Slim margins, especially considering, IMHO, we're at the peak of the market now. 

Thats why I'm transitioning to fix and flip, where margins have shrunk but still there are ways to make a buck...Continue reading and listening to podcasts and you will see that there are plenty of ways to start in real estate and not all require big down payments.Good luck!

Too often the margins are just too thin for most people.

There is no margin for error at that rate.

Welcome @Whitney T RedfieldSoCal can be a tough nut to crack for newbies.A couple years ago I mailed out lots of letters to homeowners in LA County with no luck.Then I tried rural Kern County and got a deal from a distressed homeowner in California City.The margins were not as large as they would've been in LA or OC, but I was able to rent it out for 2 years before fixing it up and selling it for a decent gain.Also, have you considered an owner-occupied small multifamily for your first deal?

Does the spread margin over the interest rate fluctuate?

@Ricardo Cristobal SoCal can be a tough nut to crack for newbies.A couple years ago I mailed out lots of letters to homeowners in LA County with no luck.Then I tried rural Kern County and got a deal from a distressed homeowner in California City.The margins were not as large as they would've been in LA or OC, but I was able to rent it out for 2 years before fixing it up and selling it for a decent gain.Also, have you considered an owner-occupied small multifamily for your first deal?

Good margin play but really better than your HML biz?

He thinks the house will be worth at least 450k so he has a comfortable margin in case of default.  

Looking at a few a off-market properties it seems like the smaller ones in good areas have great potential, but only for major rehabs - simple floor and paint jobs just don't have margins to make sense.