All Forum Posts by: Jon Schwartz

@Aj Parikh, are you concerned about Cleveland’s dwindling population? The city’s population peaked around 1950, and it’s been shrinking ever since.

Pedro,

I make my own maps using an application called Tableau and data from the Census Bureau. I end up with maps that looks like this:

 In this map, colors represent current median income and arrows represent income growth over the last five years. As you can see, the coastal communities are very wealthy and growing. What I focus on is the redder areas next to green areas that also have big arrows.

Here's another:

 This one shows household formation over the last five years in downtown LA, which everybody knows has seen a huge amount of growth thanks to the countless new residential developments. What strikes me as fascinating is that the household formation extends down below the 10 freeway, to a small neighborhood called the 26th Street Historic Core, where prices are still very low. That's another area I'm zeroing in on.

All of this data is available for free at data.cenus.gov, and Tableau is also a free download at www.tableau.com.

As mentioned previously, it's important to work with a local agent who knows LA's submarkets well. LA isn't a market; it's a constellation of submarkets!

All the best,

Jon

Adolph,

Good questions, man. I'm an investor, househacker, and agent in LA. Lemme throw my two cents by you...

Given what you've shared about your situation, you should buy a place in LA and live there. The only question is: house or multifamily property?

Since you work in tech and rent in a luxury high-rise, you're clearly not desperate for a little monthly cashflow. I assume your schedule is such that you could tolerate overseeing a light renovation in LA, but managing out-of-state BRRRRs might be too taxing. And I assume you're investing for wealth. You're already talking about a portfolio and not just cashflow. Bravo!

So I think you should buy a property in LA, force some appreciation right off the bat with a light renovation, let more appreciation bake in over a few years, and then grow the portfolio from there. The longterm appreciation gains in LA are what really builds the wealth.

Let's explore buying a house vs. buying a multifamily property:

If you bought a house, you'd want to find a light fixer in a rapidly developing part of town. Will you eventually be returning to an office? If so, where? If not, great! The whole city is your oyster, and there are several submarkets with socioeconomic trends and infrastructure plans pointing toward a lot of growth in the coming years. I pursued this strategy across two primary residences in Echo Park from 2009 to 2019; it worked out really really well.

If you go with a multifamily property, you'd be killing two (or more?) birds with one stone. You'd be owning again, and you'd have a proper rental portfolio at the same time. Given that space and quiet are a concern, I'd recommend buying in a mature submarket; the tenant base is more predictable and longterm. If you're completely against shared walls, then you'd want to find courtyard style apartments or properties with, for example, a house in the front and two apartments over a garage (in a separate structure) in the back.

I'm living in a duplex now. I actually have a wife and a toddler, and it's working out great. Our tenants are downstairs, and it's not that we never hear them, but we don't hear them any more than we did our neighbors when we lived in a house in Echo Park. I bought this duplex vacant, so I selected my tenants, and they're really great people. It's actually been a joy to socialize with them through COVID.

The advantage to buying a house is that, when you're ready to cash in on your equity, you'll have a larger pool of buyers. The advantage to buying a multifamily property is that you can keep it and cashflow when you move out. That's the plan I put together with my property; I made sure the property would cashflow when I move out, and I plan to hold it indefinitely. As its value grows (and I've already created $100K of value via a reno), I can refinance out equity to put back into my portfolio.

What do you think?

Also, I feel you on the noisy neighbors. When I was a renter, I broke one lease because my neighbor would blast the Goo Goo Dolls all day. Do you remember that band? It was insufferable. Terrible. I feel for you, buddy!

All the best,

Jon

Christopher,

I'd call an attorney before reaching out to your neighbor directly.

It sounds like your neighbor has been using this alley for a long time, and I'm 99.9% sure he won't take kindly to your asking him to clear it. I may be wrong about that, but any legit attorney will take a call without charging. I'm well worth your time to call an experienced attorney, explain your situation, ask for their cost, and ask for their opinion. At the very least, you'll be armed with a better understanding of the law if you do end up going to your neighbor first.

