Best County for Rental Property? OC, LA County or SB County?

Question

Hi everyone!
I am very very new to this and still trying to learn everything I can about multifamily real estate investments. I am looking to buy my first home (possibly and duplex, triplex or fourplex), however, I have consistently heard to stay away from LA County due to the stricter rent control policies. Is this true? Is this a make or break situation for other investors? I am planning on living in the property for the first few years.

It has been very challenging to find multifamily homes in OC due to the very little supply. OC is also significantly more expensive than other similar real estate properties in LA or SB County. Would you suggest looking for other opportunities in LA County or SB County? Or would it be worth it to wait for a good opportunity in OC?

Thank you!! Appreciate any advice you all may have.

Matt Giacinto · Answer

In my honest opinion, I wouldn't start investing in LA until you're more experienced as both an investor and landlord, unless you really want to live there. The LA rent control and tenant moratorium laws are not very friendly and could cause quite the headache for just about anyone. The OC and SB counties are great options outside of LA.

Rick Albert · Answer

Why not consider Ventura County? I know inventory is low there, but that's where I would put my money. Many people in LA are heading out there and it is better weather.

LA County works well because inventory is so low your vacancy would be low, thus high rents. I have a client who posted his 2 bed ADU rental and was getting 100-200 calls a day. He had to raise the price to slow it down.

Right now my rental is in LA County and so far so good. We do extensive vetting, which has helped. If I were to buy in So Cal, I would strongly consider Ventura County. I would probably do a house and build out an ADU.

Jazmin Hernandez · Answer

Thank you for your replies. It has been very helpful!

Peter Mckernan · Answer

I would go SB County, there you will not have to deal with tougher rent control laws as LA has steeper laws for rent control than other counties. They have slowly ramped up their rent control over the years. You can still find some deals out there in SB County, you need to be creative to get them and cashflow. House hacking as many people said as well is a good option!

Mike D'Arrigo · Answer

@Jazmin Hernandez Neither of those would be on my radar. All are expensive markets that don't cash flow without a very large downpayment. Personally, I would look out of state in more affordable landlord friendly states. With high CA prices comes high debt service. Being a very tenant friendly state, you could end up carrying a high mortgage payment with no income when your tenant stops paying and it takes you 6-12 months to kick them out. It's a sure ticket to a foreclosure unless you have a lot of reserves.

Matthew Kwan · Answer

House hacking with FHA is the ideal way with min down payment. However, anything above 3-4 units you would also need to consider passing the Self Sufficient Rule (SS Rule) where your projected gross market rental at 75% has to be greater or equal to your monthly PITI. The SS rule only applies to 3-4 units when using FHA but if it's single family or duplex, it will not trigger the rule. You can also consider single family and rent by the room. Usually it'll be 5% down payment but the mortgage insurance is lower than FHA @Albert Bui @Carlos Valencia

Natalie McCarty · Answer

Hi Jazmin! I am a local realtor in Whittier, CA. Whittier is actually a great little spot for small multi family. Happy to chat further and help you get started here in Socal!

Best County for Rental Property? OC, LA County or SB County?

Best County for Rental Property? OC, LA County or SB County?

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