To rent or to sell in Playa del Rey

10 Replies

Hi there, long time listener to the podcast, first time poster here. My husband and I have a two bedroom condo in Playa del Rey which has seen significant appreciation in the past few years. We're trying to decide whether to hang onto it, become landlords and use the equity to purchase our next place or just sell, take the profit and focus on purchasing another fixer-upper in an area we foresee appreciation. (Los Angeles wouldn't be my first choice to have a rental due to the amount of capital it ties up but with all the tech companies moving down to this area, it's making us consider a longer-term strategy.) Any input is appreciated!

Give detailers as to value, market rental rates, condo fees exc. so that we can assess the option to hold as a rental investment or not.

It all really comes down to dollars and cents unless you are an appreciation speculator.

Your decision to sell and purchase another fixer upper may be a easy decision if this property is a poor investment as a income property. 

Thanks Thomas- we bought it for 513k and it's worth around 680k. Our mortgage & taxes are $2310.00 and HOA fees are $458. Two bedroom condos rent for around 3k a month here. Numbers-wise, it doesn't really make sense but it is an area where you can count on long-term appreciation, just not sure it's worth the headache. 

Originally posted by @Thomas S. :

Give detailers as to value, market rental rates, condo fees exc. so that we can assess the option to hold as a rental investment or not.

It all really comes down to dollars and cents unless you are an appreciation speculator.

Your decision to sell and purchase another fixer upper may be a easy decision if this property is a poor investment as a income property. 

Hello Amaya! I am an investor and agent in the Los Angeles area. Your strategy would definitely depend on where you could put that money next. If you can sell and put the money into a property that makes 1% per month, it would be better from a cash flow perspective than your current option. If you are thinking long term appreciation, how much do you think it will go up in the next 5 years vs another place with better cash flow? I would be happy to work through some scenarios with you if you are interested.

As the others have said, this is definitely a by-the-numbers question. Hard to assess your situation without knowing the specifics behind it (equity in the property, average rent in the area, where you’re looking for a new place, etc).

I am also an agent and mortgage broker in Los Angeles. Shoot me a private message if you need any help. Good Luck!

It looks likes a global trade war that will raise prices across the board just started here in March of 2018, so sell sell sell is the best option if you believe that the drop in consumer discretionary spending will leave less money in people's pockets leading to a recession and/or downturn in real estate values.  March 21 might have been the top of the market and cash is king in recessions.  I would sell sell sell and take the $500K exemption pay no taxes and stay in cash until this trade war shakes out.  Maybe put some cash into low risk investments after the Fed finishes raising rates like a 3% CD.  Commodities are another area that can do well in a recession but avoid the ones that have been targeted i.e. steel, aluminum, soy beans, etc.  I just put in buy orders on some gold mining stocks for example.

But if you are stuck on real estate as the investment, history tells us that rents hold firmer than real estate values in a downturn.  And with rising interest rates, residential lending offers the lowest rates (for now as of early 2018) so a fixed rate mortgage on a rented 2-4 plex is probably the safest play for now, and you could live in one of the units.

I think you should keep your condo and rent it out. It increased so much in value already. 

Hi @Amaya Palmeri ,

I’m a local agent in the Marina and am very familiar with Playa. My big question is what would you do with the money if you sold it?

If you can find a better investment then I would recommend selling. If the market stays strong then you could see significant appreciation.

If the market turns then condos normally get hit pretty hard. Figure out what else you would do with the money and that should give you some guidance. Feel free to give me a call if you want a more accurate price appraisal.

Thank you all for your responses! It's been incredibly helpful to hear others' perspectives. We decided to sell but as to everyone's question "what would we do with the money?"...well, we're all over the map. We have family we can stay with so we're not in a huge rush on the buy side but here are a few ideas we're throwing around.

1) Look for a SFH in an area with a lot of appreciation potential in the next few years (thinking Inglewood in light of the new stadium and all the development down there)

2) Look for a 2-4plex in Torrance/Redondo area- live in one, rent the other.

3) Look for better cash flow and lower purchase prices out of state- would focus on MF properties.

Once we narrow down which direction we're going in, I will absolutely reach out to those offering their services/expertise. (Also, totally open to opinions on these strategies or others we haven't thought of!)

Thanks again for all the support!

I live pretty close - right down the street in Culver City.  It is really a booming area. I think, the tech companies will keep that area generating a strong pool of tenants for a couple of decades. It is a good place to be a landlord. 

"We decided to sell"

You made the right decision. Congrats.

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