All Forum Posts by: Wei Cho

@Account Closed that's a great way to open communication! Yes, I try to have people in my team who have the "real estate investor" / retire early mindset. I will PM you, I want to talk to as many CPA as I can.

Thanks everybody is so supportive!

Hi Michelle and welcome to BP!

I had the same exact questions and different scenarios in my head when I was looking to buy a duplex. And I finally closed about a month ago. Since you also live in LA, I can relate to a lot, especially the crazy expensive real estate. The San Fernando Valley is expensive but it is not hard. I bought my house in unincorporated LA County, very close to Boyle Heights, so no rent control. You should check if where you're buying has rent control. Some cities in the valley are in LA City. Just quickly check zimas.lacity.org and see if you're LA city and if the property falls under RSO.

To your questions:

1. I always say buy where it makes sense. Prices in LA are going to be high unless you live out in the High Desert or by San Bernardino. That said, you can always find deals anywhere. Maybe you see an overlooked property going for $519,000 and you offer $475,000 and the seller accepts (that's what happened to us). So you never know unless you actually make an offer. With a hot market like LA, I would suggest making several offers and make it contingent upon interior inspection.

2. I tried FHA and did not work for us: it is a lengthy process, especially with the older homes in Los Angeles. Most houses might need a termite clearance and if the seller is not willing to wait, then s/he might drop your offer and go with someone else. That almost happened to us so we switched our loan to FHA. Also, FHA has an upfront mortgage insurance cost and will bump up the cost of your loan. I have a very good lender with a lot of loan options, one of them is a low down-payment, a low mortgage insurance, but a "high" (5%) interest rate. Send me a message so that we can connect. I am an architect in Los Angeles. My advice to you is to start talking with lenders about loan options. That way you know what to save for.

3. Try HomePath program. It is a site with foreclosure houses and you can buy it with an FHA. But the housing inventory in that website is low and kind of pricey (IMO).

4. I would suggest you to start talking with a lender and build a relationship. I was back and forth with my lender for a year just looking at properties and having her give me pre-approval letters. They will also know what you need to prepare for financially and document wise. I would be very careful when looking at properties because every city is different in the way they adopted the ADU ordinance, eg lot size, zoning, etc. I looked into building an ADU but I found out that you need to sign a covenant stating that you will live on the property and cannot rent out both the ADU and your house, otherwise the ADU becomes non-conforming. And if you're looking at some point to rent out both units, then I would go with R-2 and above zoning to build another unit.

Hope this helps!

Hi there!

My husband and I closed two weeks ago on our first duplex and I quit my job to begin working for myself (I am an architect). I am looking for any recommendations to a local CPA in Los Angeles area. And wanted to know how you build relationships with them. My old CPA is a family friend and he retired and moved out of the country. I would bug him with a phone call for every little question that I had. Now that I have a duplex and I'm starting my own business, I need a new CPA. 

There is a CPA in my neighborhood but he charges per consultation and I don't know how to approach him to establish the kind of relationship I had with my old CPA. The type of relationship that I am looking for is that I can call/email her/him for any little question that I have but that s/he knows that I will do my taxes with them. And if they could advise me in the deductions to take, the receipts to keep, etc. I don't think I require any bookkeeping from them yet.

How do you start the conversation and how do you vet CPAs? Also, any recommendations with CPA in Los Angeles, CA area?

Thanks!

Hi Jordan, I commend you for your efforts. Never give up no matter how hard it is. But you also have to play smart. I agree with the other posters, secure a job right now because it will help you qualify for a loan. I didn’t realize how hard it is to get a loan post bubble burst until I actually went through the process. It is a rude awakening but one that will make you smarter. If you like real estate that much, why not consider getting your license? It doesn’t take much, just take some classes and study for the test and pass it. You’ll have much more options as a real estate agent and more insight. You can network with agents and lenders and build a relationship with them. I mean you can do all that without a license but if you want to commit to RE, getting your license could be a good start while you Uber (and if you haven’t found an IT job). Have you looked in DTLA? I know that the IT guy comes to our offices every week because there is always something that is not working right. And he’s a third party contractor working for a bigger company. Good luck!

