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Old 02-19-2014, 11:18 AM
 
Location: California
263 posts, read 754,488 times
Reputation: 134

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I am thinking of buying (and paying for it in full) a rental/investment property in the Los Angeles area. I am looking at foreclosure properties in the area. I know I would need to hire a management company, as I reside on the east coast. I know Los Angeles would be a good area because of the desire people have to live there and also because there is so much industry there. I am not looking to "flip" the property. I am looking for a long term investment and will most likely keep renting the property out until my retirement, which is still 30 years away. I figure homes don't really sit "empty" in LA like they do in some other areas of the country.

Does anyone have any experience with investment property in the LA area? Is it too risky with the housing market right now? I just don't want to take the chance of losing my shirt, so to speak...lol

Thanks is advance for any advice or input
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Old 02-19-2014, 11:25 AM
 
Location: OC/LA
3,830 posts, read 4,643,677 times
Reputation: 2214
Regardless of the R.E. market in LA, in no way would I recommend buying in an area where you don't know the market very well. In addition, buying as an out of state landlord as your first investment property is a very bad idea.
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Old 02-19-2014, 11:29 AM
 
Location: Los Angeles
192 posts, read 324,901 times
Reputation: 88
Hey Westside, I'm in your neck of the woods as well.

If you'd like, I'd be happy to pm/email you an excel sheet I use to roughly gauge cash on cash returns.

Good luck!
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Old 02-19-2014, 11:39 AM
 
Location: Southern California
4,453 posts, read 6,772,752 times
Reputation: 2238
Yes, are you familiar with the LA? not all foreclosures are a good deal. I don't know where to start with this.

You can lose your shirt, but you are buying all cash, your shirt would be already lost.

Houses sit empty only for a reason?

Are you looking to buy in the 310 area, the rate of return on your cash will be low compared to other places, maybe 4-5%.

Last edited by thelopez2; 02-19-2014 at 11:55 AM..
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Old 02-19-2014, 11:40 AM
 
Location: California
263 posts, read 754,488 times
Reputation: 134
Quote:
Regardless of the R.E. market in LA, in no way would I recommend buying in an area where you don't know the market very well. In addition, buying as an out of state landlord as your first investment property is a very bad idea.
I really don't even know the market in my own area either. is it a bad idea because I'm live so far away and I won't be able to monitor or check in on the property myself other than maybe once a year?
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Old 02-19-2014, 11:42 AM
 
Location: California
263 posts, read 754,488 times
Reputation: 134
Quote:
Yes, are you familiar with the LA? not all foreclosures are a good deal. I don't know where to start with this.

You can lose your shirt, buy you are buying all cash, your shirt would be already lost.

Houses sit empty only for a reason?

Are you looking to buy in the 310 area, the rate of return on your cash will be low compared to other places, maybe 4-5%.
Yes, mostly in the 310 and 213 areas. I'm interested in the West side, Silver Lake, WeHo
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Old 02-19-2014, 01:21 PM
 
Location: Los Angeles (Native)
25,303 posts, read 21,334,604 times
Reputation: 12313
You are correct that there is demand for housing in L.A ..and likely will be in the future.

The issue with buying rental property in L.A is that while rents seem high they actually are not high enough to support a mortgage,taxes,insurance,maintenance and property management fees.

Even in the 'worst' parts of L.A it's hard to cash flow ..especially with prices these days. You probably could of found a marginal deal from 2009-2012 or so but prices have gone up a lot since then.

Another bad thing (for a landlord) is very strong tenants rights and rent control.

In the past ,people have definitely done very well holding property in L.A, but hoping for the same appreciation in the future is just speculating.

On top of it you will be out of state and dependent on property management.

What part of the East Coast do you live in? I'd recommend taking a look at your local area.

You are looking at probably $400,000 minimum for a single family house even in L.A and then rents won't cover all the expenses so you will be 'bleeding' money every month to support the property.
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Old 02-19-2014, 01:26 PM
 
Location: OC/LA
3,830 posts, read 4,643,677 times
Reputation: 2214
Quote:
Originally Posted by jm1982 View Post
You are correct that there is demand for housing in L.A ..and likely will be in the future.

The issue with buying rental property in L.A is that while rents seem high they actually are not high enough to support a mortgage,taxes,insurance,maintenance and property management fees.

Even in the 'worst' parts of L.A it's hard to cash flow ..especially with prices these days. You probably could of found a marginal deal from 2009-2012 or so but prices have gone up a lot since then.

Another bad thing (for a landlord) is very strong tenants rights and rent control.

In the past ,people have definitely done very well holding property in L.A, but hoping for the same appreciation in the future is just speculating.

On top of it you will be out of state and dependent on property management.

What part of the East Coast do you live in? I'd recommend taking a look at your local area.

You are looking at probably $400,000 minimum for a single family house even in L.A and then rents won't cover all the expenses so you will be 'bleeding' money every month to support the property.
Basically this.
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Old 02-19-2014, 02:04 PM
 
Location: West Hollywood
3,190 posts, read 3,170,073 times
Reputation: 5262
Quote:
Originally Posted by WestSideGirl310 View Post
I really don't even know the market in my own area either. is it a bad idea because I'm live so far away and I won't be able to monitor or check in on the property myself other than maybe once a year?
Yes. You leave yourself open to all sorts of lawsuits if you check on your property so infrequently, management company or not. Your problem might even end up being the management company. Without much more frequent visitations it would take you a long time to figure out you're leaving yourself open to trouble.
And it's just not a great idea from an investment perspective. Rent in LA seems quite high but property prices are soaring right now. Then factor in utilities, maintenance, the cut to the management company, your travel expenses. You would have to get the deal of the century on the property.
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Old 02-19-2014, 02:17 PM
 
Location: Southern California
4,453 posts, read 6,772,752 times
Reputation: 2238
Paying all cash - no mortgage

Rent Control - This only if a multi family

It is your money, you will either give it to a Money Manager, Bank, or build your own team and business.

Cost would basically be city fees, property taxes, income taxes, maintenance, management, insurance.

Plans on holding for 30 years property value short term doesn't matter.

It is not rocket science.
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