Good luck!

Best,

Jon

Sam,

What Socal markets are good for the BRRRR strategy? I'm a value-add, buy-and-hold investor in LA, mostly.

Best,

Jon 

 Pedro,

Believe it or not, I think you can find what you're looking for.

You'll want to look south of downtown LA, from the 10 down to the 105. The closer you get to the 105, the sketchier the neighborhoods will become, so a lot depends on your tolerance for where you live.

You'll also want to look to the northeast, specifically Boyle Heights, City Terrace, and East LA. Fortunately for you, a lot of inexpensive, up-and-coming neighborhoods are in close proximity to downtown LA.

Also, on the finances, it's important to approach an LA househack with the right expectations. LA househacks don't cashflow. I only know of one househacker in LA who cashflows, and it's because he built an ADU. But househacks are still totally worthwhile in LA!

The cost of living here is soooo high and makes up a huge portion of your monthly expenses. So if you can cut that down by $1000/month, it's like making an extra $1000/month. If your gut is saying, "No, man, no way," lemme know, and I'll write a longer spiel about this.

Where in LA are you living now?

Best,

Jon

 I'm interested in connecting with a contractor who's also an investor! Derrick, PM me your contact info, please!

Cirilo,

Not *anything* is possible, but with a little know-how, you can totally househack in LA. A few things:

Firstly, go to naca.com and familiarize yourself with the NACA loan program. If you have the patience, it's an amazing way to buy a home.

Secondly, don't expect to live for free in an LA househack -- but that doesn't mean that LA househacks aren't worth it. LA housing, whether rented or owned, is extremely expensive. If renting an apartment costs you $2000/month while owning a duplex costs you $1500/month, that's a killer arrangement! You'll be building equity and appreciation in the duplex while lowering your monthly cost of living.

I'm househacking a duplex in LA. I don't live for free, but I pay about half what my tenant pays -- and I have the better unit!

Good luck!

Best,

Jon

Hassan,

Don't listen to the "pure speculation play" talk from out-of-staters. Picfair Village is a rapidly improving part of Los Angeles, and new construction isn't burdened by rent control.

Will you manage the property while living in it? If so, I think it's a fine deal.

While you live in the front unit, the back units will cover your entire mortgage payment. You'll be on the hook for taxes, insurance, maintenance, and vacancy. Maintenance won't be much, and capex should be nonexistent. If you have capital in reserves to survive a month or two of vacancy, I think you'll be in good shape.

In 2-3 years, since this property isn't under rent control, you'll definitely see at least 5% rent appreciation, if not more. When you move out, the property will cashflow.

It's an appreciation play, but it's one that will allow you to live in a 4/4 in a good neighborhood at a good price, then cashflow while the neighborhood continues to improve. For LA, based on what you've shared, it seems good. I'd be curious to know where exactly in Picfair this property is.

FYI, I'm househacking a $2M duplex in Hancock Park right now. Very similar plan: low cost of living while we're here, cashflowing when we move out, and enjoying the slow and steady appreciation over the next decade or two or three.

Best,

Jon

Linzey,

I would recommend against buying a home if your time horizon is one year. Generally, property is appreciating in Socal, but not every year sees growth. Additionally, we're in a really moment right now. The market is crazy hot even though unemployment is still higher than any point in history since the Great Depression. So who knows what's going to happen in the next year!

 I know paying rent for another year in frustrating, but buying a house with a hope to capitalize on appreciation in one year is pretty risky.

Also, as a previous poster mentioned, you should definitely speak with a lender. Is your new job in the same industry as your old job? If so, the break in employment shouldn't matter after you have two months of pay stubs. That's the last I heard on the matter, so I would definitely reach out to a major bank and a mortgage broker and see what they say.

What do you think?

Best,

Jon