All Forum Posts by: Sam Sala

@Sam Sala i used a TKP for my first property and learned the hard way. At the time I was scared to not use a TKP and do what i considered to be "on my own". The last 3 properties I've either purchased through an agent or wholesaler and have had much more success. I'm not saying all turnkeys are bad there are reputable companies, but you need to do your own due diligence and run the numbers. Many TKPs will say either repairs or capex don't need to be included because you have a completely renovated property, i whole heartedly disagree. Others will seriously underbudget those expenses. Some other costs you need to consider which are commonly missed from turnkey proformas - turnover/rent ready costs, "hidden" property manager costs, closing costs, and lawn care/utilities/pest control/hazard insurance (if applicable).

@Tim Adams Using FHA for 3-4 unit properties in LA isn't feasible unless you find an AMAZING deal (i have yet to see it happen). For 3-4 units FHA requires the property to pass its self sufficiency test. I've spoken with different lenders and they all perform the test slightly different, but the rent you receive needs to cover the PITI payment. In simpler terms, the property needs to cash flow while you live in one of the units and thats nearly impossible in LA.

The self sufficiency test is only applicable for 3-4 unit properties. So you can still buy a duplex with a FHA loan and take advantage of the low FHA down payment. OR you'd have to save up 20-25% down payment and go the conventional route.

With all that said, house hacking can still be a great option in LA. You mention currently paying $2500/month - you could end up saving a lot of money on rent while getting all the benefits owning real estate - appreciation, loan paydown, tax advantages, etc. Your house hack returns are going to depend on a few things - which area you want to live, how many units you're looking to buy, whether you are willing to rent by the room, and how much down payment you can afford.

I have an out of state rental portfolio and am now considering to do a house hack in LA. There are a lot of pros and cons to consider when buying out of state. In my opinion, many new investors underestimate the monthly expenses required to maintain and manage OOS rentals and nearly every turnkey pro forma you look at will be bogus. That said, I still plan on growing my OOS portfolio in the future (just put in another offer last week!). Happy to share more of my experiences with you.

@Jon Colin Chisholm

Hey Jon

You won't qualify for a regular Fannie Mae loan, but a DSCR loan would work beautifully. No income verification required and with your credit score, you should be able to get a 30 year fixed in the 4's with a couple points; as good or better than Fannie rates right now.

Welcome to BP

Stephanie

 Market correct up. I think the market is way too low right now.