Price to Rent

Los Angeles County, California
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Price to Rent

Alexandru Guna
Member since 2023 · 7 posts · 2 votes

Hello Everyone,

I'm a newbie at real estate investing and have been looking for an excellent deal to purchase in the Los Angeles area. However, to no surprise to anyone, LA is a saturated and overpriced area.  After a few months of searching, I realized that finding a good deal is quite challenging. Therefore, I have decided to change strategy and focus on LA's outskirts. There are many factors that I was taking into consideration in my decision to purchase an investment property. Still, some of the factors I prioritized are the price-to-rent ratio and decent location with the potential for future appreciation in property value.   I started doing some research on my own and hit a wall. I wondered if anyone had any recommendations on a LA outskirts area with an excellent price-to-rent ratio and potential for future appreciation due to population growth and economic opportunities.  Also, I ran it by the agent I was working with and was not getting much help.  So other than finding another agent, I was wondering, even if there are no specific recommendations, maybe someone could guide me in the right direction or provide resources to further research I can do on my own.

Thank you, everyone, and I appreciate your input and am sorry for the longwinded question.  

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Hamp Lee IIIPro Member
Real Estate Agent · San Antonio, TX · Member since 2019 · 1k+ posts · 832 votes
3y

Welcome to BP!

I'm originally from Compton, so I understand the challenges of finding an affordable deal.

Not sure about your price range, but have you gone out as far as Fresno or Bakersfield?

Also, search cities on the way to Las Vegas, including Vegas.

One book to help you research a city outside of what's in the BP bookstore is Buy It, Rent It, Profit!: Make Money as a Landlord in ANY Real Estate Market by Bryan M. Chavis: https://www.amazon.com/Buy-Ren...

Here are a couple additional links about Bakersfield and Fresno:

https://www.limaone.com/should...

https://www.limaone.com/invest...

I hope this helps.

I wish you all the best!

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  • Hamp Lee IIIPro Member
    Real Estate Agent · San Antonio, TX · Member since 2019 · 1k+ posts · 832 votes
    3y

    Welcome to BP!

    I'm originally from Compton, so I understand the challenges of finding an affordable deal.

    Not sure about your price range, but have you gone out as far as Fresno or Bakersfield?

    Also, search cities on the way to Las Vegas, including Vegas.

    One book to help you research a city outside of what's in the BP bookstore is Buy It, Rent It, Profit!: Make Money as a Landlord in ANY Real Estate Market by Bryan M. Chavis: https://www.amazon.com/Buy-Ren...

    Here are a couple additional links about Bakersfield and Fresno:

    https://www.limaone.com/should...

    https://www.limaone.com/invest...

    I hope this helps.

    I wish you all the best!

    3Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Hi Hamp Lee,

    Thank you so much for your prompt response.  I appreciated the book and the location recommendations.  I will do some additional recommendations on Bakersfield and Fresno and crunch the numbers to see how much of a viable solution is to look for an investment property out there.

    Best of luck to you as well.

    0Reply
  • Travis BeckBusiness Member
    Fresno, CA · Member since 2016 · 54 posts · 16 votes
    3y

    Alexandru,

    If you have any questions about Fresno and surrounding areas I’m happy to answer them. I invest in Fresno and live there so very familiar with the market. 

    559-242-4405
    0Reply
  • Samuel Toma
    Livermore, CA · Member since 2018 · 38 posts · 24 votes
    3y

    Hi Alexandru,

    I am curious, is there a specific reason you would like to buy in the LA area? Are there factors that require you to buy in that area such as you want to manage it yourself or want to househack? I know your area a bit because I grew up in Orange County but now I live in an even more expensive area in northern CA, so I understand where you are coming from. Interestingly enough from the above comments, I have purchased two investment properties in the past couple years and one has been in Las Vegas and one in Fresno because it just did not make sense to buy in the area I lived in at the time.

    If you are willing to invest out of your area, you may find it is much easier to get into a property and the numbers look a lot better. But again, not sure if you would like to keep your investment in LA for a specific reason. Good luck!

