Wholesaling and House Hacking in Los Angeles
Hi BiggerPockets – I’m here hoping to foster new relationships and hear some of you guys’ tips, tricks, and advice.
A little about myself:
I’m originally from Des Moines, Iowa, born and raised, and moved to Los Angeles 3 years ago to pursue my career in public accounting at one of the Big Four Accounting Firms. I earned my BBA and MAc at the University of Iowa in 2015 and 2017.
I started researching and learning about real estate investing in January 2020. I dedicated myself to learning the principles and practices of real estate investing, which included reading three of Brandon Turner’s books, listening to varies real estate podcasts, and as of recently, becoming a BiggerPockets Pro Member. I truly believe real estate is the avenue to generational wealth and financial freedom, and I have a burning passion to purchase and house hack my first property by the end of 2020.
Real Estate Investing Approach:
As all of you know, Los Angeles is among the most expensive cities in the US, which means significantly higher down payments and closing costs. As such, I have developed a strategy to obtain capital—real estate wholesaling! I have derived this strategy through late night readings from Brandon Turner’s “The Book on Investing In Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People's Money”, Google, and podcasts (Max Maxwell, Side Hustle Pro, and Marco Santarelli). I have estimated that I will need approximately $21,000 to finance a 3.5% down payment and closing costs on a home within the $390,000-$450,000 range. I anticipate that I could raise the capital if I complete 3-4 wholesaling deals. I understand the legality risks of wholesaling and plan to safely navigate the buying and selling process. In addition, I have started using my lunch breaks and weekends to “drive for dollars” in West LA. I am also considering purchasing my first property in the Valley as prices are more affordable per square foot. Given my timeline to purchase a home around Sept/Oct, I am hoping to house hack a home that is readily livable and requires little to no repairs.
Next Steps:
Now that I have obtained a great deal of real estate and wholesaling knowledge, I need some help getting out there and taking actions. From the forum conversations I have read, it looks like discussions are the most helpful are those that are specific. As such, I have provided a list of questions that would surely help my investing process.
1) What are the best ways to build relationships with investors during our COVID-19 pandemic? (I know that you can accomplish your goals with a few investors, however, due to COVID-19 it seems to be harder to foster relationships and build trust).
2) My lease ends in September 2020—Is closing 3-4 wholesaling deals (with no prior experience) and purchasing a home in Sept/Oct, too tight of a deadline? Am I overly optimistic or is this a realistic goal?
3) Do you recommend any locations in the Los Angeles area to “drive for dollars”—that are more likely to have distressed and/or motivated sellers?
4) Where can I obtain wholesaling contracts examples/templates?
5) Per my research, income from wholesaling is taxed as ordinary income. Are there any tax codes (similar to 1031 exchange code) that would help reduce my taxable income from real estate wholesaling? ***My expertise is in public/private auditing and not taxation***
6) I am considering developing an LLC. I do not intend on transferring the property ownership to the LLC, however, wanted to get you guys' input on whether an LLC is beneficial for business operations (i.e. bank account for income and expense, direct deposit for rent from house hacking, etc.)?
7) Overall advice for an ambitious real estate investor?