Househacking in LA on single income public school teacher salary?

Los Angeles County, California
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Househacking in LA on single income public school teacher salary?

Kara Lorenzana
Member since 2022 · 11 posts · 4 votes

Hi BP community,

First post ever! I've been reading up on the forums and listening to the BP podcasts, and switch from feeling really motivated to doubtful.  I am a total rookie and would appreciate any insights into my current situation :)

I am gearing up to purchase my first condo this August 2023 when my lease ends. I currently live in a fantastic townhome with 2 of my friends in the SGV area, and I pay $750 for my room and about $50 for utilities. My decision to buy instead of continue to rent is because one friend is moving in with her partner and the other friend is moving back to her home state. I decided that if I am going to pay significantly more for housing, it should probably be my own home at this point.

My plan is to slowly build a rental portfolio starting with a 2 bed 2 ba condo; live in one room rent the other out. I am pre-approved for $350,000 which doesn't get me much in LA, but some condos in the San Fernando Valley, particulary Van Nuys, North Hills, and Panorama.  My first question is: are those good areas to invest in or are there other neighborhoods worth looking at?

After living in the condo for 2-3 years and if the situation is ideal, I plan to take on a HELOC and use it to buy a second rental property. I'm sure there are more things to consider but as a rookie, this is about as far as I've gotten.

I guess my second question is: Is it possible to carry out this plan on my single income (I make about $73,000 a year gross) in the current Los Angeles County market? Or am I too much of an idealist??

Thanks in advance to anyone and everyone who can give me some nuggets of wisdom!

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Richard SheppardPro Member
Cypress, Orange County · Member since 2022 · 4 posts · 2 votes
4y

I've been working with a coach on this specific issue and live nearby in Orange County. When I first moved out to the LA area I lived over in Canoga Park and I've had many friends over the years that have lived in the Van Nuys and North Hills area. My general impression of it is that there are some really great parts and some other less great parts, plus the neighborhoods tend to have a lot of turn over with people moving in and out all the time. That means as an area to rent it's pretty good and you'll find a lot of opportunities to rent the second room.

So your immediate plan holds a good amount of weight. Personally I might look at the neighborhoods north of the 118 or 210 as the prices rise a bit, but the less desirable issues also disappear. So it's a matter of what you value and need more in your life since you plan to live there.

As for your second part of your plan, this partially depends on what kind of down payment you make. Essentially on a $350k mortgage for 30 years at about 5% only about 5.1k at would go to the principal the first year, 5.4k the next year, and 5.8k the year after. So three years would leave you with about 16k plus your down payment and any added value from property price increases as you equity. A HELOC is lower interest, but it's still another payment on top of the existing mortgage and then a third mortgage for the new place. This can make things tight if you're just looking at the $73k that you make, but here's the nice thing, the rent money you take in gets added to you as your income.

My suggestion would be to start with the existing plan. Buy the place you want and rent out the second room. When 2-3 years are up and you feel you have adequate equity for the HELOC, go ahead and get the next place, but with a twist. Fully rent out your condo to take care of that payment and move into the new place as an owner-occupied rental and find something with an ADU or a duplex for you to stay in one and rent the other. Keeping in mind that the amount you rent everything for (both the condo and the new place) will be part of your income, so you're not just making $73k on a teachers salary. You may also want to open a LLC to help protect your investments at this point, but that's a different topic.

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  • Richard SheppardPro Member
    Cypress, Orange County · Member since 2022 · 4 posts · 2 votes
    4y

    I've been working with a coach on this specific issue and live nearby in Orange County. When I first moved out to the LA area I lived over in Canoga Park and I've had many friends over the years that have lived in the Van Nuys and North Hills area. My general impression of it is that there are some really great parts and some other less great parts, plus the neighborhoods tend to have a lot of turn over with people moving in and out all the time. That means as an area to rent it's pretty good and you'll find a lot of opportunities to rent the second room.

    So your immediate plan holds a good amount of weight. Personally I might look at the neighborhoods north of the 118 or 210 as the prices rise a bit, but the less desirable issues also disappear. So it's a matter of what you value and need more in your life since you plan to live there.

    As for your second part of your plan, this partially depends on what kind of down payment you make. Essentially on a $350k mortgage for 30 years at about 5% only about 5.1k at would go to the principal the first year, 5.4k the next year, and 5.8k the year after. So three years would leave you with about 16k plus your down payment and any added value from property price increases as you equity. A HELOC is lower interest, but it's still another payment on top of the existing mortgage and then a third mortgage for the new place. This can make things tight if you're just looking at the $73k that you make, but here's the nice thing, the rent money you take in gets added to you as your income.

