Nikki, Home Buyer in Los Angeles County, CA

What's the best way to invest in real estate in Los Angeles if you hv about 250k cash to spend - as a first time home buyer? Would you buy a?

Asked by Nikki, Los Angeles County, CA Sat Jan 15, 2011

short sale/REO less than 500k in SFV - sherman oaks/studio city/toluca lake area with 25% down as an income property and get a $100 distressed sale condo (downtown LA/Noho/Long Beach) to live in OR vice versa? Is that the best strategy? or would you put all down towards a 600k home purchase in a better area ie. Hollywood Hills? thank you.

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19
Timothy Burns’ answer
Nikki,

With the housing market starting to make it rebound I see lots of potential in the SFV area. In face there are new listings popping up each day that are conventional which do not have to deal with the time and trouble of a short sale or REO. I saw many responses already so clearly you are within your means to choose your agent. On the other hand if you choose the short sale or REO I do have first hand experience with these type of sales. I am at your service. Feel feel free to browse my profile.

Timothy
213-422-7496
http://www.linkedin.com/pub/timothy-k-burns/20/b79/b91/
0 votes Thank Flag Link Sun Feb 24, 2013
Hi, I answer a lot of questions about residential income property in my blog. There are great places to buy multifamily homes on the Eastside (Echo Park, Highland Park, Silver Lake) with $250K in cash. These areas are on fire in terms of appreciation right now.
0 votes Thank Flag Link Sun Feb 24, 2013
I would be very careful with condos/townhomes right now. If the building is FHA approved then the HOA has passed certain guidelines which will attract FHA buyers and thus keep the value up. Values for condos/townhomes without an FHA approval are starting to drop, significantly in some cases.

As an investment the best bet is a duplex, triplex or 4 unit building.
If you need something to live in consider buying a home. The appreciation is a lot better and they are easier to sell compared to condos/townhomes.

Short sales are ok if you are willing wait out the approval process and risk losing your buying power because of a possible increase in interest rates.

There are several REO's on the market at great prices. Most REO's are between a mild cosmetic fixer to a major rehab project.

If you are still in the market, let me know if I could be of help.
0 votes Thank Flag Link Mon Feb 7, 2011
Nikki,

Here is a possible game plan.

1. Buy four (4) SFRs in Southern California as investments. In certain areas, you can get newer properties for $120K each, 25% down + CC = 35K each. Times four equals 140K.

2. For each of those 4 SFRS, you pay around $500 (using 5.25%, 30 yrs), plus $150 tax and insurance. Rents for those would be around $1,000-1150. If you can manage those yourself, you can have cash flow of about $350-500 each (or $1400-2000) before vacancy and maintenance.

3. Use the remaining $110K for downpayment of your house, let's say 400K house. A 300K loan at 4.75 OCC would yield a monthy payment of $1,565 + 375 tax and ins. Your monthly PITI would be $1,940.

4. If you are luckly and real estate recovers ten years from now back to about 85% of the previous high, each of those four can value at 220-240K. Assuming your mortgage balances on those investments would be 70K/each (after ten years), your project equity is 150K each x 4 = 600K.

5. If you are really UNLUCKY and real estate appreciates 0% ten years from now, you would still build up 20K x 4 = 80K in equity + roughly 2K in monthly cash flow.

6. please note that both #4 and #5 already discounted the 2K monthly cash flow that you have been accumulating in ten years. Consider that as a bonus ( 2K x 12 x 10 = 240K ).

You are all welcome to check my numbers and/or adding comments. If you think the post is helpful, give me a thumb up.

Happy investing

David Pham
National Brokers - connecting people to homes
0 votes Thank Flag Link Tue Jan 25, 2011
Nikki

First, Congratulations for being one of the few first time home buyers that wants to invest in income producing property. I specialize in multi family and income producing property right here in Los Angeles. Currently I own and manage a number of income properties and active flip single family homes. If you want to capitalize on your investment on a monthly basis and live there too, a mulit family is definitely the way to go.

There are many multi family properties in the Sherman Oaks/Studio City/Toluca Lake are that were originally built with an owners unit or a stand-alone house plus additional units. For example, I currently have a pocket listing for a 2bd+2ba house and 4units 1bd+1ba, in Sherman Oaks on a good street brings in $3,200 from the 4 1bd's. Something like this might be perfect for you because that income goes directly to the mortgage. Regardless, you a have a great down payments and you should be able to find something that will show you a real return on your investment.

