South Bay MF Advice and Agent Recommendations

4 Replies | Los Angeles County, California

Hi everyone,

I'm a new investor from Los Angeles looking to buy and hold a 2-4 unit in "South Bay" and surrounding areas (Inglewood, Hawthorne, Gardena, San Pedro, Long Beach, Lakewood, South LA, etc). Most likely looking for value-add properties so I can build equity and force some appreciation. This investment would be with a partner. We intend to create an LLC together once we find a place and go into escrow.

Any tips/advice you guys have for looking in this area and/or creating an LLC would be greatly appreciated (I don't know what I don't know, right?). Additionally, my current agent is a family friend who I don't really jive that well with, so I'm looking for a new agent who is familiar with this area and with investment properties. Any recommendations are welcome!

As background, I'm a Southern California native. I'm currently "condo-hacking" and am super eager to get my first investment property. I would love to meet up with other local investors (I'm on the westside) and chat about real estate and/or podcast episodes. In addition to listening to BP, I LOVE the BP Money podcast, so I'm always down to chat about the FIRE life as well!

One thing on those areas like anywhere is there a good pockets and bad pockets.

Look at school ratings, crime ratings, path of progress at the city planning department. Scope out the area you want in general and figure out which has the best chance of turning. Go into the local grocery store and if you are scared to get out of your car and go shopping then you know you'll be scared to pick up rents or meet the repair man there etc, you dont want that hassle.

Chances are if it has not shown any signs of improving it might take longer than you thought. ie: I bought in Silverlake before it was cool, I bought in Eagle rock before starbucks moved in, then Highland Park before starbucks moved in, I bought in Lincoln Heights and that took another 10 years, but it turned. You get the picture.

I would try to find a multifamily specialist in the area. Your agent friend might not know the ins and outs and the tough questions. Dont let their naivete put your investment at risk. THis market is tough, once you buy you have to make sure of your exit strategy. Its tougher on units.

I moved from LA to OC and bought a condo in Santa Ana kinda on a whim, people thought it was the unsafe, gritty not OC part of OC. I fixed it up, its in a really cute pocket and it popped in value. Next time I will do what I say.

Just like Gardena, when I was buying and selling properties in Compton, South LA, Long Beach and the likes it was pretty rough, Gardena too, but fast forward 20 years and you would not recognize Artesia Blvd. 

One thing with an LLC sometimes it is harder for financing going in, check with your lender see if there is an issue and or if you are buying as commercial vs residential etc.

Might be best to take title in your name and switch to LLC but talk to your accountant for sure.

Keep us posted.

Hey Vivian,

We should connect! I focus on investment properties in both LA and SF (I'm a SoCal native and live in Long Beach).

Happy to provide input on some LLC pointers and screening criteria for areas and properties. A few things you might consider:

- Upside: Tech movement into the area, new developments (check out urbanize LA)

- Economics: Average entry price per door, rent to value

- Other Boundaries: Rent control, crime-heavy neighborhoods

Cheers,

Armand

There is a group that knows Southbay and Long Beach multifamily like the back of their hands. They host a monthly class at the LA South REIA on multifamily topics. I'm currently trying to "house hack" and buy a multifamily and live in one of the units. I'm currently working with them to find a place.

https://www.lasouthreia.com/learn/upcoming-events/

I'm a newbie, but from what I've read and the presentations I've been to it's hard to find places in southbay where the Gross rent multiplier gets even close to getting you to cash flow.  I.e. If you buy a Fourplex for 2 million dollars but you're only able to get $1000 a month in rent it's probably not worth it.  Investors like Long Beach because there isn't currently rent control.

Good luck!