Gardena, CA SFR Or Multi Unit?

Question

Hi,

I have a some funds and thinking should I invest in a single family and built an ADU ( prob is owner occupancy) or should I invest in a multi family?  What do you think of Gardena, CA

I don’t want to invest in Los Angeles due to the rent control and evictions laws.
What are my others City options? If any developer knows of a good ROI in good school districts let me know ( Beach cities like Redondo etc.)

Any new meetups near Redondo area?

Thank you!!

Clarence Johnson · Answer

Hey Ben,

I grew up in Gardena and my parents still live there.  Excellent market, centrally located, and in my opinion in the direct path of progress as Inglewood increases in demand and more tech jobs are coming to the Southbay.  I always suggest starting with multifamily, it gives you an opportunity to use a 3.5% downpayment for a multifamily where if you start with a SFR you will usually not be able to get a bank to give you a low downpayment loan for a multi.  Don't let rent control deter you from LA or multis, as we now have state rent control to cover cities with no rent control laws.  Rent control is primarily a problem for people who buy without analyzing the properties and no plan to get the returns they expect, also if a tenant is paying mkt rent or a property is delivered vacant the new laws will have little impact on you.  @Andrew Aladjadjian is correct re the new owner occupancy law, I would just warn that I have a few clients who built ADU's in LA (SFR) and now the cities rent stabilization unit is trying to call it a multiunit and apply rent control to their single family homes.  Aside from Gardena, Inglewood still has opportunities , Hawthorne is well positioned with many catylyst for change, and San Pedro's water front development will be a game changer for their mkt.

Matthew Forrest · Answer

@Clarence Johnson Can you expand on your thought about San Pedro and the benefits of the development project? I've never thought much of San Pedro, but I guess it has a lot to gain by being on the water and being Long Beach adjacent.

Andrew Aladjadjian · Answer

In order to accept tenants receiving Section 8 vouchers you must first apply with the local public housing agency. There are a few steps involved but believe me the state is in need of all the affordable housing it can get. The only way I see you being denied is if the property does not pass the physical inspection, which simply requires a clean home with no safety or health risks. You then complete a contract like any other rental, however Section 8 has the final word on the actual rental amount (approx. average market value for the area). You may then request rent increase annually under LA county rent control laws and they are very likely to approve.

Ben Chow · Answer

Thank you for the replies.

Andrew :I am okay with CA rent NOT Los Angeles county (4% and hard eviction laws)

What is the process for section 8 renting?

Yes, would love to meet. You should do a meetup in Southbay if possible :)

Clarence :

3.5% down for multi family? How do you apply for this loan? Hard money lenders or non traditional banks? Would love more information.

ADU and renting both : issue with this is what happens after 2025? Owner occupancy kicks in? Or it’s grandfathered? Huge confusion here.

I can’t find good oppurtunities in Inglewood (multi family) if you have any leads I love to see them.

I personally went to San Pedro, opportunity yes but...but homelessness is out of hand. Needles and tents everywhere. Bad for “good” tenants in my opinion. No tech jobs are going to come in SAn Pedro due to distance ( IMO)

Andrew Aladjadjian · Answer

Hi Ben,

Per the new ADU laws of California, owner occupancy is no longer required until after 2025. You may purchase a home, build an ADU, and rent both units.

Yes, there are new rent-control laws in CA however it does not necessarily hurt investors. For example if you purchase an SFR and it is vacant, and you also build an ADU, you can impose any dollar amount for rent. Then you may raise said rent up to 5% PLUS inflation which gives you another 2-3%. If you collect $3000/mo then you can add at least $150(5%)/mo the following year. If you want to evict someone then you will have to pay for moving costs and about a month's rent, but choosing the right tenant is another conversation. Section 8 pays 80% in rent guaranteed (remaining is due by tenant). Please let me know if you would like to chat or meet as I also live in Los Angeles.

Gardena, CA SFR Or Multi Unit?

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