All Forum Posts by: Matt Mason

 I'd love to see a source on the 12% increase in rents over the last 3.5 years in Los Angeles.  From my experience and everyone I know and any data I have seen, it has been much more than that.

Keep in mind you will pay the income tax in your state of residence no matter where the property is located.  You would just get a credit for any income taxes paid to another state on your own state return.  Basically, you would pay the Texas Property Tax and CA Income Tax if you held Texas property as a CA resident, which is pretty much the worst of both worlds.

No real opinion on the costs, but you might not be as far off necessarily as some suggest. I think you will find compared to the middle of the country, labor costs will be quite a bit higher in LA, but materials often won't and sometimes might even be a little less.  Take granite and cabinets.  In Los Angeles, it comes right off the ship and after a very short truck trip is ready to go.  For the middle of the country, you have got to get it put on a combo of trucks and trains and sent across the country and shipping costs by weight add up pretty quickly on really heavy items like granite slabs.

UCLA students often spend the big bucks to live in Westwood walking distance to campus or in the case of the less well off ones often go to Palms for cheaper housing and Palms also has several SM Bug Blue Bus lines that go straight to UCLA.  It is a little bit of an up and coming area and has a new metro rail line opening next year that ironically will bring some USC students.  

On the con side, it is still somewhat expensive given its Westside location despite being a little dumpy (full of 60's and 70's apartment buildings some of which are fading), and it has a little crime here and there including a high profile murder a week or so ago.

Echo Park, Silver Lake and anything in the Valley would just be too far or too much traffic for me, but some people have more time to waste or patience than myself so each to their own.

I assume you are looking for a condo?

I am not as familiar with South of the Freeway.  The Freeway represents a major dividing line, because everything south of it is considered South Los Angeles to some degree.  It can be a little rougher around the edges down there.  I did have a friend that lived in Village Green and that was quite nice, but you tell people you are going down there and some think you are going to the moon.  However, this area is right along the Expo Line and is still very close to Culver City.  It has some potential.

@Julian L.

I hear you about a condo. Only makes sense if you are going to stay at least 7-8 years but preferably longer. Keep in mind a $300-$400 HOA fee really isn't too crazy as that should cover your water, sewer, some insurance, gardening, and outside electricity among other things. You are going to have pay those things yourself on a house. The real bite is looking out for assessments on top of that for major deferred maintenance and capital items that may exist. A lot of condo HOAs are dysfunctional messes.

I am a bit lucky in that I have lived in the same 4 unit townhome complex for 16 years and we have a simple structure and I control 25% of the vote. The downside is that I have to run a lot of the HOA duties or they probably won't get done. The advice I have taken to heart on condos is either go small (4 or 5 units where you can control things) or go really big like over 100 units where they can afford professional management and a few bad apples don't muck things up and there is a big base to spread capital costs over.

On 90016, I own an income property north of the 10 Freeway (Mid-City).  There are still quite a few properties that need rehab.  Like most of LA, the real money is in value add, which I agree can be a little intimidating for a newbie, especially with the big numbers and RSO in LA.  For the neighborhood, the good is that Mid-City to the North along Pico continues to improve.  Culver City is just a mile or so to the West and this part of CC is about to really go to the next level.  Just to the South, the Expo Line Phase II is opening next year and will provide a 20 minute stress free ride to Santa Monica, which is a game changer IMHO because there is no other affordable areas near SM that can come close to that commute.  The bad is that there is really not much of a walking commercial street here so it is kind of a spillover neighborhood.  Also, this area used to be a swamp (La Cienaga means swamp in Spanish) and does not do well in major earthquakes - liquefication...

FIBI does record them on audio and you can listen if you go to their website.  I make a few of them in person and if I can't make it, I try to listen to the audio, especially if the speakers and topic are relevant for me.  Even though I am not a flipper, I have rehabbed some and I am planning on making this one.

Rents are much more stable than prices.  I can't comment on the Bay Area specifically, but in Los Angeles, rents dipped just slightly during the Great Recession, at least in the City.  This was in an environment where LA County unemployment was around 12% and there were media comparisons between CA and Greece and so forth.  It is very rare for rents to fall more than an insignificant amount at least historically in this market.

I didn't say a property tax increase affects cash flowing property worse than appreciation property.  I was responding to another poster who stated that one negative affect of an appreciating property is a much higher property tax assessment.

I don't live in Oregon so I don't know if you had some local increases passed by the voters in the last year that may have resulted in your increases, but there is def. a 3% cap as part of Measure 47 passed in the 1990s.

http://en.wikipedia.org/wiki/Oregon_Ballot_Measures_47_(1996)_and_50_(1997)

An example of the benefits are for long time holders of real estate.  I have had my primary residence for 16 years.  The property tax has gone up about 30% over that time, but the property value has gone up somewhere around 190%.  Some of my neighbors pay annual property taxes well more than double what I do.

In most states it does, but in CA and OR there are property tax increase caps (I believe MA has this as well but not sure about other states).  3% in OR and 2% in CA is the max amount your property tax can go up each year, so if you can raise rents at a higher rate, eventually your property taxes will represent a lower and lower % of your rental income and cash flow improves year over year from that.

I agree with Steve O. in that value add and forced appreciation is where the real money is.