All Forum Posts by: Clarence Johnson

Good help is hard to find, especially locally, and it will vary job to job and city to city.  In smaller cities (Gardena, Inglewood, Compton) its difficult to do a large job with no permits and fly under the radar, in LA its a little easier.  Knowing the LA multifamily mkt I know many are not being delivered vacant and almost all are subject to city, or county rent restrictions.  With this said, if you are inheriting tenants I wouldn't remodel interior units until there is a turnover as the maximum rent increase will still be minimal while its inhabited.

Suggestions to explore building an ADU above would definitely be worth looking into. I love the San Pedro market and believe it will continue to grow in demand as the waterfront development is finished. I would explore the possibility of adding an ADU and holding out for increased equity/cashflow. I sold my sister a duplex in San Pedro a few years ago and she has had massive appreciation, and we have seen the area improving. Making $100k would be great, but to be totally honest if your not taking that money to a different market then it's probably not worth it. You would need $100k to buy a $500k property, multi's in San Pedro are averaging $580-600k right now. Don't sell without a plan, explore all options, and good luck. @Will Barnard had good tax advice above, also if you do not qualify for the owner occupant exemption a 1031 exchange may be an option.

As an investment there is no way around the large down payment and rates will vary lender to lender. I always advise my clients to explore a HELOC before a cashout refi, origination is less, HELOCS can be reused once paid, and if you wont have to take the rate hit that comes with a cashout refi. The aforementioned totally depends on your scenario; what rate you have now, are you paying MI etc. Your best bet may be to explore building an ADU on your existing properties, or to buy a SFR and build 1-2 ADU's. Going from a multi to a SFR/Condo the bank will allow you to buy with a 3-5% downpayment. I'm getting quoted to build an ADU now using my HELOC, the ROI is amazing in comparison to the cost to buy in my mkt (Inglewood). The numbers for a SFR with ADU are penciling about the same as a duplex in most LA markets, my client just purchased a 3/1 SFR with a legal studio ADU in Carson for $595k, this is comparable to duplex prices.

Hey Ben,

I grew up in Gardena and my parents still live there. Excellent market, centrally located, and in my opinion in the direct path of progress as Inglewood increases in demand and more tech jobs are coming to the Southbay. I always suggest starting with multifamily, it gives you an opportunity to use a 3.5% downpayment for a multifamily where if you start with a SFR you will usually not be able to get a bank to give you a low downpayment loan for a multi. Don't let rent control deter you from LA or multis, as we now have state rent control to cover cities with no rent control laws. Rent control is primarily a problem for people who buy without analyzing the properties and no plan to get the returns they expect, also if a tenant is paying mkt rent or a property is delivered vacant the new laws will have little impact on you. @Andrew Aladjadjian is correct re the new owner occupancy law, I would just warn that I have a few clients who built ADU's in LA (SFR) and now the cities rent stabilization unit is trying to call it a multiunit and apply rent control to their single family homes. Aside from Gardena, Inglewood still has opportunities , Hawthorne is well positioned with many catylyst for change, and San Pedro's water front development will be a game changer for their mkt.

Inglewood is still a growing, high demand market.  The city did just pass a form of rent control so we are now on an equal playing field with LA City and County.  Sfr can be anywhere between $550-700K, and duplexes are about $600-650.  I live in Inglewood, run my business here, and both my property investments have been made in the city.  There is room for growth, and plenty more to come.

Welcome, house hacking is definitely a great foot in the door.  The state rent contol and LA county rent control made it harder to put a deal together buts its still very possible.

Hey Stephanie,

I know the best NACA Realtor in LA, and in total transparency, its not me lol. Msg me for the contact, I don't even do NACA deals and this is her specialty.

@Oriane Brice your going to want to find these before they are for sale and exposed to the market.  Find them when they have yard signs advertising vacant units, find them when there's furniture and trash at the curb from an eviction, find them before they know they need you.  Stay the course...

Welcome to BP. House hacking a 2-4 unit is a great first step. I have done it and suggest it to most clients. Finding a BRRR using an FHA loan in SoCal isn't likely but the house hack will create a good foundation for further in state and out of state investing.

@Coco Cook I would disagree with Hawthorne being C-/D.  It's well positioned and the worst areas in Hawthorne are a C at the worst.  Hawthorne is well positioned near Inglewood and has market pressure from tech companies like Spacex moving in.  Ring is moving from Santa Monica to Hawthorne and you see places like Eureka Burger and Base51 (https://www.yelp.com/biz/base51-hawthorne-3) popping up to cater to the demographic.