I would be happy to help you find the right property and show you how to let tenants pay your mortgage. If you have any questions, call anytime.

Thank You

Rob Shiels
Realtor

12345 Ventura Blvd. Suite M.
Studio City, CA. 91604

Mobile (310) 740-7552
Office (818) 980-5040
Fax (888) 495-6056
License# 01872799
Rob@crescentrealtyla.com
http://www.crescentrealtyla.com
0 votes Thank Flag Link Mon Jan 17, 2011
Hi Nikki, wow, that is a great question. Honestly, we'd need to know a lot more about you to answer that question -- what your goals are, what you want to do with the property etc. For example, if I had $250k, I would probably buy a fixer in the $200-250k range and try to flip some fixers. But I have been in the business for awhile and have owned and rehabbed properties in the past. I don't think right now is a good time for a newcomer to try at it because the market is so unpredictable. So I think the best piece of advice for you might be one a mentor told me once: "buy as much real estate as you can afford and hold it." Good luck, and let me know if I can be of any further assistance.
0 votes Thank Flag Link Sun Jan 16, 2011
Hi Nikki,
I make this a short and sweet answer for you. Take you time and find the right deal. Make sure you can afford the property , and all the costs that go with it. Also, give yourself an exit strategy if you should like to rent it out too.
Make sure it will cover its costs as a rental property. By all means take you time and look for a great deal. It is a buyers market right now,and you will benefit greatly from having someone who can help you navigate this market, and help you to find a property that suits your needs.
Good luck!
http://www.nealgrusky.com
0 votes Thank Flag Link Sun Jan 16, 2011
Buy a house to live in- or a duplex/triplex-
all things come and go investment wise-
but everyone needs a place to live-
your primary residence is the cornerstone of your investment future-
stop renting and paying off someone's mortgage -
think relative to your work/live/social situation-
even a condo in a good location is better than renting-
assuming you are gainfully employed - a mortgage interest deduction is a good thing-
keep more of what you make- have pride in ownership- paint the front door purple if you like-
if it's a single family- and build equity!!!!
Good luck my friend!
-Joyce
Asst. Mgr. Prudential Santa Monica
0 votes Thank Flag Link Sun Jan 16, 2011
I would probably find a 4plex in a nice area.. and live in one of the units while having the tenants pay for my mortgage,

Though is a tough question to answer without knowing your tolerance for risk, work, schedule, do you have school aged children, etc... I usually understand my client's life-stayle before I wold suggest an investment that would enhance it...

Best of luck!

Ron Escobar, MBA
Broker
0 votes Thank Flag Link Sun Jan 16, 2011
Dear Nikki,

there are so many variables to this decision, it would be impossible for someone to give you a direct answer from the question you just asked. However, your question seems to boil down, generally, to whether you should buy more house in a better area for you and your family to live in, or a more modest home and and income property.

The first question you need to answer is do you want to be and do you have the time/know how to be a landlord?

Next, can you and your family live comfortably in a condominium vs. a home?

Finally, do some window shopping. You may be surprised how limited your selection may be for a condominium in the $100k price range. The comparison to a home in the $600k price range will likely be night and day. This may ultimately drive your decision.

Happy shopping.

--
Allan S. Glass
President
ASG Real Estate Inc. ®
149 S. Barrington Ave, Suite #660
Los Angeles . CA 90049
Mobile: 213.952.9052
Direct: 213.973.8637 (213.97.FUNDS)
Fax: 213.947.4461
E: asg@allanglass.com
http://www.asgreinc.com
CA License: 01154002

