Home Buying in Sherman Oaks>Question Details

Toshiba510, Home Buyer in Los Angeles County, CA

Is it possible to find a small house (e.g., 2 beds and 1bath) in Sherman Oaks for $400K?

Asked by Toshiba510, Los Angeles County, CA Fri Aug 13, 2010

I am thinking of buying a small house in Sherman Oaks for investment purpose in the next few months. Would it be easy to rent it out afterwards in today's market?

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4
Hi Toshiba,

There are no profitable single family rental homes on todays L.A. housing market, with the possible exception of the least expensive properties in town. The example that you mention in Sherman Oaks would need close to $3000 a month in rents just to cover the debt service on your downpayment and loans not including maintenance and repairs. There are also plenty of homes for sale south of the Hollywood Hills in the L.A. Basin proper that will have a lot stronger appreciation in the long-term.

Here's a link to a blog that I recently wrote about investing in Los Angeles which may be helpful.

http://activerain.com/blogsview/1771647/where-to-find-the-be…

Please feel free to contact me through my profile if you need specific property searches run or if you would like to discuss your options further. Best of Luck.
0 votes Thank Flag Link Mon Aug 16, 2010
It is possible, but like the others said you will be looking at homes that need major fixing and on busy streets. I would suggest looking at places like Valley Glen that offer amazing neighborhoods, but better prices. Good luck on your search!
0 votes Thank Flag Link Sun Aug 15, 2010
Toshiba510,
I would say that it is pretty much impossible unless you are willing to work with a major fixer and you would probably need all cash. When banks lend money on a home they use all comps within the last 3 months. So, in Sherman Oaks, over the last three months, there have been 12 homes sold under 450k with only 2 under 400k. One of the two was boarded up by the city and the other was an REO from Indymac. It was near the corner of Burbank and Van Nuys. If you know the area it is behind the car dealerships, not the best of locations.

If you want more bang for your buck, there are about 90 3 bedroom 2 bath homes in the Mission Hills/Granada Hills are under 450k. If you want to stay near the strip, Encino/Tarzana has about 15 such homes. If you want to expand your rental base by being near really good schools, Burbank has 8 such homes. I can email you a list of all these or other areas if you like.

I do agree with the agent below, right now the rental market is strong. Even though housing prices are not rising significantly, the rental market is very competitive. And many of my rental customers are looking at condo's. However, I would say that my view of the quality of the rental customers is not that exciting. In our apartments we have had applicants with FICO scores in the 400's. You will find some that have 700's but our experience is that those are not too common. Everyone that is losing their homes to foreclosure or short sales are going into rentals and many have taken a beating on their credit scores.

Let me know if you need help.

Tommy Lee
DRE #01723594
tommy.lee@dilbeck.com
323-821-2292
говорю порусскии
0 votes Thank Flag Link Fri Aug 13, 2010
Not easy..but possible. In the last 6 months there have been 50 home sales in Sherman Oaks of $450,000 or less, and several under $400,000. Keep in mind that under $400,000 you are really scraping bottom of the market - the homes are smaller, older and usually on busy streets or backing up to commercial zones. These homes will only produce cash flow on a monthly basis with high down payments - 30% or ore usually. You will get a better monthly return on condos (even with HOAs!)

The rental market is strong - if you price it right. I know that sounds obvious, but it is important to note that there are quality tenants out there! I just rented out a property in 2 days with over 10 applicants.

Let me know if I can be of any help.

Richard Schulman
#1 Listing and Selling Agent
Keller Williams Realty
310-482-0173
schulmanrd@yahoo.com
http://www.RichardSchulman.com
0 votes Thank Flag Link Fri Aug 13, 2010
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