The Rental Market Doesn't Make Sense (Los Angeles, Culver City: apartment, foreclosure, lofts)

[SiddharthaGautama]

I am considering moving to LA and have been doing research on rental prices. I will be looking to share a room or house as I cannot afford anything by myself. After looking at properties and prices I'm a little depressed. It seems like the standard price for a decent place with roommates is $1000. And it doesn't look like it matters where the place is even located. I mean you can rent a room out in a Hollywood Hills house or an average room in Culver City for the same price. You can even rent a room in Malibu for the same price. It doesn't make sense to me, does it to anyone else? The cheapest place I've seen with roommates is $700 - $800 and this is usually a dump. So why not pay an additional $200 if you can. Its basically like going from a 2 star hotel to a 4 star hotel for only an additional $200. I knew the rental prices were high, but its just that the price gaps don't equal out. Is it not possible to find a 1 bedroom apartment in a good location (hollywood, santa monica, manhattan beach, venice, culver city)for $1000...I don't think so because I haven't found it? I've lived in a few different places: West Palm Beach, FL and St. Louis, MO which aren't near as high in rent. I'll be leaving a place in St. Louis where I rented a 3 bedroom loft downtown for $1100 per month. Where do people live, do they rent, do they have roommates and what justifies living there? I could understand living this way if you are under the age of 30, but I can't understand why anyone older would want to live like this unless they could afford it.

[katenik]

we don't. if you are are over 25, and can't afford to live on your own here, why would you even consider coming? a one bedroom apartment in a decent area will cost a minimum of $1200, but probably closer to $1400-1500. to share a 2 BR in a similar area, you're looking at no less than $900 each. unless you are the kind of person who can live ANYWHERE (i.e., don't care who your neighbors are, how safe the neighborhood is, how clean the streets are, and what kind of shopping, dining, and other services are available in your neighborhood), it makes no sense to move here if you can't spend at least that amount on rent alone.

[ffknight918]

You DO make more in LA than St Louis though. I can give a good example of this.

I'm at a hotel in St Louis right now.(I live in Milwaukee) I'm taking the physical test for St Louis Fire Dept. tomorrow morning. Then I'm flying straight out to LA for an interview with Los Angeles City Fire Dept.


StLFD starting pay is about $34k.
LAFD starting pay is about 54k.


However, most LAFD firefighters make about 100k after their one-year probation and with overtime.

So rent is double, but the pay is more than doubled. I know this doesn't apply to all careers. West Coast firefighters seem to actually make a lot of money for some reason. However, depending on your job, it may not be as bad as you think.

You just won't get one of those awesome looking lofts. I can't believe how cheap a nice loft is in St. Louis. I have to live in the city if I get a job with StLFD. Since there aren't really any nice areas actually in the city besides those downtown lofts and condos, I'd probably get one for myself.

Good luck with everything!

[bhcompy]

if you just wanted a room, check the pennysaver (pennysaverusa.com). lots of folks(esp older ones) use it to post up rooms for rent

[Ryanman]

This really depends on the value of the property. Usually owners want to earn at least the 5% of the cost of the property every year. Hence, an apartment that costs $500,000 must create an yearly income of 500,000/20/12 = $2083 dollars per month.

The rental prices just go by with the property value. Only in very little cases they do not follow this rule, but then this means instability for the owner (and risk of foreclosure and you, the tenant, being kicked out by the bank!)

Take care!

Moderator cut: advertising not allowed

[motoman]

Originally Posted by Ryanman

This really depends on the value of the property. Usually owners want to earn at least the 5% of the cost of the property every year. Hence, an apartment that costs $500,000 must create an yearly income of 500,000/20/12 = $2083 dollars per month.

The rental prices just go by with the property value. Only in very little cases they do not follow this rule, but then this means instability for the owner (and risk of foreclosure and you, the tenant, being kicked out by the bank!)

Take care!

Moderator cut: advertising not allowed

It appears you are trying to publicize your website. This is the second post you have it mentioned.

The numbers you listed above are in no way accurate and greatly understate the cost of property ownership in the United States, as well as the expected return. Please understand what you are doing before you start giving advice.

If an investor were willing to accept $2,083 per month on a $500,000 apartment, they would have to have contributed about $170,000 as a down payment just to get the mortgage low enough for the monthly payment to be $2,083 per month. On top of that you have property taxes, maintenance on the property, the cost to manage the property, and the expected return on the investment. There isn't a single house/condo, etc., in the Los Angeles area that makes sense as a rental property assuming you were to buy at today's prices. Not a single one.

[talktobrent]

to the OP... I noticed the same thing in Washington DC. Any place listed for 700 or less had tons of competition, no matter where it was. If you widened your search up to over 800 there were alot more attractive options in both very good and mediocre neighborhoods, with alot less competition as well.

When you think about it, people looking to rent a room in someone else's house are generally on a budget. when these owners put these listings up they are competing with a ton of other listings. So someone looking to live in LA probably isn't going to justify paying too much extra to live in a strangers guest room (even in Malibu). chances are they're focusing on saving their money for bigger and better things in the future. Plus, I don't think Malibu or the hollywood hills are all that convenient for a regular working person to communte to and from on a daily basis.

It just seems to me like everybody is fighting for the lowest rents, meanwhile if you step your budget up just a bit you have a ton of qulaity options just waiting to be taken. I agree, the added quality of life may be worth it, plus the reduction in stress might make you a more productive person anyway.

[ibarrio]

West Coast firefighters seem to actually make a lot of money for some reason. However, depending on your job, it may not be as bad as you think.

Yes, you can make great money. But the work is very hard. There is a fire season in LA County...and it will keep you very busy. You will soon see why the pay is more.... Do not come thinking you will have a kick back job.

[Hungry For Cheese]

I don't know how well this will apply...but I am personally stuck in the middle of the "just pay $200" deal.

If I were to live alone in a 1bd for $1000 including all utilities in an undesireable area....that would leave me with a whopping $560 for everything else. Car payment is $330...so $230 for all misc bills and food.

The "$200" thing would never work.

and I am young, make just a bit under DOUBLE min. wage...but after taxes, mdeical,dental and 401k contribution....IT SUCKS!!!!!!

My point is...I "think" there are MANY ppl in my situation.

If I brought home $2-2500 a month....I could spend $1400 on a nice place...but in Los Angeles...from what I see, lots of people will spend a couple hundred more, to make it $1600-1800, therefore leaving the $1200-1500 with what seems to be "open" spaces. But it is very hard to find a place anywhere here regardless.

[Rats]

Originally Posted by Ryanman

This really depends on the value of the property. Usually owners want to earn at least the 5% of the cost of the property every year. Hence, an apartment that costs $500,000 must create an yearly income of 500,000/20/12 = $2083 dollars per month.

The rental prices just go by with the property value. Only in very little cases they do not follow this rule, but then this means instability for the owner (and risk of foreclosure and you, the tenant, being kicked out by the bank!)

Take care!

Moderator cut: advertising not allowed

The 5% of the value of the house figure is the upper limit in LA. Since property values are so overblown, most rents are between 3-4%. If you're paying any more than 4% of the property value, you're getting screwed.