Los Angeles (South Bay), CA Multifamily

9 Replies

Hello BP community,

I am very new on my real estate journey. I don't have any experience in this field; so I am starting off with learning as much information that I can and also looking to network with seasoned REI and others in the real estate field. I have recently finished reading 'The book on Rental Property Investing"by Brandon Turner and I absolutely loved it; that lead me to the BP podcast and now I have joined the BP forum,with that being said I am extremely excited & motivated about this new path I have chosen. I'm originally from New York and fairly new to LA, I currently live in the Valley but my plan is to invest in the south bay area mainly because of all the new up and coming projects I have heard about. If you know of other areas I am open to hearing about it. I am currently working on coming up with the rest of the down payment 50k (about 20k short), raising my credit score to 750(50 points short) and lowing my DTI ratio. I plan to start with a Duplex possibly a Triplex depending on pricing. I am eager to start so I plan to purchase January 2020 (I work best under pressure). Very interested in advice/comments, I look forward to speaking with you guys.

Thanks in advance 

Kyle M.

@Kyle Marcs welcome to BP!  Congratulations on starting your real estate journey and I'm confident you'll do well!

Yes, the South Bay does have some good up and coming projects.  Depending on what you're looking for there are locations in Hawthorne, Torrance, San Pedro and Long Beach that you can get some good deals on multi units.

When you're ready to start looking please feel free to reach out.

Originally posted by @Kyle Marcs :

Hello BP community,

I am very new on my real estate journey. I don't have any experience in this field; so I am starting off with learning as much information that I can and also looking to network with seasoned REI and others in the real estate field. I have recently finished reading 'The book on Rental Property Investing"by Brandon Turner and I absolutely loved it; that lead me to the BP podcast and now I have joined the BP forum,with that being said I am extremely excited & motivated about this new path I have chosen. I'm originally from New York and fairly new to LA, I currently live in the Valley but my plan is to invest in the south bay area mainly because of all the new up and coming projects I have heard about. If you know of other areas I am open to hearing about it. I am currently working on coming up with the rest of the down payment 50k (about 20k short), raising my credit score to 750(50 points short) and lowing my DTI ratio. I plan to start with a Duplex possibly a Triplex depending on pricing. I am eager to start so I plan to purchase January 2020 (I work best under pressure). Very interested in advice/comments, I look forward to speaking with you guys.

Thanks in advance 

Kyle M.

 Kyle,

Good to hear that you're really getting into real estate. Los Angeles is a really great market for real estate. I am very optimistic about Los Angeles in the long term; however, I think the market is very expensive right now. I don't want to discourage you, but I don't think you'll find anything that will cash flow (in other words, your net cash after debt service) in this market. To get a positive return, you will have to rely pretty much 100% on the value appreciation. In my opinion, this is a very risky investment, unless you are an experienced investor doing a quick flip in the area. 

The three most important strategies in minimizing risk is:

1. Cash flow from Day 1

2. Secure Long Term Financing

3. Maintain a healthy capital reserve

Imagine you buy an expensive duplex in LA right now, and the market crashed 30% next year. How will this impact your investment? If you have sufficient capital reserve, then you can sustain the monthly debt service, but what if your term is coming due and the bank wants you to repay the loan? Do you have sufficient capital reserve to pay off the bank? In this case, you may lose your equity in the house. 

Alternatively, I'd suggest you look for other types of investments or simply hold on to cash and wait for the market downturn. It's hard to be patient, but it can be rewarding. 

Above is just my opinion. I could be completely wrong, so I'd love to hear other people's opinions!

Most of South Bay is crazy expensive. For appreciation my bet is on San Pedro. It’s really the last working class/blue collar area in LA County that’s on the waterfront. 

I worked with a fantastic agent who's based in Long Beach, Cody Charnell at Buckingham Investments.  I think he's on BP.  They only do MF, and they take however much time you need/want to educate you.  They have free detailed metrics of the South Bay/LB/San Pedro/Inglewood that their company has been collecting and aggregating for years (decades?).  I really like working from a numbers-based perspective.  I get nothing for the plug, but appreciate others who offer up trusted resources.

There's a lot of inventory in Long Beach.  It's often older, which creates a great opportunity to buy at a discount, live in one unit, and rehab/value-add.  I'm a strong advocate of house-hacking.

With Long Beach and CA state-level rent control here or soon-to-be here, you want to buy on actuals or at least be sure your underwriting doesn't exceed the likely rent increase caps.

@Kyle Marcs I came across this thread and figured I would point out that I refer to @Jeffrey Isenberg for anything 2-4 units in the South Bay.  It's his niche and he can really help you further understand the slight nuances that can be found block by block and how they can affect your investment.  

Best of luck!

@Jay Chang that’s for the advise; you are right with all this talk about the market crashing it really has me nervous but at some point I do have to jump in. I will say LA is very expensive I may end up buying out of state for a lot less and cash flow get my feet wet then return and buy some here.