Thinking of buying land in LA from Canada. Need advice/guidance. (Los Angeles: real estate market, renting)

[TheAtlantian]

Hello all,

I am living in Toronto, Canada and I am seriously thinking about buying a piece of land in Los Angeles. The climate here during June and July is awesome, it is the climate from November to February that really bothers me.

From a financial perspective the main reason I am thinking about this right now is the affordability due to the exchange rate between the Canadian dollar and the American dollar since they are around parity. The prices in the LA real estate market being low also helps.

A little about me. I'm 30 years old and right now I am back in university to get a commerce degree in accounting and international business. It will take me about a year to finish. I will be taking a US tax course so I will be able to work in the USA as a CPA if and when I decided to move permanently to the USA or just do contract work for the time I spend there.

In terms of money and time horizons, I will be paying cash for the land and I am not planning to start construction for 10 years so that would put it at 2021. The reason for the long time horizon is that I want to save up my money while working and pay as much in cash as possible to build the house. If things go better than planned I could start construction with 5 or 6 years, but I would rather not overextend myself.

With all that out of the way what I need to know is what are the steps I need to take to buy land in LA? I have already looked at several promising properties on the internet. I must say I am amazed at how much information is publicly available which is in stark contrast to Canada (especially Toronto) where the local real estate boards have a near monopoly on information and try to restrict information as much as possible unless you use one of their real estate agents.

I understand that I will need to get a connection to the city sewer and water which I was reading about on this forum. One of the properties I am looking at has homes adjacent to it so I think it is a safe bet the city sewer and water connections are not excessively far.

In terms of zoning my first choice is zoned LARE40 (I have no idea what that means) and is 0.3 acres. Is there a set rule for how many square feet a house can be in relation to the land? Are there rules about how far from the property line, etc. the house has to be?

Basically at this point I have a lot of questions and I know that there are even more questions that I have to ask that I have not even thought of yet. Any and all advice would be greatly appreciated and I want to say thank you in advance for the help.

Lastly, once I am done all the preliminary work from here I am going to fly down to LA for a week to see the property in person (provided there are no red flags that come up from the research I do beforehand).

[1200RT]

I'm not sure where you plan on finding developed 'land' in Los Angeles; if you broaden your horizon to Los Angeles County, you'll have better luck.

Also, where did you get the notion that "prices in the LA real estate market [are] low"?

[TheAtlantian]

My mistake I meant LA Country. As for the low comment it is all relative. Keep in mind for Canadians not too long ago 1 Canadian dollar was $0.67 American, so to buy 1 American dollar one would have needed $1.49 Canadian. Basically it is more of an exchange rate thing than anything, so from a Canadian perspective prices are "low" at least for us.

[yamota]

It's just like in the 80s when the Japanese bought all those properties in downtown LA

[laysayfair]

There are rules for everything you can think of when building in CA and L.A.

[greggd1]

RE40 means you can build 1 single family residence for every 4,000 sq ft of land on that lot.

Also consider buying an older home in the area you want to live in, then completely rennovate it or demo most of it and go from there. You can live in the place while you save for the construction costs.

I'd also suggest renting a place down here for a year and go from there. Certain neighborhoods/areas may seem like they are nice etc but they may have negative attributes you would not be aware of unless you were more familiar with LA.

Things change and you may not like an area after a while or find one that better suits your lifestyle.

[TheAtlantian]

Thank you to everyone for the replies!

@yamota
That reminds me when Paul Reichmann of O&Y who bought the Uris buildings (eight skyscrapers) in Manhattan (NYC was on the verge of bankruptcy) for $334 million (with $46 million down) in 1977 and sold then in the 1980s for $3 billion. You can read about it here -> 01/20/97 FAITH AND FORTUNE--Part 2

@laysayfair
There is a bit of Byzantine in my ancestry so I should not have a problem.

@greggd1
Interesting. The minimum lot size I want is 12,000 square feet. Since the lot is zoned RE40 does that mean (12,000/4,000 = 3) does that mean that I could build a guest house/pool house and a main house? If the answer is no that would not be a deal breaker for me, but it terms of quality of life and enjoyment it would be nice if there was a separate place for family/friends to stay while with me. For those who have never enjoyed a Canadian winter lets just say anyone who can will come stay with you for the winter.

As for LA I have wanted to move to LA for a decade, but the problem for me has been affordability in terms of employment prospects (one of the reasons I went back to school was to get my CPA), what I can afford to spend (in terms of how far each dollar will go), and what the exchange rate is between the Canadian and US dollar at any given time.

In terms of neighbourhoods/areas I am somewhat familiar, but I have some relatives and close friends living in Los Angeles so I do have some local help in terms of what deals are not good deals at all.

One last important question. Since I am on the other side of the continent. How much can I deal with over the phone? I am coming to LA at the end of August (I have to see the land before I think of buying it), but I doubt I will be able to take care of everything (especially if I do not think of it). I am still not sure what has to be done exactly, but for example calling the city for zoning, approvals, permits, building codes (what can be built, how big, rules, etc.) or are these things I will have to be in LA to deal with?

[greggd1]

You can build a guest house easily. That would not be considered a 2nd unit. There are some stipulations to that, but there are also work- arounds.

I would suggest you hire a consultant to provide you with details as to what you can build, height, setback etc. before you purchase. Your realtor may be able to provide you with a contact or find your own property development consultants and call a few. They can direct you to someone who specializes in zoning and the permitting process. If you are building within the Coastal Zone, you will need to gain approval by the Calif Coastal Commision.

if you lot is on a hillside, your going to need an engineer. He/she will have the contacts above if they specializes in new residential construction.

Time is on your side...its a buyers market, and remember realtors want to sell you now, now, now rather than tommmorow. If you are concerned about the exchange rate, park your money here in the U.S.
until you sort it all out.

[Patrolman]

Not to rain on your parade, but the prudent rule of thumb is not to buy vacant land that you will not develop within six months, especially when you are 3,000 miles away. Ten years is a long time (even 5-6 years!) and a lot can change/happen during that time. Your personal plans/career path could change, not to mention changes in zoning and building regulations. I'd give this idea a long hard look before sinking your hard-earned dollars into vacant land that you may get stuck with down the road. Just some food for thought.

[TheAtlantian]

@Patrolman
You raise very important and valid points which I have been discussing with my family. The real impetus for this deal, at least for me, is the combination of relative weakness in the LA real estate market (improves affordability for me) and the weakness of the US dollar (again improves affordability for me).

I do understand what you mean about things changing over time, but for me my personal and career goals will not be changing. My family is looking to buy a house in Phoenix, Arizona but I was not too hot on the idea, in spite of the idyllic weather (I hate the cold and snow), because Phoenix is a small city with not too much culture. Los Angeles on the other hand is exactly what I want, if I can find something that I can afford and will provide the lifestyle I want.

As for the changes in zoning and building regulations being from Toronto, Ontario that is something that is on my mind. One of the areas outside of the city proper, which it has been expanding into, is called the Green Belt and the provincial government decided a year or two ago to ban all development (residential/commercial/industrial) in the Green Belt (at present it is mainly used for agriculture). So I know what you mean about changes in zoning and building regulations. On the bright side for us, however, since a large chunk of land is no longer available for urban sprawl the value of our properties in the city are worth more.



Thank you Patrolman and everyone else, this is the kind of sober second thought I came to this forum looking for.