Quote from @Rick Albert:
Quote from @Tom T.:
@Rick Albert Thanks for the response.
Your case study was inspiring, I read that book and found it very insightful.
1. Yes 120 days with the normal permit ($80 or so). Then $800 to get the 365 day/year permit. I have read about people waiting months for their permit to be approved and losing rental income. So I agree this may be bad to bank on.
2. Agreed, I think people underestimate how much you can still increase rents with CA/LA rent control. 5% plus the change in the local Consumer Price Index (CPI), but not exceeding 10%. That seems like plenty ie last year that'd be about 8%
3. Curious, have you had any tenant issues in CA? Any evictions? You said 19 doors, are the only CA doors former house hacks? Have you gotten investment properties just for investments in CA or do you go out of state for that
What makes you think mid-term rental? I think there are some tenant rights that don't go into effect until 1 year later. Rent for a furnished room could also be higher. I am not sure how to source these without airbnb. It looks like Zillow allows rent by room listings now, I also know of furnished finder.
Most of my rentals now are out of state. At one point I had two doors here from house hacking and down to my ADU. Once I move out, I'll make my current primary a new rental. Good news is because of LA appreciation, my main house will cash flow all of the expenses on it's own and we keep the ADU income.
I've gone through four tenants here in LA and so far so good. The worst was just the condition left. But I would take that over an eviction any day. For those that I know had tenant issues, sometimes it came from poor vetting or making exceptions.
I think mid-term is interesting because you get around the laws for STR and rent control. But you really have to run the numbers. I looked into it for my ADU and I was going to make the same versus a long term tenant. If that's the case, put the long term tenant in and call it a day.
If you are in a desirable area, mid term can be profitable. Keep in mind that includes insurance claims, people coming for work, and some people here just for a short term change of pace. I have family that traveled to Panama for a month because they work remotely.
Thanks this is very helpful information.
I think the main options I am still debating are:
1. Smaller house hack property - lower purchase price, SFH or duplex, easier to manage, lower risk with tenants (e.g., fewer tenants, mid-term tenants), longer time to cash flow, higher payment out of pocket per month, higher down payment to get reasonable PITI monthly payment
2. Larger house hack property - higher purchase price, triplex or quadruplex, because of economies of scale it often can cash flow after one year, more tenant risk (i.e., long-term tenants, more tenants), lower payment out of pocket each month, lower down payment to get reasonable PITI monthly payment
If I go with option 1 I have more capital to invest elsewhere in more landlord friendly states. If I go with option 2, I can more quickly turn my LA house hack into a cash flowing asset (but perhaps that is undesirable to have an investment property in a very anti-landlord state).
My temptation is to do a debt snowball on a quadruplex. Average rent would be ~10k/month. Once it's paid off that is enough to cover my living expenses.
