Starting out in Los Angeles

[Jason Kang]

Hi all,

I live in the general Los Angeles area (probably not the ideal place to start) and I'm looking to get started in real estate.  For someone like me in their early/mid 20's, would it be better to:

1. Look to buy a home and attempt something even remotely similar to a house hack (if it's even possible in LA), or 

2. Try to look for an investment property (whether it be a short term rental or long term rental etc.).  

Or anything else?

Any thoughts, opinions, and advice would be greatly appreciated!

[Rory Coyle]

Hey Jason - congrats on taking action! In all honesty, one isn't better than the other. Whichever one gets you moving first is the right one, at least imho.

If you are trying to decide between the two strategies, it really comes down to what your short-term and long-term goals are... as well as your current capital position.

While it takes more work, it's definitely possible to house hack in LA on a 3.5% down FHA loan. You likely won't be cashflowing out of the gate (even with your tenants), but you will experience the other benefits of owning RE: a) tax benefits, b) principal paydown, c) appreciation / equity growth. So, you may buy something and still be "paying" as much on your mortgage as you are on your current rent. But you will have created a wealth building tool and put yourself in a position for long-term financial growth.

If immediate cashflow is your highest priority, then I'd recommend exploring an investment property out of state. I've got properties in LA (a house hack) and Ohio (investment duplex) and they are apples and oranges in terms of price points. But I'm very grateful for both.

Feel free to reach out anytime if you've got any questions. Happy to share my experiences.

Good luck!