    0Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    3y
    Quote from @Alexandru Guna:

    Hello Everyone,

    I'm a newbie at real estate investing and have been looking for an excellent deal to purchase in the Los Angeles area. However, to no surprise to anyone, LA is a saturated and overpriced area.  After a few months of searching, I realized that finding a good deal is quite challenging. Therefore, I have decided to change strategy and focus on LA's outskirts. There are many factors that I was taking into consideration in my decision to purchase an investment property. Still, some of the factors I prioritized are the price-to-rent ratio and decent location with the potential for future appreciation in property value.   I started doing some research on my own and hit a wall. I wondered if anyone had any recommendations on a LA outskirts area with an excellent price-to-rent ratio and potential for future appreciation due to population growth and economic opportunities.  Also, I ran it by the agent I was working with and was not getting much help.  So other than finding another agent, I was wondering, even if there are no specific recommendations, maybe someone could guide me in the right direction or provide resources to further research I can do on my own.

    Thank you, everyone, and I appreciate your input and am sorry for the longwinded question.  


     I would look Riverside and San Bernardino County. Those two areas are always good for some cashflow, or at least some higher appreciation. If you look at a lot of data that comes out of markets that are within the top ten and twenty of most heavily increased in population due to work, and or affordability the Inland Empire along with Riverside County/Riverside is always one one of those lists. You'll need to find an area in these two counties that fit what you are looking for on the purchase. 

    I would suggest areas with still a lot of room to grow for instance Yucaipa, Menifee, Temecula, or Winchester.. Or areas within those two counties that have a great infrastructure for instance Redlands (this has a ton of employment or companies that are local to this community that have employers hiring). There are are a lot of other factors to look at and the fundamentals are the ones that you need to make sure you are watching (job growth, population growth, overall city regulation, etc.). 

    The McKernan Group4.957 Reviews
    WebsiteView Page
    0Reply
  • Jeff Zimmerman
    Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes
    3y

    @Alexandru Guna welcome to RE investing!  Getting started is by far the toughest part.  Fresno has always been good to me when it comes to cash flow, like everywhere else, deals don't grow on trees here but they can certainly be found.  The most important thing is that you find a city or region to invest in and learn about it, starting with the different neighborhoods, how the market works, etc...  Whether it be in LA, another place in CA, or somewhere else in the country.   What resources are you looking for?

    0Reply
  • Dan Portka
    Real Estate Agent · San Pedro, CA · Member since 2019 · 253 posts · 128 votes
    3y

    @Alexandru Guna Welcome to BP, you've come to the right place for help with real estate investing! I wouldn't focus too much on rent to price ratios here in LA, we're looking at sub 0.5% in most areas. Where we see most of our clients have success in socal is house hacking. Because owner occupant properties allow for low down payment, you can control a $1M property with say $50K down while having your mortgage subsidized by tenants (if you buy right it could be cheaper monthly than renting). When compared to non-owner occupant you're looking at 20%+ down so $200K on that same property (and you'll likely be cashflow negative unless you put a much larger down payment). If over the next few years your property increases in value to say $1.1M, you've tripled your equity in the house hack scenario as opposed to a 50% increase in equity on the straight investment scenario. I'm happy to help share how we analyze house hacks vs other rental properties if it interests you.

    0Reply
  • Mark Frattini
    Real Estate Agent · San Diego, CA · Member since 2014 · 338 posts · 176 votes
    3y

    Have you looked into the areas around San Bernardino, Lancaster & Bakersfield? I used to live up in LA and would consider these areas if you are looking for opportunities outside of the city. It's important to think about why these other areas a the less expensive
    options and the risk associated to buying in a secondary type market

    My market is San Diego now and we share a lot of similarities with Los Angeles. Very competitive, low inventory, expensive etc. You might be able to get started with a smaller house or a condo as your first investment.

    0Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Samuel Toma:

    Hi Alexandru,

    I am curious, is there a specific reason you would like to buy in the LA area? Are there factors that require you to buy in that area such as you want to manage it yourself or want to househack? I know your area a bit because I grew up in Orange County but now I live in an even more expensive area in northern CA, so I understand where you are coming from. Interestingly enough from the above comments, I have purchased two investment properties in the past couple years and one has been in Las Vegas and one in Fresno because it just did not make sense to buy in the area I lived in at the time.

    If you are willing to invest out of your area, you may find it much easier to get into a property and the numbers look much better. But again, not sure if you would like to keep your investment in LA for a specific reason. Good luck!


     Hi Samuel, 

    Thank you so much for your input.  The reason I wanted to buy in my area was that I wanted to manage the property myself. However, I realized I needed to look elsewhere and use a property manager to invest and be passive.  Thank you so much for the two locations' recommendations. 

