned to Ali, MF is just a secondary option I am looking at, as I am in the market for my own residence. But I will definitely let you know if I need any help getting pre-approved or anything like that.

@Jeff Greenberg Thanks a lot Jeff! I appreciate that!

@Derek W. Thank you very much! I'm definitely going to have to check that website out. You wouldn't happen to know if there are any current foreclosures or off market properties in Silver Lake or Echo Park? Any insight would be greatly appreciated!

@Manolo D. Yes I did explain that to her. But she still seems hesitant. But I am still on the search for both SF and MF, so maybe if we find that right one, she will change her mind. You mentioned that I would only be living there for a year? Would that be the property that I will be purchasing? I'm really hoping I will find a house that needs minor fixing up to do, even if it is retail. I just think completely renovated flips will be too expensive.

@Eric Dowling Thanks for the message! I will definitely let you know once I have my schedule figured out for next week. Definitely appreciate that!

@Joe D. Thank you very much! Very excited to join the community!

@Manolo D. Thank you for the great tips! You are absolutely right in taking my time and getting the correct inspections done. Especially because SL and EP have houses mostly made in the 1920's or so, so there can be many potential problems. And at the moment, I am still deciding whether or not we would like to go with the multifamily option, as my fiance doesn't seem as comfortable as me, in regards to living in an attached property with other residents. After listening to your thoughts, purchasing a property wholesale may not work for us, as I don't know anything about hard money loans, and although we will make a big down payment, I don't have enough cash to purchase any properties outright at the moment. We may have to go with more of the retail route. But I will definitely try to connect with Roger A to see what he thinks about it. Thank you so much!

@David Tipton This has been my biggest concern. I have been looking at the websites for a few months now, however there hasn't been anything that we loved as of yet. It is one of the hottest markets right now, during one of the hottest times. I will definitely have to check out the Ultimate Beginners Guide. And the only problem with renting in that area would be that it is so expensive. So I would be throwing away a lot of money on rent even it were a 1 year lease. So we may have to live with the parents for a few months, as a last resort. And yes, we are definitely not going to be selling anytime soon. If we do happen to move out after a few years, we will keep the property and rent it out, as I would like to eventually start buying and holding properties for the future. But thank you very much for the information! I will definitely start educating myself more and contact some agents in the area.

Thank you all for the help! I very much appreciate it! If there is anything else that anyone else can add, I would very much appreciate that as well!