Newbie Intro - Los Angeles multi family investor...

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Newbie Intro - Los Angeles multi family investor...

Donna Arrogante
Investor · Los Angeles, CA · Member since 2016 · 16 posts · 9 votes

Hello investor friends! Though I'd finally introduce myself after poking around for a few weeks and also ask for some advice. 

I'm Donna, I'm passionate about creating passive income streams, attaining financial freedom, personal development, entrepreneurship, breaking through scarcity mentality and creating a life with MORE fun, creativity and freedom!!

I am planning (anxiously) to purchase my first multi-family property. I plan on house hacking it to get rid of my rental expenses. Nothing excites me more than doing this! I see this as a better investor style for myself. I've invested in my very first SFH 2 years ago and it's cash flowing ok... but after doing the math, especially after listening to the Clayton Morris' interview about finding your "Freedom Number", and also because I have the urge to get rid of my rent payment, I think house hacking every year or two, for a few years utilizing the FHA loan will benefit me more and help me get to my freedom number faster.

I'd like to know if there are any investors out there who's house hacked in Los Angeles?? If so, I'd love to learn any insights you can share with me. I am looking to invest around Lawndale (ideally) and most likely in South LA or a little east of the 110 Fwy because it seems like that's where my income will allow me to purchase. 

Also, do you have an FHA loan expert you can recommend so I can ask my questions in order for me to be in the best position to reach my goals?

I have a new full time job now, and also have a side business helping solo entrepreneurs with branding and web design. I currently live in West LA, where rents are ridiculous, but I work in Marina del Rey, so I have to be kind of nearby. I don't mind commuting after moving into a triplex, it has to be WORTH IT!!!

My plan right now is to stay here at my apartment until I have enough cash for the down payment, closing costs, mortgage insurance and repairs. I think I will be ready around January. I've been using FHA mortgage calculators online, but I'd really like to speak to a loan expert to know where I stand and how to get to my goals. 

Thank you all. I'm so grateful for this community, all the generous shares and inspiration. Because of this community, I feel like there's more purpose in my life and that it's possible to reach financial freedom one step at a time! 

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Kiersten Vance
Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
10y

Hi @Donna Arrogante! Welcome to BP and congrats on the first purchase. Thats great. House hacking is a great way to get into investing. We did it with our houses in Glendale, Loma Linda and even Napa Valley. I have a lender I can send you the information for if you send me a PM. @David Dye is also a lender here on BP that might be able to help you with the FHA questions. Let me know if you have any questions about the market or multi-units. I bought an 8 unit apartment complex as my first investment and have loved it!

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  • Michael Lee
    Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
    10y

    Hello and welcome to BP!  I do not know anything about the Las Angeles area except of what I have learned from TV and what I have learned here.  It would be good if you chose your market between where your work and where you live.  Since you are probably in an area that is suffering from the low inventory, take your time in getting started in investing.  Learn as much as you can and you will gain confidence.

    "House Hack hacking" is one the best ways to get started that you can do.  It is just harder to have cash flow that is positive.  If it meets your goal requirements it is probably will be a good deal.  Try to get owner financing where you get a big discount where you can sell it at a discount (at least 10 percent below market value).  That should make you some money and giving a discount to your buyer where you both win.  Owner financing does not guarantee anything except for negotiating and flexibility of options.

    Working at a W-2 job will help you get a loan. Buy a duplex, 3-plex or a 4-Plex as well to qualify for a long time. Positive cash flow will help you do what you want to do hopefully as soon as you close on an improved apartment complex or on a home that qualifies with the job requirements for a 203k loan or something similar.

    I also went to college, not that it is mandatory, and I got a degree that was emphasized with real estate.  Since I was in Texas and planned on staying there I felt more comfortable with the construction business.  Just stick with your plan and the action that it takes.  I kept my broker license active for about 30 years but I never did that full time.  I have been in construction since I was 17 including those college years

    My father has been into buying and selling real estate for about 45 years and he has taught me a little bit.  If you think that I could help you please contact through BP at any time.  Pick a blue collar area in Los Angeles area where rental demand is around. Good luck to you!

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  • Donna Arrogante
    OP
    Investor · Los Angeles, CA · Member since 2016 · 16 posts · 9 votes
    10y

    Hi @Michael Lee, wow thank you for your feedback! I do have a new W-2 job now. I just need to pass some time so that I can prove I have stable income. I will think about the 203k loan. I'd like to pay for the repairs myself to avoid more payments. There's much to learn, but I'm eager to. Right now, I feel that I need to speak to a FHA loan expert so that I can find out how to be in a good position to invest. Thanks again Michael!