    0Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Dan Portka:

    @Alexandru Guna Welcome to BP, you've come to the right place for help with real estate investing! I wouldn't focus too much on rent to price ratios here in LA, we're looking at sub 0.5% in most areas. Where we see most of our clients have success in socal is house hacking. Because owner occupant properties allow for low down payment, you can control a $1M property with say $50K down while having your mortgage subsidized by tenants (if you buy right it could be cheaper monthly than renting). Compared to non-owner occupant, you're looking at 20%+ down so $200K on that property (and you'll likely be cashflow negative unless you put a much larger down payment). If over the next few years your property increases in value to say $1.1M, you've tripled your equity in the house hack scenario as opposed to a 50% increase in equity on the straight investment scenario. If it interests you, I'm happy to help share how we analyze house hacks vs. other rental properties.


     Hi Dan, 

    Thank you for taking the time to respond to my post.  I also appreciate the recommendation for the house hacking, but it doesn't quite fit with my lifestyle.  I wanted to invest money in a rental property because I wanted a hands-off approach and not to have to move from my primary residence.  After some more in-depth research, I do realize that you are right. If I plan to purchase an investment property in my area, I either need to elect another strategy or focus on another factor other than cash flow. However, I do not want to invest in a money pit with the hope that I will be able to capitalize on my investment at a future date after the property appreciates. Consequently, I decided to look further out for a property that makes sense for the type of passive investment that I'm looking for. Thank you once again for your conventional wisdom and advice.  Much appreciated

    0Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Travis Beck:

    Alexandru,

    If you have any questions about Fresno and the surrounding areas, I’m happy to answer them. I invest in Fresno and live there, so very familiar with the market. 


     Thank you, Travis, I have considered it, but for now, it is not an area I'm interested in.  If things change, which has been quite a bit since I started to be interested in investment properties, I will contact you. 

    0Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Mark Frattini:

    Have you looked into the areas around San Bernardino, Lancaster & Bakersfield? I used to live in LA and would consider these areas if you are looking for opportunities outsidethe city. It's important to think about why these other areas a the less expensive
    options and the risk associated to buying in a secondary type market

    My market is San Diego now and we share a lot of similarities with Los Angeles. Very competitive, low inventory, expensive etc. You might be able to get started with a smaller house or a condo as your first investment.


     Hi Mark,

    I appreciate you taking the time to answer my question. I currently have some boots on the ground in the Riverside and Lancaster area, looking at properties.  Thank you so much for your suggestions. 

    0Reply
  • Alexandru Guna
    OP
    Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Jeff Zimmerman:

    @Alexandru Guna welcome to RE investing!  Getting started is by far the toughest part.  Fresno has always been good to me when it comes to cash flow, like everywhere else, deals don't grow on trees here but they can certainly be found.  The most important thing is that you find a city or region to invest in and learn about it, starting with the different neighborhoods, how the market works, etc...  Whether it be in LA, another place in CA, or somewhere else in the country.   What resources are you looking for?


     Thank you Jeff for responding to my post. Fresno is not an area that I'm interested in at the moment. 

    Thank you so much for your input. 

    0Reply
  • Jeff Zimmerman
    Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes
    3y

    @Alex

    @Alexandru Guna good luck with your future investments!  I hope they go really great for you!

    0Reply
  • Brooke WilsonPro Member
    Realtor · Bakersfield, CA · Member since 2017 · 60 posts · 17 votes
    3y

    @Alexandru Guna - I am an agent in Bakersfield. If you decide to look outside of your market, please let me know if I can be of any help to you. I have encouraged lots of new investors to consider house hacking, or buying outside of their area, if the numbers make sense. Good luck in your search!

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    In Los Angeles, it is less about "finding the deal" and rather "creating the deal."

    Most are not going to pencil out as you have to kind of bank on appreciation. Good news is overall inventory is low on the rental side so finding a large pool of tenants isn't that difficult.

    When I invest in Los Angeles, I always looked at desirable areas and buy just outside of it (I house hack here). That way as people get priced out, they have to go somewhere. My condo almost doubled in value in 7 years and my house with ADU has gone up about 50% in value from when I bought it (including renovations and value adds) since 2018. We are expecting a slow down in the market so I wouldn't bank on those types of gains going forward but you get the idea.

    You also have to look at what KIND of property you are buying. Think about the type of tenant you want and work from there. If you want middle class, that's one neighborhood, if you want high paying millennial, that's a different neighborhood.

    0Reply
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