Starting Out In Los Angeles

[Eric Grunfeld]

Hello:

I am a new real estate investor that currently lives in Los Angeles, CA.

I have been seeking to invest in 2 - 4 unit establishments.

However, I have been experiencing this market to be priced quite high (low cap rates). Very competitive market. 

And wanted to know what is currently working in the Los Angeles real estate market? What are people investing in? How are investors making money in this over-priced market?

I look forward to your thoughts/comments on this.

All the best,

Eric

[Charles Renn]

Hi @Eric Grunfeld,

The market for small multi-family is extremely competitive at the moment and I think it will be for the foreseeable future. Because of this most of the investor my team works with come at it from the house hack angle, as Rick mentioned. Live in one unit and rent the others, using a low down payment loan. Using this strategy provides a low cash investment up front, but trying to cash flow or break even can be a challenge. If you have some capital saved up a house hack could incentivize you due to it's low interest, lower than an investment loan. 

Without dragging on to far here, the main point I'll make is that your expectation when getting into 2-4 unit investing in SoCal, is expect it to take a few years to break even and/or cash flow and play the appreciation strategy. 

What do you think?

Hope this helps!