>$1MM House Hack in West Los Angeles?! Help me analyze this deal!

8 Replies

I looked at your deal, seems like a lot of money to put down to basically break even for cash flow per month.  I don't know your market though, you may be doing it for appreciation which would make more sense.  But unless you see some value add items you can do to increase your cash flow, seems not enough juice for the squeeze to me.  Just my opinion.  Good luck!

@Daniel Ziner you can't buy a SFH fixer in this market (LA Westside) for under $1.2MM. This is a 5-10 year appreciation move for us to live in and gain equity/pay down mortgage.

@Fred Castro we are able to get the 2.65% rate only by making it a conventional loan (vs jumbo), which cannot exceed $1,053,000. Yes, tying up a lot of capital. Our down will be $417k plus closing costs. 

Originally posted by @Erin O'Connor Smith :

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Hi Erin. We invest in multifamily in LA (admittedly, very different areas than this one), but I have a few thoughts. I think this is a pretty decent deal if you are planning on staying for the medium to long term (at least 6 or 7 years). 

You'll see some rent growth during that time, and I think the generally positive trends in the area thanks to Silicon Beach etc will continue. You can find house hacks with a little more "meat on the bone" in other areas (think Leimert Park, Inglewood, some parts of northeast LA still), but if this is an area you like, I'd go for it. 

We host a local multifamily meetup online, and will likely have a guest on to talk about house hacking soon - feel free to add me here on BP and I can send details of the next meeting. 

 

Originally posted by @Erin O'Connor Smith :

@Daniel Ziner you can't buy a SFH fixer in this market (LA Westside) for under $1.2MM. This is a 5-10 year appreciation move for us to live in and gain equity/pay down mortgage.

@Fred Castro we are able to get the 2.65% rate only by making it a conventional loan (vs jumbo), which cannot exceed $1,053,000. Yes, tying up a lot of capital. Our down will be $417k plus closing costs. 

Erin,

I'm a house hacker in Hancock Park and agent in LA; all my clients are house hackers. 

I can refer you to a lender who has a pretty cool product: he marries a conventional loan to a HELOC so you can get a conventional rate and put as little as 10% down. The HELOC portion carries a higher rate, but it's a minority of the leverage, so the blended rate is still quite good. The product works up to a purchase price of around $1.5M, so it looks like a good solution for you if you'd be interested in putting less down.

Lemme know if you'd like the referral!

Best,

Jon

Originally posted by @Brian Gerlach :

@Jon Schwartz does that product make sense for a SFH in the $600k range or is it less/month to go with a conventional loan and just pay pmi? Thanks.

At $600K, you're better off going conventional and paying PMI.