Is this a good time for a foreign investor (a close relative) to buy investment rental property (condo) in LA now?

Asked by Qqq, Los Angeles, CA Wed Oct 12, 2011

A close family member is looking to invest about 80-100K as a down payment for a rental property around LA Metro area and rent out the part or the entire unit either through a management company (if far from my current location in LA) or by me (if in neighborhood close by). I would co-sign the morgage application and possibly claim primary residence. Is this a good idea?

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Deborah Brem…, Agent, Los Angeles, CA
Wed Oct 12, 2011
First of all, let me address the issue of claiming a property as your primary residence when it is not...that is mortgage fraud. DON'T DO IT! There is no reason to lie on an application. The interest rates are low enough that it won't make a difference. Be straight with your lender and you will avoid future risk.
As to whether it is a good time to buy, it depends. If you do a comparison of rentals in the SPECIFIC NEIGHBORHOOD in which you plan to buy, along with the total cost of owning the property, and you can get a cash flow, then ANY property becomes a good investment. Appreciation should not be a factor when purchasing an investment property; it is a bonus that comes forth at time of sale or refinance, but should NEVER be used when calculating the value of an investment. The simple question is, can I make a cash flow on this property based on current, and trending, market rents. If the answer is yes, buy now. There is never a bad time to make a sound investment.
By the way, over 1/3 of the Los Angeles market is currently all cash buyers who are buying for investment, many of whom are foreign. So the anecdotal evidence suggests that your relative is in good company.
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
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I want you to know that I appreciate any referrals from friends and associates who may be in the market to buy or sell real estate. You can count on me giving them the same high-quality service I provide to all of my clients.
1 vote
Kevin and Ju…, Agent, Wildomar, CA
Tue Oct 18, 2011
It is a great time to buy. Based on the info in your question, my only advice would be to actually live at the property if you indicate to the lender that it will be your primary residence. You do not want to commit mortgage fraud -
0 votes
Heather Paul, Agent, Santa Monica, CA
Sat Oct 15, 2011
Hello Qqq, now is an amazing time to buy, not only will you get to take advantage of the great prices out there but the interest rates just dropped again recently. For all your loan questions, I would gear them more to a loan officer to get specific answers. I do recommend using a management company to handle all of your maintenance issues for the tenant or tenants, happy tenants means you always have rents coming in. Which areas are you looking to buy in LA?

I look forward to assisting you in anyway I can.
Have a great day,
Heather Paul, Realtor
Coldwell Banker
0 votes
Kathleen Bec…, Agent, Santa Monica, CA
Thu Oct 13, 2011
Hi Qqq:

There are many properties available that are 2 to 4 units, where you would be able to invest your money, obtain a loan, rent out the other units and live in one. You would want to look for properties that would give you a positive cash flow, even if it is just $1.

The best way to determine your buying power is to actually submit your information to a mortgage broker and get pre-qualified, where they would be able to tell you what types of loans are available and what your purchase price would be.

I would start there. If you need a mortgage broker and if you would like to see what types of properties are available, feel free to contact me and I will be more than happy to send you information.

Good luck and all the best,

Kat Becker, Realtor
Prudential California Realty
(323) 819-4760
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Oct 13, 2011
If you should ever consider the San Diego (Americas Finest City) market we'd love to work with you. We specialize in distressed property acquisition, rehab, remodel and rebuild properties. We partner and/or JV with our investors or can act as their one stop turn key solution.

We are a RE Broker, investor, contractor, architetural, landscape and interior design all owned and operated by one family. We have over 50 years of combined experience in the real estate investment, development and construction businesss and would love to work with you should you ever decide to invest in San Diego.…
0 votes
Nick Mercado, Agent, Los Angeles, CA
Wed Oct 12, 2011
it is definetely a great time to invest in Real Estate. Interest rates are at an all time low and prices have dropped even more than last year. As of claiming the property as your primary residence it is your decision but I would definetely talk to your CPA about that. Please get pre approved before starting the process to save a lot of headaches and running around knowing what you can afford makes it a lot easier.
Best of luck.
Nick Mercado
Keller Williams Realty
0 votes
Allan S Glass, Agent, Los Angeles, CA
Wed Oct 12, 2011
Dear Qqq,

Smart real estate investors buy for cash flow. Therefore, whenever you can invest in a property that comfortably fits within your monthly budget and generates positive cash flow it's a good time to buy.

It's also important to note that there are good and bad deals in every type of real estate market. Therefore you will need to evaluate each deal individually do best answer your question.

The benefits for investors in a declining market are two fold: 1) money is cheap / interest rates are low, and 2) there are more opportunities to buy for current cash flow and long term appreciation.

As one of my colleagues noted below, appreciation is the icing on the cake. Our current housing market has shown many novice investors that appreciation can disappear quickly, it's cash flow that keeps you in business.

Assuming you occupy one of the units, getting an owner occupied loan will allow you to leverage your purchase more (eg. less down payment) which will make the return on your money better. It will also give you the added tax benefits afforded to owners with their primary residence.

If you decide not to occupy the property, don't fret. There are many lenders who can lend 85% to 90% of the purchase price for investor purchases.

Foreign or domestic many successful investors are buying in today's market. There are many opportunities, just remember to do your homework and don't leave common sense at the door.

Best of Luck
Allan S. Glass
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
CA License: 01154002


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0 votes
Douglas Perez, Agent, Los Angeles, CA
Wed Oct 12, 2011
Hey Qqq,
It's a great time to buy, even though, there are pessimism and optimism. There's no crystal ball. BUT,
if the numbers make sense in your investment, go ahead and hold it until appraise higher for resale.

Good luck
0 votes
Maguy Benaim, , Los Angeles, CA
Wed Oct 12, 2011
Definitively a good time to buy. if your relative is from europe, with the euro so high, you can get good deals.
Any help, please contact me.
0 votes
Bill Eckler, Agent, Venice, FL
Wed Oct 12, 2011

There has never been a better time for the smart shopper.....not all offerings represent value and opportunity but for the discriminating and patient buyer that is well represented.....this IS the time!

As a "co-signer" all parties should carefully understand the terms and conditions of this type of agreement. A co-signer is essentially contractually commiting to assume the loan responsibilities should the primary borrower not. Historically, these situations have created nightmares for family and friends when they don't work out. Be sure it's the right thing for you and the borrower that you are supporting is VERY responsible.

Good luck,

0 votes
Victor T Spa…, , Los Angeles, CA
Wed Oct 12, 2011
No values are still going down in most areas. If you buy be prepared to hold on to the property for a long time. Maybe things will get better in a 10 or 15 years. I'm an appraiser and the market is in decline!
0 votes
John Barry, Agent, Eagle Rock, VA
Wed Oct 12, 2011
Hi Q,

Sure, it is definitely a good time to buy investment property. When you think about it, how ofter are there low prices combined with low interest rates. It has not happened in decades - in the past, when prices were low, rates were usually high, and vice versa. Now is absolutely a great time to buy - with that much of a down payment you should be able to keep your mortgage payments low enough to get positive cash flow from the rental. With the price of gas, areas like downtown with close proximity to public transportation are quite likely the hot areas of the future. Let me know if you have any questions & good luck..

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Twitter: @RealtorJB
0 votes
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