Twitter: http://twitter.com/asgreinc
Linkedin: http://linkedin.com/in/allanglass

Visit Allan’s Blog: http://allanglass.featuredblog.com
Web Reference: http://www.asgreinc.com
0 votes Thank Flag Link Sun Jan 16, 2011
Without doubt, your best investment as a first-time Los Angeles homebuyer is going to be an owner-occupied property. Pick an area you like and investigate your options in that area. After all, you are going to want to buy in an area in which you will be comfortable living for a while.
Web Reference: http://www.homejane.com
0 votes Thank Flag Link Sun Jan 16, 2011
i need to know more about your total budget and requirements for your residence. Assuming you will keep your residence for 5 or more years go for a strong location. If you can meet your minimum requirements and still afford a rental that's the best situation. There are a number of nice duplex/triplexes in the mid-wilshire area. If you take on a rental pay attention to rent control and CCR issues.
0 votes Thank Flag Link Sun Jan 16, 2011
Hello Nikki,
I would by an income property or condos and not have all your eggs in 1 basket. The more properties you have the more maintenance however you have less worry if you loose say 1 renter in the Hollywood Hills. The best values if you can swing it are properties that have over 4 units. The cost per unit is much less than a 2-4 unit as you aren't competing with owner/users. The downpayment requirements are higher but you can get more bank for your buck. If you are going to live in it, then you are going to be best off with a 2-4 then renting a home and living in a 100k property. You will also need to determine what you can qualify for. The rents will play an important factor in that. Their aren't too many distressed condos in DowntownLA/Long Beach/Noho for $100. If you need assistance, let me know. $600k in the Hollywood Hills will also not get you much. I think it's important to better understand your situation the amount of return per month you will need on these properties.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes Thank Flag Link Sun Jan 16, 2011
Hi Nikki,
Before you can make a choice as to the type of property to buy you need to define your reason for buying. Are you planning to make this property your home, how large a mortgage payment can you afford. Will this property be your home, if so location is a very important factor. I believe by buying an under-priced home in a great neighborhood and living in it for at least 5yrs you will have made a good investment.It sounds like you have done your research and at this stage you need sort out on goals because you do have several options as other agents have mentioned.The real estate market is challenging and the job of a good agent is to help you sort through the maze. Please check out my website for helpful real estate information.

Karen Numme
Keller Williams Realty
323.804.2008
REAL ESTATE re-envisioned
Web Reference: http://www.karennumme.com
0 votes Thank Flag Link Sun Jan 16, 2011
Nikki:

The answer to your question really depends on what is important to you about owning property. If you really want a home, then I suggest you focus there first. With current FHA lending rules, you can purchase your home for as little as 3.5% down, up to a purchase price of $729,000. That means, for about $32,000 out of pocket (which includes closing costs), you can buy a $729,000 home, assuming you have the income to support the payments.

That would leave you with $218,000 to invest in income property. If you are willing to buy a condo or townhome in the areas you specified, you could pay cash for your income property. If you are willing to explore other areas in LA county, you might even be able to buy a single family home.

Like I said, it really depends first on what is important to you about owning real estate and then what your income will support. If you would like to explore this further, please feel free to contact me. I have a short list of questions that will help you get to the root of what would be best for you. Then you can proceed with confidence that you are making an informed decision. Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
SSG Pro®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
424-2HELP12 (424-243-5712)
myrealestateanswers@gmail.com
http://shel-lee.listingbook.com
0 votes Thank Flag Link Sun Jan 16, 2011
If you have $250k, you realistically can only afford a single property on a conventional loan. A small income property would be good to start with, but if that doesn't fit your style of living, or if you don't want to be a landlord, then I would pick a nice single family home in an always desirable neighborhood, like Hollywood hills, Brentwood, Santa Monica, etc.

Truth be told, this is the time to invest so buy something you will enjoy and keep the property for a long time. Whether that's a cash-flow type income property, or an sfr in the burbs, it doesn't much matter. All the ideas you mentioned are good ones.
0 votes Thank Flag Link Sun Jan 16, 2011
Try to diversify. Buy a couple different properties and spread your risk and reward around.


Richard Schulman
#1 Selling Agent
Investment Properties
Keller Williams West LA
310-482-0173
schulmanrd@yahoo.com
http://www.RichardSchulman.com
0 votes Thank Flag Link Sun Jan 16, 2011
I would buy a home FHA for as little as 3.5% down. I would live in this home and then I would......send me an e-mail and I will tell you something I learned from a very smart UCLA real estate teacher.

jeannette.alamilla@gmail.com
0 votes Thank Flag Link Sun Jan 16, 2011
Hi Nikki,
Are you looking to be an investor/landlord or a happy homeowner? If you are capable of showing full docs for a loan, you may qualify for an FHA loan and that would only require 3.5% down and you could get the home you are looking for. Then, based on you income, credit, etc, I know of a lender that can do 25% down on investments. Its late right now, but I would be happy to discuss this further with you over the weekend or early next week. Hope to assist. Thanks.
0 votes Thank Flag Link Sun Jan 16, 2011
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