Getting Started in LA

7 Replies | Los Angeles County, California

Hello! I am moving to LA for work in a few months and wanted to take the opportunity to get finally actively involved in real estate investing. I'd be most interested in a live-in flip or house hacking, and this would be my first house purchase. The LA market seems like a tough one for someone starting out with limited cash (I've got about 50K available for down payment/closing costs). On top of that inventory is low and demand is high at the moment. That being said, I know that is is possible to get a good deal in LA and that there could be benefits to investing in a desirable market even if it might cost more upfront. I've also been interested in RE investing for a while and I want to take action. My question to some seasoned investors and people familiar with the area is - do you think that the current LA market is a good one to get started in? If so, what neighborhoods and areas would you recommend focusing in on? The alternative could be to rent in LA and invest outside of the city or state, but I definitely want to explore all options. 

Any additional thoughts or bits of advice are also welcome! Looking forward to connecting with and getting to know this BP community. Thanks!

@Cynthia Sigler

I think you would be amazed at what you can find in LA right now, especially near Long Beach.

If down payment is going to be your limiting factor I would suggest going for a primary residence as you can take advantage of low down payments.

Highly suggest getting pre-approved so you know what range to look at.

Originally posted by @Cynthia Sigler :

Hello! I am moving to LA for work in a few months and wanted to take the opportunity to get finally actively involved in real estate investing. I'd be most interested in a live-in flip or house hacking, and this would be my first house purchase. The LA market seems like a tough one for someone starting out with limited cash (I've got about 50K available for down payment/closing costs). On top of that inventory is low and demand is high at the moment. That being said, I know that is is possible to get a good deal in LA and that there could be benefits to investing in a desirable market even if it might cost more upfront. I've also been interested in RE investing for a while and I want to take action. My question to some seasoned investors and people familiar with the area is - do you think that the current LA market is a good one to get started in? If so, what neighborhoods and areas would you recommend focusing in on? The alternative could be to rent in LA and invest outside of the city or state, but I definitely want to explore all options. 

Any additional thoughts or bits of advice are also welcome! Looking forward to connecting with and getting to know this BP community. Thanks!

Cynthia,

Investor, house hacker, and realtor in LA here.

Firstly, LA isn't a market; it's a couple dozen markets. 13 million people live in metropolitan Los Angeles -- which is more than Nevada, Arizona, and Utah combined.

There are a bunch of great markets in LA! A few neighborhoods that come to mind are Long Beach, Inglewood, West Adams, Jefferson Park, Leimert Park, Mid City, Rampart Village, Chinatown -- and these are all west of the 5! (You'll get that reference once you move here.)

Your biggest challenge is going to be funds. LA is a difficult market to start in because it's so expensive. However, it's not impossible to start here. A few suggestions:

- Definitely pursue an owner-occupied investment, like a house hack or a live-in flip. This will allow you to get into a property with as little as 3.5% down.

- Know that there are two real estate markets in LA: the competitive market and the non-competitive market. With a low-down-payment offer, you won't be able to succeed in the competitive market. Only offer on properties that have been listed for at least 10 days.

- Investing out-of-state is totally worthwhile so long as you find a way inexpensively in LA. Rent is so high here that it makes a ton of sense to house hack or do a live-in flip -- provided you have the funds to execute. If you don't, find an inexpensive living situation and invest out of state.

Hope these tips help!

Best,

Jon

      Hy Cyntha.  When my wife and I closed on our first duplex here in 2019, we paid well over ask but put less than $40k down and had all of our closing costs covered by the seller after inspection.  We have the added benefit of being in part of the county that has not yet banned short term rentals, and that really helps our numbers.  As @Jon Schwartz said, it really comes down to where you want to live. Bang for your buck is tough to find these days, but historically you make that up and more in appreciation. Jon does a lot of work with house hackers, and I would recommend speaking with him. I'm also happy to share more details of what we did and how we were able to refi after 6 months dropping our PMI payment by about $500/month. I will say though, if you are looking for something where your "rent" is close to 0 you're going to be doing a lot of work one way or another.

      Thanks so much all - this is really helpful and pretty much solidifies what I had been thinking. @Jon Schwartz I appreciate the tips and the neighborhood recommendations - I'll definitely look into them. As you said, LA is a large umbrella that covers many markets so it is helpful to have some kind of direction! @Chris Collins Thanks for the detailed response - that sounds like exactly what we are looking to do. Would love to hear more details of the deal itself/ any lessons learned if you don't mind sharing.