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  • Kiersten Vance
    Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
    10y

    Hi @Donna Arrogante! Welcome to BP and congrats on the first purchase. Thats great. House hacking is a great way to get into investing. We did it with our houses in Glendale, Loma Linda and even Napa Valley. I have a lender I can send you the information for if you send me a PM. @David Dye is also a lender here on BP that might be able to help you with the FHA questions. Let me know if you have any questions about the market or multi-units. I bought an 8 unit apartment complex as my first investment and have loved it!

    1Reply
  • Donna Arrogante
    OP
    Investor · Los Angeles, CA · Member since 2016 · 16 posts · 9 votes
    10y

    Hi @Kiersten Vance! Thank you so much! And WOW what you've done is so inspiring! May I ask how long it took to get your second one after the first one? Did you occupy it for a year or more? I'm curious to know why you chose those cities to house hack in. It seems like you were free to live where ever you wanted to. My challenge is that I work in Marina del Rey and I can't find anything affordable in the West side. But I am open to looking all around LA even if I have to commute a bit. Thanks for sharing information about David! I will reach out to him. Thank you again!

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  • Kiersten Vance
    Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
    10y

    Hi @Donna Arrogante. We were in the house for two years before selling it to avoid capital gains tax. I bought apartments in Loma Linda and lived there for a couple years before moving to Glendale. If you get an FHA loan, they typically require you to live in the home for a set amount a time (I think a year) before you can rent it out. It may be better in your case to stay for 2 years and then sell and put the money into the next place. We chose Loma Linda for rentals as it is a good market for student and patient housing because of the hospital right there. Glendale was near my boyfriends parents so that is why he chose there. :)

    It will be hard to find something in West LA that is affordable even with house hacking, so yes you may have to commute a bit. Try looking for something listed as an SFR with a note in the description that is has a granny unit or studio apartment. That might help you get a little extra income and won't be noticed by investors as a multi unit because it was listed wrong. I have a buyer that is buying a house like that right now. Two units but it was listed as one so it didn't get much attention. :)

    1Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Donna Arrogante

    Welcome to Bigger Pockets. Make sure to check out all of the informative podcasts.

    0Reply
  • Donna Arrogante
    OP
    Investor · Los Angeles, CA · Member since 2016 · 16 posts · 9 votes
    10y

    Thank you @Mark Nolan! Yes, I've been going through the podcasts, I listen to 3-6 a day. =D 

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y

    Welcome ... if you are looking to house hack a fourplex with FHA, you will need to do some research on the "self sufficiency" rule. @Logan Allec is the man you need to talk to about that. I don't think this rule applies to duplexes or SFRs, which will likely appreciate better but have lower initial cash flow. I got my start house hacking SFRs and am a big fan of the strategy. I prefer to focus on appreciation more so than initial cash flow as I've done both over the last 15 years and have made orders of magnitude more money on my appreciation plays. My advice would be to look for the least expensive, ugliest SFR that is surrounded by bigger, nicer SFRs on the nicest block without a HOA that you can reasonably afford to buy on. Then roll your sleeves up and put in some sweat equity.

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  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y

    Also, you say the West LA prices and rents are high, and you are right ... it is a very desirable place to live. Cash flow day 1 in those markets will be low (negative with FHA), but just the kind of market I like for appreciation ... just look at the historical prices and rents in those neighborhoods over the last 30+ years ... that is how you build true wealth in RE, not a couple hundred a month in cash flow. The truly ironic part is that with the higher rates of rent increases, these properties will cash flow better over the long run than the so called "cash flow" markets either inland in SoCal or out of state. You do have to be able to afford in the short term, through the market ups and downs, though ... but those who have made it to the long term with those properties have been handsomely rewarded. I know this 1st hand :)

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  • Donna Arrogante
    OP
    Investor · Los Angeles, CA · Member since 2016 · 16 posts · 9 votes
    10y

    Thank you @David Faulkner for sharing! Yes, I am looking into neighboring cities, like Lawndale, or Mid City.. since those areas are really improving, and are still in proximity around more desirable areas. I'm not worried about putting in sweat equity either. It's actually better that way. If I stay in a unit, I will probably upgrade it during my stay there. My game plan is definitely house hacking and living rent free so I can save more money to invest in future properties. I'm glad to hear it's all working out for you!! 

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