Newbie/House Hacker in the making - Los Angeles

7 Replies

Who am I:

Hello, Everyone! My name is Roman Cervantes. I grew up in Arizona and attended Arizona State University where I received a Masters Degree in Architecture. Upon graduation in 2015, my wife and I packed up our belonging and made our way West searching for that ocean breeze and ended up in Los Angeles.

Experience:

I made a great friend that recently introduced me to bigger pockets, and I've been hooked since. I guess part of the reason why I decided to pursue architecture is that my father worked in construction for many years and this line of work was something I felt familiar with. Growing up, I helped my parents with their house flipping and rentals, so I've witnessed what REI can do, I just hate that it took so long for the light bulb to go off.

Current State:

I am looking forward to gaining as much understanding as books can give me, but mostly eager to acquire our first property and learn while doing. My wife and I just started talking to lenders and realtors as well as driving all over the neighborhoods to understand the areas and market. Our plan is to find a duplex at a decent price so we can House Hack,  preferably a property with the potential to add value and resell in the future. If we cannot find something that makes sense, we are open to other options, possibly flipping a house or apartment.

The Goal:

My short term goal is to find a duplex in Los Angeles to House Hack. Long term goal is to acquire multifamily properties in Phoenix Arizona and hold as rental properties. I plan on having 5 units by year one. There is so much to learn and I'm not sure how it's all going to happen, but I know I will achieve it and I look forward to learning from all of you. 

If anyone is looking for an extra hand and you're in the Los Angeles area, I would be more than happy to help. Finally, I would love to hear your thoughts on Los Angeles vs Phoenix Arizona. House Hacking would potentially cut my rent payment in half, netting me about 1200 a month vs finding a triplex or fourplex in Arizona that would cash flow 600-800.

Thanks for reading!

Originally posted by @Roman Cervantes Jr :

Who am I:

Hello, Everyone! My name is Roman Cervantes. I grew up in Arizona and attended Arizona State University where I received a Masters Degree in Architecture. Upon graduation in 2015, my wife and I packed up our belonging and made our way West searching for that ocean breeze and ended up in Los Angeles.

Experience:

I made a great friend that recently introduced me to bigger pockets, and I've been hooked since. I guess part of the reason why I decided to pursue architecture is that my father worked in construction for many years and this line of work was something I felt familiar with. Growing up, I helped my parents with their house flipping and rentals, so I've witnessed what REI can do, I just hate that it took so long for the light bulb to go off.

Current State:

I am looking forward to gaining as much understanding as books can give me, but mostly eager to acquire our first property and learn while doing. My wife and I just started talking to lenders and realtors as well as driving all over the neighborhoods to understand the areas and market. Our plan is to find a duplex at a decent price so we can House Hack,  preferably a property with the potential to add value and resell in the future. If we cannot find something that makes sense, we are open to other options, possibly flipping a house or apartment.

The Goal:

My short term goal is to find a duplex in Los Angeles to House Hack. Long term goal is to acquire multifamily properties in Phoenix Arizona and hold as rental properties. I plan on having 5 units by year one. There is so much to learn and I'm not sure how it's all going to happen, but I know I will achieve it and I look forward to learning from all of you. 

If anyone is looking for an extra hand and you're in the Los Angeles area, I would be more than happy to help. Finally, I would love to hear your thoughts on Los Angeles vs Phoenix Arizona. House Hacking would potentially cut my rent payment in half, netting me about 1200 a month vs finding a triplex or fourplex in Arizona that would cash flow 600-800.

Thanks for reading!

 Hope all goes well for your future real estate investing journey. I live an hour and a half from L.A. and currently house hacking and I'm a bit glad that I am due to the prices there in L.A are extremely expensive. So maybe look a bit farther away from L.A. to find a slightly better deal if it feasible to you. Anyway good luck!!! 

@Ricardo Cristobal Thanks Man. I wish it was feasible, but my wife's and my job are here. I don't think we want a crazy commute. You're right though, the prices are so high that most properties that I'm looking at wouldn't cash flow once I move out. That's the main reason why I keep debating if I should keep renting here and invest in Arizona. Out there you can find a fourplex for 250k, not in amazing shape but decent.

Originally posted by @Roman Cervantes Jr :

@Ricardo Cristobal Thanks Man. I wish it was feasible, but my wife's and my job are here. I don't think we want a crazy commute. You're right though, the prices are so high that most properties that I'm looking at wouldn't cash flow once I move out. That's the main reason why I keep debating if I should keep renting here and invest in Arizona. Out there you can find a fourplex for 250k, not in amazing shape but decent.

 That's true. I've been to Phoenix, Scottsdale, and the other cities nearby at Arizona and you are definitely right that it is much cheaper over there. Anyway you mentioned that you plan on renting here in California while at the same time you want to house hack in Arizona? 

@Roman Cervantes Jr Your decision should be based on your incoming cash, current cash, and cash goals. Say if I have 200k cash, I want that cash to work for me, so i'll be flipping houses. Say I have 50k cash, then that would let me do a house hack for maybe 3.5% interest, since 50k is not enough to flip. By house hacking it will decrease my rent/cost of living expenses. If I go OOS, I make the same money with my 50k but have the risk of flying there and staying on a hotel to fix an issue, fly+hotel will probably cost me 600, which will wipe out one month's rent, if you are handy and the MF is in LA, if a water heater breaks, you can go HD and buy parts, replace it yourself -- if it's in AZ, you pay someone to do it, maybe 200-300 more at least, that's half the rent. LA has virtually no vacancy while OOS makes you wait weeks or months to fill. Also monthly income comes into play, if you don't need the money because you earn 8-10k/mo OR if your current time for your work is flexible why rentals? If you are too stressed with work on a daily basis where you want to enjoy your weekend, go for rentals, if you have time to visit a property before / after work and do some on the weekends to make more money, go flip. With all that said, I'd say evaluate what you have

@Roman Cervantes Jr , welcome to BP! I'm currently living in Sacramento, CA, but I have been to Los Angeles before, and I grew up in Arizona. I personally do not like LA, but that's just me. as a real estate investing location, I would pass, because to me, it seems like there is more competition, and everything is so expensive. Arizona is a beautiful place, and once I've found my success in Sacramento, I'm planning on expanding back to my hometown out there. I'm not too familiar with the Northern California market yet, but I know AZ is ripe for the picking! Welcome, and good luck!

I moved to Phoenix just so I wouldn't have to go to CA :)

In LA your best bet is Luxury House Hack as I described in my book. Pick it up if you haven't yet. I agree, a good house hack is the best first step.

Feel free to reach out, Roman!

@Keith Torsen sorry for the late reply, been running all over the place last two weeks. Yes LA is very very expensive, that's why I keep thinking about getting into the market in AZ with my parents. After speaking with a lender, I learned that I'm limited to a duplex if I only have enough for a 3.5% down payment, I will be practicing on the BP calculators before I make my first purchase. 

@Manolo D. thanks for the tips Manolo. Currently working with a realtor and thinking about getting into a SFH that I can fix up while living in it. I'm leaning towards a slow flip, live in it and fix it if the deal makes sense. I'm paying so much in rent and prefer to have my money going towards a property.

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