In a dilemma purchasing my first residential property

3 Replies

Hi BP,

I rent in Los Angeles right now, and I'm trying to purchase my first residential property (for all natives, i'm looking anywhere west of the 405 near Santa Monica). Obviously prices are really high, and my dilemma is this: I can continue to piss away 1500 in rent every month until there is a correction (hopefully), or I can try to find a modest 2b/2b in a more affordable area (Mar vista, Westchester, parts of culver city).

I'm leaning towards the latter because I know that all of my work will be near Santa Monica/Playa Vista for at least the next 5-10 years. I'm looking for a 2b/2b, and because I'm planning on living in it for a while, Id like the location to be near a bit of night life, restaurants, bars, safe, etc, but when it comes to the actual home, I'm fine with getting my guys to do some remodeling work on the inside after purchase (aka "finding the worst house on the best neighborhood"). I'm also avoiding areas that are rent controlled, and I want to use an FHA loan (first timer!) for purchasing this as well.

Now that you're a bit more familiar with my situation, does anyone know how I should go about looking for a modest 2b/2b on the westside? Do those even exist? I'm trying to buy something below my means because of the sky high prices right now, and any general thoughts on what I should be thinking about would be great.

I would recommend you connect with a local Realtor to help you find a place. It would be a bonus if you can find one that also flips houses and is connected to wholesalers so they can send you some of those wholesale deals as well. 

@Rohan J.  I'm a Realtor in Santa Monica with Coldwell Banker.  I'm primarily focused on flipping though and just started to work with a wholesaler.  

That said, there is almost ZERO inventory for wholesalers or flippers on the westside.  Most sellers in these parts in fact over estimate the value of their home, even if it's a shack, and they want top dollar.  I think your best hope is the find that fixer on a nice street and shoot to pay a little below retail.  Westchester and Mar Vista are the most affordable but the whole "Silicon Beach" thing is pushing values higher fast.

I'm happy to chat w you more if you want to private message me.   

@Rohan J.

Taking your own residential requirements out of it, would you buy a rental in West LA? I have dealt with the same thing you're going through and in the end my answer to that question is no. Think of the rules you read about here. 2% rule?  Ha. Try 0.2% rule. 

Everyone needs to make their own decision but I've decided to invest for the long term in areas that cash flow and rent my personal residence in the area I want to live. I've decided to capture the benefits of real estate ownership without the negative cash flow associated with our area. You can take the 100k you'd need to put down on a place on the west side and purchase one or two rentals in another market. You'll be able to rent more cheaply than your mortgage payment here in LA and you'll be cash flowing on your rental(s).

Now, if you would buy a rental in our area and pray that appreciation makes you whole, then buy the best place you can afford on the west side (location wise) because Santa Monica will appreciate more quickly than Mar Vista will. 

BEST OF LUCK! 

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