Visit LA regularly for work. Dumb idea to buy something to rent out when not in use?

Question

I'm hoping your expertise can set me straight!I'm a 
mid-career professional living in the Midwest with my family, but visit 
Los Angeles 5-6 days/month for work.  This will not change.Instead
 of ubering/hotels when I visit, I have an apartment in LA, and a car 
I keep there. I understand that is wasteful from a 'bottom-line' point 
of view, but it makes it so much easier to deal with the travel when I 
have my things on hand.Instead of throwing away money on 
rent, I was thinking about buying a property I could use 
when visiting, and rent out when I'm not there.I know STR in 
Los Angeles is very difficult to pull off. Further, I know that 
'investing' in LA is not the best use of my money.

But, is 
there some way to make this work? I am currently 'losing' a few 
thousand dollars/month on rent, so anything close to breaking even would
 be fantastic, plus potential appreciation. If STR is possible, I would not want to self-manage.

additional info:- logistically, would be ideal to be in the south SFV or north 405 LA corridor (brentwood, culver city, etc). I could stray from that a bit if necessary.

- I would be willing to put in around 200k cash. I have excellent credit.

any other info I am happy to offer if needed. Appreciate any guidance you all can provide!

Ned J. · Answer

Id invest your $$$ in the midwest close to home and use the $$ to expand and fund the trips to LA.

OOS investing is always a challenge and the are of LA that you are trying to do this is is expensive and a real tough market to make cash flow. It may pay off in long term appreciation

Najma Osman · Answer

Hi @Neil Patel,

I would also recommend investing in an area in the Midwest that will provide a better return on your investment. You can then use that cash flow to fund your stay in California. I invest locally in Columbus, Ohio and I think we have a great market for appreciation and cashflow.

Account Closed · Answer

If you are going to be doing this for a long time, it makes sense IF an STR is feasible. If you end up with a vacant for 3 weeks a month and live it in the fourth, probably not. But if your negative cash flow ends up being less than your rent, and a down payment is no issue, this could be a good opportunity to save some money every month and build equity.

Chris Morris · Answer

To be clear, you can only rent out a unit as a STR in Los Angeles unless you live in that unit for > 50% of the year.

But you can do rent out rooms, or the entire unit, for 31+ days, as that is not considered a short term rental.

Peter Mckernan · Answer

The challenge with a lot of LA County cities are that the Airbnb idea is tough to nonexistent due to laws/regs they apply. For instance LA you have to have the home as a primary, and then rent out the back unit etc.

I would suggest this on your search in LA since you visit:

1. Find a property with a small ADU, you can come stay in the back on those days you are in town

2. The front part (main house) rent as a Midterm Rental (MTR), cities are still allowing these and the areas you stated would still have these in high demand (if you want to confirm that go to furnishfinders, go to owner resources and search the areas you want to look in, that will show you amount of views and requests over the past 12 months in those areas= Demand).

3. This will give you another write off, increase your cashflow, and reduce your expenses with staying in a hotel

4. The last one is that appreciation you will get having your place in LA, it will still have a good upward movement for when you sell it

Damaso Bautista · Answer

@Neil Patel

The corridor where you are looking to buy is one of the most expensive in Los Angeles County.  So unless you have money to burn I don't see how the numbers would work out.

Personally I don't think it makes too much sense to do this as an investment.  Put that same amount of money into properties in the mid west where you are and you can pay for your stays in Los Angeles with the money you are making there.

Just my opinion. Good luck!!

Johnny Quilenderino · Answer

Yes sir, buy the house and house-hack. I did that for three years in college. Had my house paid for in a few years. California is all about ADU's!!!

Johnny Quilenderino · Answer

Have you thought about room rentals? Potentially, buy near a college or a hospital?I had a young nurse do that in Northern VA, and within 5 months she has all spare rooms rented. Maybe something to think about? She started paying the mortgage with rental income at the five-month point.

Visit LA regularly for work. Dumb idea to buy something to rent out when not in use?

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