“I actually have absolutely no idea what you do,” confessed my friend, Austin. “It seems like sometimes you sell properties right away, sometimes you fix them up, and sometimes you rent them out—what do you actually do?”
“Well, I’m a real estate investor,” I said. “I invest in real estate. Every piece of real estate is a different opportunity with different potential.”
I said it confidently, but it had taken me a long time to figure out my investment portfolio. In California, there are so many ways to invest in real estate—and there are a lot of popular California real estate investing strategies that can help you meet your goals.
Here’s how I explained them to my friend.
Popular California Real Estate Investing Strategies
California real estate attracts investors due to its geographic diversity, strong economy, and great investment opportunities. But those opportunities also present challenges. Each investing strategy has its advantages and drawbacks.
I explained to Austin that there are three major investment opportunities I personally look for.
- Fix-and-flip properties: You buy a property that you perceive as undervalued, renovate it, and then sell it.
- Wholesaling properties: You locate properties that are distressed or otherwise need to be sold quickly, buy them at a low price, and then resell them fast.
- Rental properties: As an investor in California, you can also invest in income-generating rental properties.
There are all sorts of other investments out there, such as commercial real estate, but I focused on the three above for the unique opportunities they present. Let’s dive deeper into each one.
Flipping Houses in California
One of the most popular California real estate investing strategies is flipping houses. You buy undervalued property, renovate it, and sell it. Often, house flippers use specific tools and techniques to identify undervalued properties, but it’s really about networking and knowing the market. House flipping can be a great business practice that really serves to add value to communities.
- Property in California is high in value, providing potential opportunities for growth.
- You don’t need to hold onto properties for long periods of time, and the California real estate market tends to move quite fast.
- You can flip one or two properties in your spare time and scale up as needed.
- It can be difficult to find undervalued properties in California because the real estate market is so hot.
- Accordingly, there’s a lot of competition in the state.
- You need to have access to capital, such as hard money lenders.
- You need to be knowledgeable of real estate, repairs, and maintenance.
Wholesaling in California
Wholesaling houses is another popular real estate investing strategy in California. It involves identifying and acquiring undervalued properties, then selling them to a buyer without having to complete any renovations or repairs yourself.
To be successful at wholesaling housing in California, investors need to have a strong network of contacts. You need to be able to identify opportunities quickly, as well as negotiate favorable terms with property owners.
- You can make a quick profit by identifying a buyer and a seller. The California market is so broad and diverse that there are many opportunities for doing both.
- You don’t need to invest a lot of money. It can be prohibitively expensive for a new investor to start purchasing properties in the California market.
- You don’t need to renovate the property.
- You need to have a strong network of contacts in place. In California, it can take time to develop these contacts.
- You have to be able to identify opportunities quickly and move fast.
- You must be excellent at negotiations.
Renting Out Properties in California
Another popular real estate investing strategy in California is renting out properties. The process involves acquiring property and then leasing it to tenants. This is what I did when I first started investing, but eventually I saw that a lot of my properties performed better as flips or even as wholesales.
- You can generate long-term passive income from rental payments, and it isn’t hard to keep rentals full in California.
- Rent prices have remained fairly high throughout a lot of regions.
- You can even hire someone to manage your rentals for you if you don’t want to manage them yourself.
- While you do make money in the long term, you do so slowly.
- If you get the wrong tenants, you could encounter major problems.
- The property could run into expensive maintenance or repair issues.
- You may just find that you make more money selling houses, especially in the hottest California markets.
Regardless of which real estate investing strategy you choose, you really need those connections. As I grew my investment business, I realized that it was all about acquiring leads. If I wasn’t finding the right properties, and if they weren’t on the open market, I wouldn’t be able to invest intelligently.
Invest in California Real Estate With HomeVestors®
As I explained to Austin, choosing the right California real estate investment strategy really depends on the properties in question. Through the network that I formed with HomeVestors as an independently owned and operated franchise, great deals now come across my lap. From there, I simply have to decide if the property is something I want to renovate, sell right away, or turn into a great long-term rental.
Once the properties start coming to you, then you can start deciding how you want to invest. As for how to get started, maybe it’s time to buy a franchise in California.
If you are interested in investing in California real estate but don’t know where to start, a HomeVestors® franchise can help. HomeVestors® is a nationally trusted brand with an extensive network of franchises across the country. When you join the team, you gain access to initial week-long training, 1-on-1 mentorship, and a network of experienced professionals ready to help you every step of the way.
If you are ready to take the next step in your real estate investing career, contact HomeVestors® and learn more about popular California real estate investing strategies.
Each franchise office is independently owned and operated.