House Hacking in Los Angeles- SFV

[Jeffrey Chen]

Hi BP forum!

I will be moving into the San Fernando Valley in a few months, and will either be purchasing my first property, or renting while patiently looking for deals as the pandemic continues. Either way, I have my first property in my sights and my goal is to eventually scale up as a REI. The locations I am considering, in order of preference: Woodland Hills, Tarzana, Encino, Sherman Oaks, Calabasas. All of these areas seem to have appreciated significantly in the past several years, except Woodland Hills, which is why this is my focus(please tell me if I am wrong about this).

My goals:

1. Buy an under-value property, fix it up, house hack.
2. Purchase price @ 70-79% of ARV(shout out to Graham Stephan and Meet Kevin, who is a successful Youtuber and REI in the neighboring county. The LA market is tough and by analyzing his deals I figured he generally purchases at ~75% ARV, then puts in 10% of PP repairs, so this should be a reasonable target)
3. Looking for a house with an ARV value of about $700-800K
4. BRRR and cashflow sooner than later.

Obstacles:

1. VA and Physician loan requirements for the condition of a property- may limit my options for fixers.
2. Limited capital - though my new job should provide steady income
3. The obvious LA market.

I have been pre-approved for the VA Loan(0 down 3.2% interest) and also have access to Physician Loans. I realize that cashflow in LA is tough, and I don't have enough capital to do a real BRRR, so I am looking to start by house hacking. I've been doing research for the past 6 months, and I'm trying to learn any important lessons before jumping in. I would appreciate some insight/pointers from the BP community. Thanks!

Questions I have specific to the area:

1. Any insight into finding a good fixer? House size, # of BRs, Logistics, location recs?
2. How is the rental market?
3. How could I make a turnkey property a good “investment” in this market?(assuming fixer limitations from my loans)
4. “North” vs “South” of the blvd as far as investment outlook? North is cheaper, but the communities are generally less desirable. South is more developed and expensive, but I’m not sure if it’s a good rental/investment market.
5. Tax question: If I buy a 600k House, and after repairs it is worth 750K, When, do I pay taxes on the 600k vs. 750K?

I know, that’s a lotta info and questions. Thanks in advance!

[Ellis San Jose]

1) Have your agent tag fixer in MLS search in your areas of interest. Connect with a trusted "Wholesaler" that works the unlisted properties in that area.

2) Rental market is typically strong due to lack of supply. However, COVID 19 policies may cause some market shifts. 

3) Making a turnkey a "good investment" is very subjective.  I would consider buying at as much of a discount as you can, in a good location ( not on a busy street, not near any "yeah buts" as MeetKevin would say, stable neighborhood, fixed long term financing

4) South of Blvd has always had higher desirability, but if you find a good value, there are many great neighborhoods north of the blvd.

5) I'm not a CPA, generally you pay taxes when you sell & if it's a primary residence there are large exclusions ($250k each individual owner)