Investor/Agent · San Francisco, CA · Member since 2016 · 77 posts · 25 votes
Hey guys, I'm looking to buy a multifamily prop in LA next year and could use some help nailing down target areas.
I'm looking for an area with the following:
- <$300k/door purchase price (or close, will look for an off-market deal) - Over 10% CoC return - Upside for appreciation (not crazy about areas like Lancaster for this reason) - Ideally rent control-free (or workarounds)
Los Angeles, CA · Member since 2014 · 11 posts · 11 votes
9y
In my personal opinion, Inglewood is going to be showing the most growth over the next few years. With the Rams stadium going up, there will be a lot of jobs formed and more people wanting to move to that area. Also, as you said, there should be some trickle down from silicone beach.
Culver City is quite expensive and so is Fairfax/Midcity. Unless you are going for large multi, 300k/door might be challenging.
Unfortunately I am not sure about Pasadena as I am not very familiar with that area, but as far as I know, Pasadena is a bit expensive as well. I would look at areas more like Highland Park nearby which is getting a lot of Echo Park and Silver Lake trickle because of how expensive those areas have gotten.
What is your overall budget? How many doors do you want to buy at max 300k/door? I think that is going to make a big impact on whether you can hit the.m revenue you are looking for. I think the best course of action would be to find a junky Inglewood building close to the Culver City border and put some money into updating finishes and the exterior/landscape to attract young professionals that will be moving in the area in the next few years.
Hope I helped!
Los Angeles, CA · Member since 2014 · 11 posts · 11 votes
9y
In my personal opinion, Inglewood is going to be showing the most growth over the next few years. With the Rams stadium going up, there will be a lot of jobs formed and more people wanting to move to that area. Also, as you said, there should be some trickle down from silicone beach.
Culver City is quite expensive and so is Fairfax/Midcity. Unless you are going for large multi, 300k/door might be challenging.
Unfortunately I am not sure about Pasadena as I am not very familiar with that area, but as far as I know, Pasadena is a bit expensive as well. I would look at areas more like Highland Park nearby which is getting a lot of Echo Park and Silver Lake trickle because of how expensive those areas have gotten.
What is your overall budget? How many doors do you want to buy at max 300k/door? I think that is going to make a big impact on whether you can hit the.m revenue you are looking for. I think the best course of action would be to find a junky Inglewood building close to the Culver City border and put some money into updating finishes and the exterior/landscape to attract young professionals that will be moving in the area in the next few years.
Hope I helped!
this sounds scary, but I honestly think there is NO money to be made in LA anymore, as is the case for Bay Area, especially if you are financing the purchase.... The 4-5% you can make all goes to paying the bank....
I think these days only those with $$million sitting in the bank making 0.00001% can find "deals"...
Investor/Agent · San Francisco, CA · Member since 2016 · 77 posts · 25 votes
9y
@Irina Costea this is great info! Ideally my purchase price would be under $650,000 total, but I'd be willing to do a JV on anything up to $800,000 if the deal is worth it. This would probably put me in a duplex or cheap triplex. Are there any pockets within Inglewood particularly notable?
@Diane G. I agree it's tough to find deals in open air. That said, I don't think you need millions to find a great deal. I've had success sourcing deals for other investors through mailers, cold-calling. Just need to be a bit creative and find the niches.
Investor · Long Beach, CA · Member since 2016 · 45 posts · 19 votes
9y
I feel like rent control gets a bad wrap. Of course you need to steer clear of inheriting tenants paying $500 when market is $2000 but there is a lot of golden opportunities in rent controlled areas especially if you are just starting. Significantly less competition when buying and you can still see a 10% return.
Inglewood has SOME awesome areas if you can find anything worth the price. I believe prices are already reflecting the development.
San Pedro on the other hand has the huge $1 billion development starting but the prices haven't started climbing excessively yet. Its also the possibly the easiest neighborhood in the world to understand. To the west of Gaffey are the easier to manage properties, to the east of Gaffey are the harder to manage but much better returns.
Ventura county is a great place to buy rental properties. Excellent tenants and lots of upside.
Which parts of Ventura County? Ventura County is pretty pricey these days and many neighborhoods don't seem to have many multi-family properties. Oxnard seems to be relatively lower priced. There seemed to be quite a bit of construction going on there and new retail when I was there a few months ago.
I feel like rent control gets a bad wrap. Of course you need to steer clear of inheriting tenants paying $500 when market is $2000 but there is a lot of golden opportunities in rent controlled areas especially if you are just starting. Significantly less competition when buying and you can still see a 10% return.
Inglewood has SOME awesome areas if you can find anything worth the price. I believe prices are already reflecting the development.
San Pedro on the other hand has the huge $1 billion development starting but the prices haven't started climbing excessively yet. Its also the possibly the easiest neighborhood in the world to understand. To the west of Gaffey are the easier to manage properties, to the east of Gaffey are the harder to manage but much better returns.
Hi Tyler, 10% cap rate/return in SoCal sounds really good . Are you currently invested in these areas? San Pedro does sound interesting with the development you mentioned.
Investor · Long Beach, CA · Member since 2016 · 45 posts · 19 votes
9y
I had a great experience with my first duplex in San Pedro. I bought it with an FHA and was able to refi after the first year to a conventional at 20% equity. Because I bought it with FHA, I am in to it for about 50k on a 650k property.
I had a great experience with my first duplex in San Pedro. I bought it with an FHA and was able to refi after the first year to a conventional at 20% equity. Because I bought it with FHA, I am in to it for about 50k on a 650k property.
Nice, yeah the buying a 2-4 unit property using FHA and live in one unit and renting out the others seems like a good opportunity.
I know in parts of the country this strategy can be used to live pretty much mortgage free and have the tenants pay your mortgage and expenses.
Investor · Long Beach, CA · Member since 2016 · 45 posts · 19 votes
9y
Its not just the fact that I used FHA. There are still good deals located in the San Pedro market and much less competition than anywhere else. I believe the city is working towards gentrification in this area so it also has opportunity appreciate. Just screen your tenants carefully!
Hcidla.org has a good handbook about la rent control. Check it out. It made me feel more comfortable back before I started investing here just knowing all of the different rules.