    My suggestion would be to start with the existing plan. Buy the place you want and rent out the second room. When 2-3 years are up and you feel you have adequate equity for the HELOC, go ahead and get the next place, but with a twist. Fully rent out your condo to take care of that payment and move into the new place as an owner-occupied rental and find something with an ADU or a duplex for you to stay in one and rent the other. Keeping in mind that the amount you rent everything for (both the condo and the new place) will be part of your income, so you're not just making $73k on a teachers salary. You may also want to open a LLC to help protect your investments at this point, but that's a different topic.

    2Reply
  • Renee Harris
    Real Estate Agent · Los Angeles, CA · Member since 2015 · 218 posts · 111 votes
    4y

    Hi Kara,

    Welcome!

    Before I answer... How much money could you come up with in cash and what area would you prefer to live in?
    Also, do you have any friends or family that are handymen/women, i.e. could help fix up a fixer house?

    1Reply
  • Bennie Williams
    Real Estate Agent · Los Angeles · Member since 2022 · 6 posts · 4 votes
    4y
    Quote from @Kara Lorenzana:

    Hi BP community,

    First post ever! I've been reading up on the forums and listening to the BP podcasts, and switch from feeling really motivated to doubtful.  I am a total rookie and would appreciate any insights into my current situation :)

    I am gearing up to purchase my first condo this August 2023 when my lease ends. I currently live in a fantastic townhome with 2 of my friends in the SGV area, and I pay $750 for my room and about $50 for utilities. My decision to buy instead of continue to rent is because one friend is moving in with her partner and the other friend is moving back to her home state. I decided that if I am going to pay significantly more for housing, it should probably be my own home at this point.

    My plan is to slowly build a rental portfolio starting with a 2 bed 2 ba condo; live in one room rent the other out. I am pre-approved for $350,000 which doesn't get me much in LA, but some condos in the San Fernando Valley, particulary Van Nuys, North Hills, and Panorama.  My first question is: are those good areas to invest in or are there other neighborhoods worth looking at?

    After living in the condo for 2-3 years and if the situation is ideal, I plan to take on a HELOC and use it to buy a second rental property. I'm sure there are more things to consider but as a rookie, this is about as far as I've gotten.

    I guess my second question is: Is it possible to carry out this plan on my single income (I make about $73,000 a year gross) in the current Los Angeles County market? Or am I too much of an idealist??

    Thanks in advance to anyone and everyone who can give me some nuggets of wisdom!


     I think west SFV is a great place to start your investment journey. I have lived in Lake Balboa area for 13 years, and I see the growth happening daily. Van Nuys, North Hills, Panorama, Lake Balboa, Reseda, all those neighborhoods are good for investing/living.


    Regarding the income question, that is a challenge, but it’s the challenge most people face when they start investing, not having enough money. My thought on that is to continue to save and cut expenses. Thinking positive and going through the process is super important while you’re on this journey. You have what you have, and that’s what you’ll start with.
    My first property was a 3 bedroom, 1 bathroom in the hood that some crackheads burned down! I was totally new to investing, but going through that experience taught me some valuable lessons. Not only about making better choices regarding location but also about tenant selection, rental management, dealing with insurance companies, and rehabbing properties.
    Also, keep in mind that this will be your first property.

    I’m confident you’ll be able to find a suitable property and start building wealth. Your 2-3 year plans can work; yes, you will make that single income work.
    1Reply
  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    4y
    Hi Kara and welcome to BP. Starting out in RE investing is difficult, but very rewarding. I don't have any info for your first question, but for the second I do. Depending on the area, you can often get a better value per rental area by purchasing a 2-4 unit building, and living in 1 unit. You didn't say how much you would be putting down for the new property. Take some time to look into programs that assist teachers in buying houses in California. Also, look into the Teacher Next Door program. Start putting together your team: You'll need a real estate agent and a banker at a minimum. Don't be afraid to interview a bunch of people to find the right one for you. Determine what type of property you want to buy and a very specific area. Start your search once you have your financials in order. You can definitely do it on $73,000 a year.
    1Reply
  • Robert Reynolds
    Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
    4y
    Quote from @Kara Lorenzana:

    Hi BP community,

    First post ever! I've been reading up on the forums and listening to the BP podcasts, and switch from feeling really motivated to doubtful.  I am a total rookie and would appreciate any insights into my current situation :)

    I am gearing up to purchase my first condo this August 2023 when my lease ends. I currently live in a fantastic townhome with 2 of my friends in the SGV area, and I pay $750 for my room and about $50 for utilities. My decision to buy instead of continue to rent is because one friend is moving in with her partner and the other friend is moving back to her home state. I decided that if I am going to pay significantly more for housing, it should probably be my own home at this point.

