Los Angeles Real Estate

4 Replies

I am brand new on BP and just started to look into Real Estate. Since I live in Los Angeles, I thought it would be wise to buy something 'close to home'. At first I thought I should buy for myself, but since I am single, and have a super cheap rent right by the water, I decided to buy and rent the property out. Many articles talk about the ROI and 'good deals & bad deals', but realistically it seems to be impossible to find ANY property in Los Angeles, which would pay for itself by renting it out. I am looking at properties around 450K - 500K, which does not buy you much in this city. Down-payment can be 20%, which will result in a needed rental income of about $2500 to break even and to cover the mortgage, tax and insurance, but not including unoccupied time, repairs, etc. The houses in areas which could yield this amount are too expensive to buy and the ones which fit my purchase budget, wont be bringing in enough rent. While people on here write about $130.000 houses, which they rent out and make a living off of it, this doesn't seem possible in an expensive city like Los Angeles. I am sure there are hundreds of people like me on here, who experience the same.

@Chris Weike

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Originally posted by @Chris Weike :

I am brand new on BP and just started to look into Real Estate. Since I live in Los Angeles, I thought it would be wise to buy something 'close to home'. At first I thought I should buy for myself, but since I am single, and have a super cheap rent right by the water, I decided to buy and rent the property out. Many articles talk about the ROI and 'good deals & bad deals', but realistically it seems to be impossible to find ANY property in Los Angeles, which would pay for itself by renting it out. I am looking at properties around 450K - 500K, which does not buy you much in this city. Down-payment can be 20%, which will result in a needed rental income of about $2500 to break even and to cover the mortgage, tax and insurance, but not including unoccupied time, repairs, etc. The houses in areas which could yield this amount are too expensive to buy and the ones which fit my purchase budget, wont be bringing in enough rent. While people on here write about $130.000 houses, which they rent out and make a living off of it, this doesn't seem possible in an expensive city like Los Angeles. I am sure there are hundreds of people like me on here, who experience the same.

In my opinion, most areas of California are terrible for "Cash Flow" investing.  Although I started with flipping houses in SoCal, I now purchase, rehab, lease and sell or hold turn key cash flow properties in Kansas City Missouri because it is a great market and your returns there are great!  And never mind about even spending $130k.. Fully rehabbed and rented, you can find them in the $60k-$80k range in good C+ - B class areas. 

Ivan

LA is a value add deal perhaps vs go on mls and buy for straight up cash flow like most areas. You can find CF a couple hours outside of RB still. Many who buy LA are expecting appreciation in value and rents. The cheapest closest place to you might be Inglewood. There could be some great path of progress coming there with stadium plans etc...I have seen some deals there that could work if you are up for being in a pioneer stage.

Good luck with your search!

@Chris Weike I'm from CA also so I know the impossibility to get decent cash flow and ROI here unless you've owned the property for a long time. I like the Midwest, particularly Indianapolis and Kansas City where you can buy cash flowing properties for less than $100K with strong rents. I'd be happy to share more insight if you want to contact me.

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