All Forum Posts by: Jon Schwartz

@Sejal Dasondi, are you seeing a property for $4000 or $400,000? The former is not possible unless it's a very remote piece of land. The latter is possible in some California markets.

@Sonny Sacks, I don't know if you can get a USDA loan anywhere in LA County -- certainly not any urban area in LA County. If I'm wrong, please, somebody correct me!

Real estate here is expensive. Have you spoken to a lender about how much you can borrow? It takes a pretty decent income to be able to afford an LA mortgage.

And the other component if your down payment. Remember, you can put as little as 5% down on a house, duplex, triplex, or fourplex with a conventional loan.

If I were you, I'd speak with a lender about your financial situation to understand what your budget actually is, then look for an inexpensive duplex. You can ever use the income from the other unit toward your own income when qualifying for the loan.

Good luck!

Best,

Jon

@Aubrey Ford, yes! I've recently helped a VA client in Los Angeles buy a duplex, and I'm working with another VA client now to find a triplex or fourplex. Speak with a VA lender for specifics, but you can 100% do it.

Good luck!

Best,

Jon

I'd invest in California. Currently, you can add two units to any multifamily property through the state's ADU laws (ADU = Accessory Dwelling Unit). Buy a duplex in an appreciating area in a California city and add two units. The property will cashflow and appreciate really wel.

@Deinno OKeefe, unless your duplex was built in 2009 or later, or unless you live in the other unit, it is still subject to statewide rent control (the law known as AB1482).

You're limited in how much you can raise this tenant's rent every year -- either 10% or 5% plus the percent change in cost of living. Right now, you might be able to get to a full 10%, but going forward, you'll be limited to 5% plus local CPI.

For this reason, I wouldn't create a document showing future rent increases. You really can't know what your future increases will be. And stating that you *will* increase rent beyond what's allowed under state law is probably inviting a headache you don't want to deal with.

Good luck!

@Amy Wei Ru Chang, LA investor and Realtor here...

I think you should use $300K as a down payment and borrowing the rent of the purchase price. If you have income to support the loan, your purchase price is now $1.2M.

Then, use the other $300K to build an ADU or two on the property you buy. Adding ADUs to existing structures is the best investment you can make in LA right now -- especially if you have the cash for it. The additional income from the ADUs will easily cover the cost of the loan and produce really solid cashflow. Plus, buy in a rapidly appreciating part of town, and you'll really reap your gains when you sell or refinance down the road.

Here's an active property that I love right now:

https://www.redfin.com/CA/Los-Angeles/1167-Geraghty-Ave-9006...

Very affordable (for LA standards) and in the improving neighborhood of City Terrace. What's more, there's a garage with a basement underneath it. The garage and the basement can each be converted into studio ADUs, and I think the price tag would be around $300K. Converting the garage and its basement into two studios would generate about $3500/month in additional cashflow.

Happy to discuss more if this kind of a strategy piques your interest. It's the kinda of thing you can only do in LA (because of CA's ADU-friendly laws and LA's HCOL), and it's a real game changer here.

Good luck!

Best,

Jon

@Malik K., don't forget to factor in the cost of your rent in your calculation.

For example, house hacking a multifamily in a desirable part of Philly might not cashflow, but is the reduction to your cost of living greater than the cashflow from an investment property in a bad part of town?

Also don't forget that you can house hack a multifamily with 5% down, but buying a multifamily as an investment property requires 25% down.

Good luck!

Best,

Jon

@Edward Alicante, is your current provider no longer offering insurance to fourplexes, or no longer offering new policies in California? I lot of insurers have suspended two CA policies in light of the fires the last few years.

If it's the latter, you just need to find another residential insurer as fourplexes are residential real estate. I've found Homesite (https://go.homesite.com/) is still reliably writing policies in CA.

Good luck!

Best,

Jon

@Joyce Kim, have you considered your options under SB9? If you're able to subdivide the lot into four new R1 lots, then each R1 lot can handle a duplex and two exterior ADUs -- ie, two duplexes.

Eek... I highly recommend you call an eviction attorney before doing anything else!

Or, at the very very least, get NOLO's book on evictions:

https://store.nolo.com/products/the-california-landlords-law...

Good luck! It'll be worth it in the end, I'm sure.