Los Angeles, CA · Member since 2016 · 3 posts · 1 vote
Hi,
I'm brand new to the BP and still very new in learning the ropes. I'm interested in house hacking and rehab a duplex or triplex, but the Los Angeles area can be really expensive. I want something in a decent area, so I'm trying to stay away from area such as Compton or parts of South LA that are really cheap, but generally unpleasant areas to live, since I'll be living there as well.
For those who are more experienced in this and with the Southern Cali area, can you steer me in any relatively reasonably priced areas with potential gain for a first time investor?
Also, should this be done as personal purchase or only under a business entity such as an LLC? If the latter, how difficult is lending in this scenario?
I'm not completely clueless, but I need a lot of advice. The more I research I do, the more this all seems quite overwhelming! All advice and help is sincerely greatly appreciated!
Thanks!!!!!
Real Estate Agent · Los Angeles, CA · Member since 2015 · 201 posts · 82 votes
10y
@Elice Hennessee House hacking is a great way to get started here in LA. It really depends on your budget and where you want to live. There are some options in Inglewood, Hawthorne, Carson, long beach areas. You are not going to get great returns here, but you do get great rent growth and a possibility of appreciation.
Real Estate Agent · Los Angeles, CA · Member since 2015 · 201 posts · 82 votes
10y
@Elice Hennessee House hacking is a great way to get started here in LA. It really depends on your budget and where you want to live. There are some options in Inglewood, Hawthorne, Carson, long beach areas. You are not going to get great returns here, but you do get great rent growth and a possibility of appreciation.
If you're house hacking a duplex or triplex it's most likely a personal purchase. An LLC is going to have a hard time getting a loan on anything under 4 units.
More than 4 units is a commercial property which requires a commercial loan. Those are easier for LLC's to acquire but it's a different ball game.
Los Angeles, CA · Member since 2016 · 3 posts · 1 vote
10y
Thanks all! @Jeff B. , what do you mean by "high drama"?
I think a comfortable budget for what I want to do in the first deal would be between $350-450k, but that's based on limited research I've done on the areas mentioned. It seems good investment opportunities are scarce in any decent area, and the really good deals are either cash only or auctions (which I think are hit or miss and prices can easily get too high). Is there anyone with experience and insight on auctions? Is it worth seriously looking into for someone doing this with one or two other partners?
I hope to increase budget for subsequent deals.
I prefer to avoid a ridiculous commute, so Valley areas are not ideal for me, but Inglewood, Hawthorne, Carson and Long Beach are definitely viable options in terms of location - thanks for the suggestion @eric dowling !
Also, as a personal purchase how do you safeguard against tenant legal issues? My research has shown that the landlord business is highly litigious, and I like the legal protection an LLC or S Corp would offer. What measures, if any, do you all take to protect personal assets and finances from lawsuits?
Thanks again for the replies! I look forward to getting more info -- as much as possible!!!
Investor · Victorville, CA · Member since 2015 · 17 posts · 3 votes
10y
My attorney had a good point... When you say protect yourself the question is what are you protecting? (What are you worth, asset - Don't actually answer that question) if it's cheaper to increase your insurance (protecting your assets) then do that first. Then as you grow look into LLC, inc or Corporation of your choice... Just an opinion. It worked for me, but every situation is different.
Investor · Victorville, CA · Member since 2015 · 17 posts · 3 votes
10y
My attorney had a good point... When you say protect yourself the question is what are you protecting? (What are you worth, asset - Don't actually answer that question) if it's cheaper to increase your insurance (protecting your assets) then do that first. Then as you grow look into LLC, inc or Corporation of your choice... Just an opinion. It worked for me, but every situation is different.
Also, as a property manager if you take care of issues and document everything you will be fine. I don't go to court often. But when I do I'm very confident.
Real Estate Agent · Los Angeles, CA · Member since 2015 · 201 posts · 82 votes
10y
@Elice Hennessee have you looked into the FHA 203k loan? Could be a good option for house hacking. I'm not sure how much luck you will have at auctions, They usually are not recommended for first time investors.