advice for Los Angeles

[John M.]

Hello,

I am based in Los Angeles and would like to get opinions on my situation and if there's anything I haven't thought of.  I have several properties out of state but looking to come back home here to invest. My strategy is buy and hold.

Houses here start at $500k and go up to $1.1millon for a 3br/2ba 1200sqft. Right now I'm renting a house, but would like to purchase a primary in order to do a "house hack". I've heard recently that the State of California passed a "ADU" law (Additional Dwelling Unit) which allows for a conversion of a garage to another livable structure. I am thinking of doing that in order to rent the front out.

Comfortably I have $50k to throw into a deal, and if I stretched it, could put $100k into a deal. However even with $100k down, the properties here just don't cash flow.

I have looked into trying to do a foreclosure and use a HML to do it, but all HML's I talk to won't lend on a primary.

My question, is there anything people would recommend in this situation? Would they wait in the California market or would they stretch themselves just to make it happen? Do people recommend I continue to rent and take the money and invest out of state? Or do they recommend I try to muscle into this market for the appreciation play even though the numbers look a little worrisome. 

Thanks!