There seems to be virtually nothing on the market (that I’m aware of) that cash flows even with 25% down. Is the market just too overpriced or am I missing something?
I am just curious how one would go about getting any cash flow at this time - specifically San Diego area.
First, you need to get into the right houses in the right price range. In SoCal, it’s hard enough you go an hour or two East. Consider also, other states, but it’s not worth it for ONE house - in Atlanta, for example, you can buy 4-5 houses with that $100k as down payments.
How to start RE Investing
Good question, and it was the exact dilemma when I started RE investing in 1983. Back then, I had 50K to invest, interest rates were high, and so were the prices. In NYC nothing cash flows.
My wife and I settled on two approaches. Her approach is to look at at least 100 properties, and there would be a fluke. My theory is to commit to a two hour commute radius to my rentals, and see what we can find.
First, my approach. While 3 families in NYC at the time sells for 200K to 225K, 2 or 3 families in Philadelphia, not bad areas, goes for 40K to 90K, and at these prices, cash flows nicely. While house prices were 4 times higher than NY, rents were only half as much in Philly. So we spent some time checking out Philly.
We also tried my wife’s approach. We concentrated on 3 families, and as I said, they went for 200K to 225K. After looking 8 to 9 months, we were approaching checking out 80 properties, we found a FSBO for 150K, a fully legal one in a good area to boot. Many are illegally converted. The one negative, it’s located 3 houses down from an abandoned gas station.
So we checked at out the next day, and submitted the offer the same night, and closed on it 3 months later. I put 50K down and moved there, with the rental apartments carrying most of the mortgage.
So we skipped the idea of doing RE in Philly. My 2nd and 3rd investment also followed the 100 property rule. They also happen to be flukes. I bought the 2nd property for 180K whereas it should go for 225K. While I at this point had another 50K to put in it, my mother in law also wanted in and invested another 40K, and so putting 90K for in a 180K property, it cash flows nicely. I would just about break even at 50K down.
This is how I started. Driving from NY to Philly checking properties takes some effort. Checking out 100 properties locally, hoping to find a fluke, while sound ridiculous, also seems to work.
I’m sure there could be other approaches. So the trick is to get busy and start looking.
Reit
You could check out a REIT, like Rich Uncles which is based in Orange County, California.
Or find a managing partner to find and close deals. Some private and Hard Money Lenders use funding partners for their product offerings. They also offer cashflow for your investment. These are ways of investing without having to manage properties yourself or be a landlord.
100k to invest in SoCal
Hi, I have found a solution for this issues. I have 18 properties now in SoCal and they are all cashflowing heavily. Sometimes I pick up properties for as little as 25k… not 25k down, just 25k. Im in Orange County but my properties are not in the city here. If you have an interest just message me. I get anywhere from 15% to my best property returning 80% on my money. I have a property manager in place and they handle everything.
100k In SoCal
To clarify, yes the properties are in SoCal