Los Angeles 2% Rule

2 Replies

Was looking at the local rentals in my area. I live about 30 miles east of Los Angeles. Houses and condos near here sell for $600000 to $800000, or about $400 per square foot. Rentals, however, seem to be between $2000 and $2800 per month for the same houses and condos. That comes out to less than 0.5%. In other words, no measurable cash flow in the immediate area. I looked on the forum and found a thread from some years ago discussing this. The thread mentioned appreciation, which generally does happen. https://www.biggerpockets.com/topics/65607. My 1700 sq ft house was purchased in 2001 for $305000 and is now worth an estimated $675000. Zillow doesn't know I've replaced the central air system a year ago and also am in the middle of a forced bathroom remodel. (stupid copper pipes!)

So, my question for you in LA. Do any of you rent to students, thus getting higher for a property than available from a single resident? There is a university less than five miles from this area and I often see houses being rented to students. Is that a decent strategy to get into?

Thank you for the insight. Apologize for the delayed reply. The mobile version of the site doesn't show that a reply was made.  

I am reading right now David Greene's book about remote investing. I was deathly afraid of it but now am excited. I see it can be done with the right effort and team.  Just got to pick an area.

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