Updated 5 months ago on . Most recent reply
Investing In Los Angeles
Hello everyone!
I would like to use the method House Hacking for my first real estate investing, is that even possible in Los Angeles? I checked Redfin but everything looks very expensive.
And thoughts or ideas? Thank you!
Most Popular Reply
It is a tough RE market. Interest rates are near the highest for this century. Property prices per 2 recent studies are at an all time high versus rent (the studies were comparing the cost of home ownership to renting and both studies concluded that in virtually every large US city it is on average cheaper to rent than to own).
In virtually all markets the days of purchasing a rent ready property at retail off the MLS is not going to save the house hacker money in the initial years. It likely is not going to beat other investment options available.
It is my view there are only a few paths in RE in the LA market (and most other RE markets) at this moment 1) patience. I am thinking years of patience. LA has historically out performed virtually all other markets. Over the long term I believe this will continue. However, other markets have the same challenges contrary to the posts from OOS agents. I am not that patient. 2) value adds. For the most part these require work and have risk but there are few markets that do better than LA via value adds. My last purchase is up over $1m above my costs in 3.5 years. 3) alternate rent models (rent by room, STR, MTR). These require work. Pay an PM and the profit is significantly reduced 4) alternative below market financing such as assumable, owner finance, wraps, sub to, etc 5) path of progress. Buy in areas that appreciation will far exceed the general market. It there a large major infrastructure development somewhere? In my market they recently completed a multi billion dollar Chula Vista bay front redevelopment. Already approved but early in the process are a large enhancement of a secondary airport (brown field) and the midway rising development which includes a new arena, retail, and residential development (pending law suits, etc). With such large and costly development, these areas seem likely to out appreciate the general local RE market.
realize if you purchase rent ready off the mls with market financing, you likely will need to hold near a decade for it to likely save enough versus renting to justify the effort. Patience is very likely to be awarded. As indicated, I am not that patient. I always use one of the other items I mentioned.
Good luck