Rent in one city, invest in another, how can I scale from here?

Los Angeles County, California
General Real Estate Investing
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Rent in one city, invest in another, how can I scale from here?

Jonathan Carmel
Member since 2021 · 7 posts · 4 votes

Hi everyone, I currently live / rent in Los Angeles and have an investment property in St. Petersburg, FL. I'm looking for strategies to buy my second property, but can't decide whether to try and house hack in LA or continue honing in on the Florida market. I've thought about selling in Florida and doing a 1031 exchange to build equity in Los Angeles, I've thought about a HELOC or home equity loan to buy a second property in Florida, etc.

Does anyone have thoughts / strategies on how best to scale from here? I'm itching to continue buying, but can't decide which direction to move. 

Thank you! 

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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
4y

You can house hack here in Los Angeles with 3.5% down. I just closed on one for a client a few weeks ago. It was an FHA 203(k) loan.

I'm always in the mindset of owning the roof over your head. That way your income coming in has a good flow from one appreciating asset into another. Your rent will continue to climb. Intuitively, I'm thinking rents are going up at least 10% over the next 12 months. Inventory is remaining low.

Plus you can lock in a better interest rate with less money down house hacking. It just depends on the lifestyle you want/are comfortable with. 

We also don't know how much money you have to play with. Knowing that could also help us in getting a better idea of your situation. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    I would house hack where you are at. If you have equity in the FL home continue to invest there and use a HELOC. Do both, if you have the ability then do it. I would say house hacking is higher priority if it was me. Would help you save, you can start building equity( since it's a high appreciating area) and that'll snowball.

    0Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    Thanks for the response @Caleb Brown! My only thing is, if I were to finally plant roots in LA, I would need to either sell the FL property or take the equity out for a down payment since the prices are so much higher here. Thoughts?

    0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    @Jonathan Carmel

    Hmmm. Do you have 3.5% saved for a DP? That’s all you’d need to house hack

    1Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    @Caleb Brown even in LA? It's super competitive with buyers going all cash. 

    0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    @Jonathan Carmel

    Yes it is competitive. But saving up that much cash for a house that doesn’t make much sense. Using low down payment is one of the best parts of house hacking. You might have to put in many offers but one will stick

    1Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    @Caleb Brown Thank you my friend! Would you tap the FL equity for anything? I don't need repairs or anything necessarily, it would just be to reinvest somewhere. 

    0Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Jonathan Carmel:

    Hi everyone, I currently live / rent in Los Angeles and have an investment property in St. Petersburg, FL. I'm looking for strategies to buy my second property, but can't decide whether to try and house hack in LA or continue honing in on the Florida market. I've thought about selling in Florida and doing a 1031 exchange to build equity in Los Angeles, I've thought about a HELOC or home equity loan to buy a second property in Florida, etc.

    Does anyone have thoughts / strategies on how best to scale from here? I'm itching to continue buying, but can't decide which direction to move. 

    Thank you! 


    I think if you can continue renting and your RE is making more then your rent it is a no brainer to keep renting. What made you choose FL? I would start to analyze deals in your area that you want to invest. If you can do a HELOC and buy an undervalued property then refinance it you can have another property free and clear pretty much, then put the money back into the HELOC.

    If you have not already you should consider investing OOS here in Columbus or Cincinnati. The price to rent ratio makes for great investments. Not to mention our appreciation has been 8% higher then the US national average, because of the high demand for affordable housing.

    0Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    @Steven Foster Wilson I'm originally from this area of FL and have knowledge / resources to understand where to buy. Just feels weird not to have the house hacking ability where I live. Would be nice to have equity in LA somehow. 

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    You can house hack here in Los Angeles with 3.5% down. I just closed on one for a client a few weeks ago. It was an FHA 203(k) loan.

    I'm always in the mindset of owning the roof over your head. That way your income coming in has a good flow from one appreciating asset into another. Your rent will continue to climb. Intuitively, I'm thinking rents are going up at least 10% over the next 12 months. Inventory is remaining low.

    Plus you can lock in a better interest rate with less money down house hacking. It just depends on the lifestyle you want/are comfortable with. 

    We also don't know how much money you have to play with. Knowing that could also help us in getting a better idea of your situation. 

    2Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Jonathan Carmel:

    @Steven Foster Wilson I'm originally from this area of FL and have knowledge / resources to understand where to buy. Just feels weird not to have the house hacking ability where I live. Would be nice to have equity in LA somehow. 


     Okay, that makes sense. I think it is all about the numbers and what will be better for you long term. For myself, I want to be able to be financially free so I have choose to invest here in Columbus because I have got great cashflow, great appreciation, and I see the market turning into a place like Nashville and Charlotte. You cannot really get a property there anymore that is decent returns. If the numbers work in those places then go for it! Start to build your core 4 so you can continue to grow. 

    1Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    @Rick Albert was this a single family or multi? Think there's a chance to do multi at 3.5% down?

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Jonathan Carmel this was a single family with unpermitted 2 bedroom second unit. She is getting it permitted as an ADU.

    Yes, there is a chance. You have to get creative and be flexible. Good news is in LA we have high loan limits, which opens up the possibilities. 

    1Reply
  • Charles Renn
    Real Estate Agent · Los Angeles, CA · Member since 2021 · 215 posts · 103 votes
    4y

    Hey @Jonathan Carmel,

    If I can add anything to this conversation it would be that when considering 3-4 unit properties, there are additional requirements for FHA buyers, specifically the projected rent needs to cover 100% of the mortgage. Your lender can clarify this, but it was added during COVID as a further hurdle for financing. If you'd like an introduction to an investor friendly lender familiar with the Los Angeles market, let me know.

    Hope this helps!

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Jonathan Carmel can you househack where you are and invest elsewhere? I've done that for a few years and it's worked very well!

    [email protected]512-888-9122
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    0Reply
  • Jonathan Carmel
    OP
    Member since 2021 · 7 posts · 4 votes
    4y

    @Jordan Moorhead that's what im hoping to do here in LA, just trying to understand what the requirements are financially. Whether I need to pull equity from my investment property to make the transition. 

    1Reply
  • Matt Giacinto
    Investor · Los Angeles · Member since 2021 · 94 posts · 29 votes
    4y

    Hey Jonathan, there's quite a few routes you can go as far as utilizing that equity here in LA. House hacking is a great way to get started out in a very competitive LA market. If you want, let's connect and talk more. I'm a commercial agent in LA and we can go over strategies of how to scale your portfolio. 

    0Reply
  • Robert Reynolds
    Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
    4y

    Hi @Jonathan Carmel, 

    I highly recommend house hacking in LA. The appreciation in LA is solid, because our supply is so low and the demand is always going to be high. This imbalance in the market creates high appreciation. One strategy could be to take a heloc on your investment property and then use that equity for a downpayment on a primary residence in LA. If you can find a good house hack situation, it will be hard to not come out on top. You can then repeat every year or two to scale your portfolio.  

    0Reply
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