    My plan is to slowly build a rental portfolio starting with a 2 bed 2 ba condo; live in one room rent the other out. I am pre-approved for $350,000 which doesn't get me much in LA, but some condos in the San Fernando Valley, particulary Van Nuys, North Hills, and Panorama.  My first question is: are those good areas to invest in or are there other neighborhoods worth looking at?

    After living in the condo for 2-3 years and if the situation is ideal, I plan to take on a HELOC and use it to buy a second rental property. I'm sure there are more things to consider but as a rookie, this is about as far as I've gotten.

    I guess my second question is: Is it possible to carry out this plan on my single income (I make about $73,000 a year gross) in the current Los Angeles County market? Or am I too much of an idealist??

    Thanks in advance to anyone and everyone who can give me some nuggets of wisdom!

     HI, @Kara Lorenzana, 

    It is definitely possible with your income, especially if you are looking to house hack. Those areas in the San Fernando Valley have good areas and not so good areas, and just like most of LA, it often will vary by street. If you want to send me some of the properties you are looking at I can let you know. My other job besides being an agent on So Cal The David Greene Team, is that I am an LAPD officer and I used to work the Van Nuys area. I can let you know which areas are better than others. 

    Depending on if you are putting 3.5% down for an FHA or 10-20% down for conventional lending, doing a HELOC may be difficult after just 2-3 years.

    2Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Richard Sheppard!

    Thank you so much for your insight. I haven’t considered any of the neighborhoods north of the 118 and 210, but now I’ll definitely research those markets! I did hear that more people are moving to Santa Clarita from LA and I’ve seen some 2 bed 2 ba homes for as low as 250,000 on Zillow but it seems that most homes are owner occupied. I think high turnover like you mentioned would be ideal for me since I want to rent out the other bedroom.

    Thanks for info on the HELOC as well. I realize I didn't fully understand that it would be another payment on top of the first mortgage and then the second mortgage so that's definitely something I'll need to prepare for.

    I appreciate you!


    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    4y
    Quote from @Kara Lorenzana:

    Hi @Richard Sheppard!

    Thank you so much for your insight. I haven’t considered any of the neighborhoods north of the 118 and 210, but now I’ll definitely research those markets! I did hear that more people are moving to Santa Clarita from LA and I’ve seen some 2 bed 2 ba homes for as low as 250,000 on Zillow but it seems that most homes are owner occupied. I think high turnover like you mentioned would be ideal for me since I want to rent out the other bedroom.

    Thanks for info on the HELOC as well. I realize I didn't fully understand that it would be another payment on top of the first mortgage and then the second mortgage so that's definitely something I'll need to prepare for.

    I appreciate you!



     You can start by buying the condo with 5-10% down and then after a year of living in it, rent it out and buy another one. At the same time, you could also work on increasing your income and partner up with someone else to qualify for more than $350,000. Starting with a multi family (if you could find one) could be better since you will be able to house hack. 

    [email protected]818-269-7983
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    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Renee Harris!

    Thanks for your response. 

    I will have about $30,000 for a down by the time I'm ready to buy Aug 2023. As for the area, because LA is such an expensive market, I'm limited to where I can afford that is still relatively near to downtown LA. I would say the furthest would be an hour drive away from LA where I work. So far I'm looking at Van Nuys, Panorama City, North Hills because it is closer to other neighborhoods I would frequent (but are out of my price range) in the area such as North Hollywood, Sherman Oaks, Studio City, Burbank, Glendale, etc.

    I don't think that I have anyone in my circle that are handy apart from my partner, but that's a skill I could learn myself.

    0Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Bennie Williams!

    I am so glad to hear from someone who has lived in SFV! I have one friend who lives in Studio City and he turned my eye to Panorama, but other than him, I don't know too many people who can speak to living in SFV. 

    Thank you, also, for sharing your story about your first property. It's definitely important for me to have realistic expectations regarding my first property. I'm nervous/excited about this venture, but your words are very encouraging. I appreciate you!

    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Benjamin Aaker!

    I originally wanted to get a multifamily but after seeing the prices I am not sure if it's possible for me to do so on a single income, which is why I'm thinking a condo might be more realistic. I did look into the Teacher Next Door Program briefly, but I'll give it a second look since I may have missed out on some details. I've been learning about NACA and it seems like the most promising route for me at this point due to 0 down, 0 closing costs, etc. My hesitance with NACA though is that I've heard it's not investor friendly and they tend to be more conservative in the amount they loan. My credit union, SchoolsFirst, offers a competitive program with either 3.5% down or 5% down no PMI. I'm also considering that. You're right that I should continue to look for the best program for my goals.