Hi James and Wayne,

Thanks so much for both your input. I feel more confident about submitting my offer even if it’s less than asking price. The LA market is so hot but nobody seems to be paying any attention to this property. However I did my due diligence and everything points to this property being okay to add more units. I think I will wait and see if the first offers come through and hope that the appraisal comes out to $400k. 

Thank you,

Wei

Hi everybody!

This is the year that I want to become a home owner! But I need some advice for the people in this community.

There is a remodeled detached duplex for sale in the city of Los Angeles, it is fronting a major street with the light rail a mere 4 minutes walking from the duplex. The location is great, up and coming, and there are about 3 cemeteries around the area. It is zoned multifamily, so building another unit on the lot is not a problem (I checked with the planning department). There are two structures on the site, one is 500sf and the back unit is 300 sf. The total size of the lot is 3600 sf (pretty tiny). The asking price is $440,000 and it's been on and off the market (due to the seller) for about a year. I've checked on the MLS and this property never appears as "pending". I understand that they have not been in escrow. I like the property but I do not like the price. I intend on offering $400,000 with a 20% downpayment. Has anyone asked for a "discount" of $40,000 on a home purchase?

So I ran a craigslist ad for about a day and I received on average 9 emails for each of the units of people who are interested in renting them. Granted, the ad did not have any pictures but there is definitely interest in renting around the area. The duplex is great for me because I have a low income and the income from the duplex gives me more purchasing power. However, my lender said that the appraisal might come in around the high $300,000 because there are no comparables to support the selling price of $440k. Which means that I would probably have to come up with the money out of pocket or negotiate with the seller to lower the price further, and be closer to what the appraisal came out.

There is already an offer for asking price, but with FHA financing. My lender thinks I still have a shot because even though I am offering $400k, I have cash reserves to pay for the difference and probably the FHA applicant doesn't. So I am submitting the back-up offer on Friday. Now, how aggressive should I be with the back-up offer? In anyone's experience, do you think I have a shot at getting this duplex?

Thank you for your help!

Hi John, If you don’t mind me asking, where is this property that you found located? I’m looking to buy my first MFR property, and the only ones I found in LA County are max 3 units with prices ranging from $400+. Thanks!

Thanks everyone for the responses! I have decided to look in another up and coming areas.

Hi everybody, I am new to the forum but have been an avid RE fan. I probably digested every book from BP and other great book recommendations mentioned on the podcast. My husband and I are looking to purchase our home in Los Angeles, CA, or home town. I started working fresh out of college 2 years ago and Daniel, my husband just started working a 1099 job about 4 months ago (also new graduate). We want to house hack using an FHA loan so we have 3.5%. However we're only getting the loan with my income because my husband 1099 is not bankable. We don't have any debt except that we're paying a car loan that it's not accruing any interests. Anyway. The pre approval letter says that I only qualify for $350k. Barely anything considering that median home price is $550k!!! There are only certain neighborhoods that we can buy and that's South Central LA (think the 90s riots in LA). It's definitely an area that is undergoing revitalization especially with subway projects and the new RAMS stadium being built close by. I've seen more and more fix and flips and property values go up. It's about the last affordable place in Los Angeles. Do you think we should wait to convert Daniel's income into a W2 (which is a possibility for 2018) or do you think investing in a formerly "ghetto" neighborhood a good idea/investment? We'd buy a duplex or triplex and we'd live in it. We're worried about the tenants it might attract. Thanks!

This is amazing! Thanks so much for sharing. It's the first time I see another architect in training in BP so far. i just joined. I'm going through the loan process with my husband. I work in downtown Los Angeles and there is so much construction around me. It would be my dream to be licensed architect at 25 and own a home/income property. The housing market is tough here but I'm sure we'll find a good deal that works for us.