All Forum Posts by: Clarence Johnson

For a $700k approval and your flexibility with the areas I would suggest Inglewood, Hawthorne, San Pedro, Gardena and 90047 LA. Much of 90047 LA is in the county strip and not subject to LA City RSO, though it now has its own rent restrictions. The goal is to buy in the path of progress, and when equity allows you can drop MI and possibly do a garage conversion to create another unit and additional income. I actively invest and executing the exact plan as I explained above, followed by a condo and SFR purchase using low down payment loans, and converting the SFR garage to an ADU for additional income.

To the agents, lenders, and property managers that suggested it, what low down payment conventional loan programs are your clients using?  The programs that we once used now have income restrictions that put my buyers in SoCal in a position where if they make enough to qualify for the property they make too much to qualify for the program.

Thanks

@Lyndsey Jones welcome and hoping your income recovers soon!  Love your willingness to help, I remember offering to work in real estate offices and sweep job sites for free.  Amazing what people show and help you with when knowledge is the currency, stay the course!

I'm going to go ahead and say that's a lot for a condo, you can buy duplexes in appreciating mkts for that, you can buy $400k condos in Inglewood where they are currently building $800k condos. Using the term cashflow for a owner occupied condo with no actual income is a reach. I understand your goal of being able to rent it to cover PITI, however your aren't renting it for 1-2 years and even if the mtg payment is $200 above mkt rent, a good portion of that goes back into your pocket where all the rent currently goes to your landlord. I would look for a less expensive duplex in the path of progress in LA, possibly requiring the same $50k in rehab with better returns.

@Jonathan K. that's a broad range of expertise. Knowing the areas can be helpful, however given the online portals of the world your access to whats on the market mirrors our access. Given your plans it would be more helpful for the agent to be an investor, be familiar with ADU regulations (statewide and in each city), and be knowledgeable on multifamily properties and LA's RSO. Knowing the city will not be helpful if the agent/lender is not familiar with the FHA self sufficiency clause for multi's, if they are not familiar for lending guidlines on SFR's with existing ADU's (my clients Carson SFR/ADU purchase was reduced $30k in escrow), and how RSO can potentially impact and SFR with ADU. I know a guy.

@Tom Camarda as I read from the top I was afraid you would lose the deal.  Given your long term goals and plans I think its a good idea to lose deals for $50-60k, not $10k.  Of course you had no way of knowing, but if it was a financed deal that $10k reduction would barely move the needle on your payment and only impact your down payment by $2000-2500.  I'm in LA too so hearing about $140k 8 units is exciting.  What city was it, I plan to look in Ohio as well.  I would be the guy offering $147,500 and praying the appraisal comes in low so I can shrug my shoulders and ask for a price reduction in escrow lol.

@Marco Cruzatt I would avoid the big banks even if they didn't raise their requirements. The overlays and lender experience/motivation can be a problem if the transaction is not a slam dunk. I would suggest an FHA loan for a duplex if it is in LA. There are conventional programs, however the conventional options that I'm aware of have challenges in our market (income restrictions that contradict what is needed to be approved for the amount of the property), that may not exist in lower price points. The best time is always now, though I would avoid showings if properties are occupied and specifically target fully vacant properties for the moment. I say the time is now because there is less competition and your ready to strike if opportunity presents itself, otherwise you can passively shop (approvals don't expire if your situation is the same) until opportunity presents itself.

check your DM

LA City has a rent freeze so you may not be able to increase rents even if you want to.  I don't think increasing rent now is a good idea, I would let the leases lapse and allow the tenants to be month to month until the rent freeze is lifted and the the world is a little closer to normal.  At that time just offer longer terms 15, 18 months etc so your leases once againm end in the summer months.  Most tenants will agree to a longer lease at the time of a rent increase with the understanding that the rent cannot be increased during this term.