    Thank you so much for the warm welcome and the vote of confidence!

    0Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Robert Reynolds!

    I am so glad to hear that! Yes, any detailed insights about the neighborhood would be a great help. I went to an open house this weekend for a condo on Sherman Way and that particular area looked good, but a few blocks down it was a different story. 

    Thanks for that insight about the HELOC. They do say that building wealth through real estate is a long game, and that's something I have to remember!

    0Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Erik Estrada!

    I was thinking of who I could partner up with, recently. Initially my dad was willing to partner with me but he is now unable to due to unforeseen circumstances. I'm thinking of one friend that I have, but doing business with friends sounds can get sticky. It's an option though; I think he would be open to it. 

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Kara Lorenzana

    I have a client doing exactly what you wanted. She is a teacher and was house hacking a 2 bed 2 bath condo. It is doable. She actually bought in Pacoima. I know it isn't an ideal neighborhood, but I have other friends and clients who invest in that area and are doing well. I bought my first house hack on a similar income at the time in Tarzana back in 2015. I then used a HELOC to buy the next house hack and now have another HELOC ready to deploy.

    The big thing is we had a great appreciation run but I would expect it to slow down. Therefore the HELOC approach isn't something to bank on. It might actually make sense to sell and scale up that way. But you can cross that bridge when you get there. Plus certain condos are subject to LA rent control. Alternatively, I'm seeing big price gaps between fixer and done condos. I have a client buying a fixer in Chatsworth where the margin is about $100k in value but will cost him $50k to renovate. This is going to be a bigger job than a condo you might be looking at.

    Happy to discuss further.

    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Rick Albert,

    Thanks for the insight! I'll do some more research on Pacoima. I'm so glad to hear of your client's situation, as that tells me that this is not too out of reach for me!

    What you said about appreciation makes sense; I have been seeing some drops in the market reports from Zillow. I also didn't think about rent control at all which is definitely something to keep in mind. Ideally I'd like something almost move in ready--if not fully--as I am not really handy. I suppose I could learn if push comes to shove, but I'd love for any fixes to be minor and cosmetic. I did see a pretty move in ready condo in Van Nuys this past weekend for $350,000 and was surprised by the price point. The building was old and outdated though, but the unit itself had been repainted, utilities were all ok, and floors were updated. 

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    To remodel a condo is actually pretty easy and low cost assuming single level. Plus I am seeing a bigger price difference between fixers and done condos, more than the actual cost to do the work. Last year I sold a condo where fixers in the complex were going for $375,000. He decluttered, scraped the ceilings, touched up the floors, and repainted. Spent about $7,000 and we got it sold for $415,000. 

    You can also pick and chose what and when do to the work. A small condo now might cost you in the $20K-$30K range depending on what work you choose to do.

    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Rick Albert!

    I see! The numbers in the situation you presented are much more attainable than what I was imagining. Not doing a remodel all at once also seems more doable (financially, for me) than all together at once. Thanks for the insight!

    1Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    4y

    Imho Reseda and other areas west of the 405 are preferable for your price range. But give that a grain of salt, I have lived in Reseda the last 27 years. Every area has some pockets that may not be as nice. You might try Tarzana and Encino near the 101 Fwy and Reseda Blvd. That is also close to the Orange Line busway, if that works for you. And in case you are not aware, most of the San Fernando Valley is City of Los Angeles. There is no city of Reseda or Van Nuys, or...... They are all neighborhoods of LA.

    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Lee Bell,

    Thanks so much for your input! As a long standing resident of Reseda, how do you like living there? I'll check out Tarzana and Encino, too!

    0Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    4y

    We lived in one house in Reseda for 15 years, and now in another Reseda house for 12+ years. So, we like it. It's an average suburban kind of area, not high rent (relatively) and not low rent. Not Bel Aire, not South LA. You have your high zoot shopping nearby and your more affordable too. Think Whole Paycheck Market vs Food4Less. Pretty much everything you need is not too far away. That section of apartments and condos off Reseda Bl and 101 is obviously more densely built then areas with houses. But looks like a decent area imho, and close to lots of stores etc. Good luck. Hope this helps.

    1Reply
  • Kara Lorenzana
    OP
    Member since 2022 · 11 posts · 4 votes
    4y

    Hi @Lee Bell!

    Awesome! This does help, thanks so much. Your descriptors really painted the picture for me! I totally get what you mean when you say Whole Paycheck VS Food4Less!

    0Reply
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