Los Angeles Owner/Investor DP Help!

[Anna L.]

The classic "you must have money to make money" dilemma.

LA being a renters market, there's no reason I can't get great return on renting out additional units (long or short term). Since I'm local, I also have the benefit of primary residence financing options on my side. However due to purchase prices being so incredibly inflated, the barrier to entry for multi-unit STARTS at $30-50k even with the lowest FHA loan downpayment.

I'm aware that this may be a novice inquiry, but are there any work-arounds I can consider? Personal loans from family are not an option. Would my situation appeal to any investors/partners since I'd be a primary resident? I've been educating myself on investing for the last year, but you don't know what you don't know! Am I totally out of luck in this market?

I have amazing credit! I am self-employed, but have been for 7 years and annual income is modest but consistent. I work from home, so I have the ability to manage the property to a degree. I also own one inexpensive rental property out of state as of 2019. I want to let that equity build, but maybe there's a creative way to leverage that asset?

TIA for your insight! (And for your patience with this newbie.)

[Joe Timko]

@Anna Lee hi Anna, last year I found a duplex for my daughter in LA. She was able to buy it FHA with 3.5% down. We got the sellers to credit us with 5% of the purchase price for closing costs and repairs. So she got in with almost nothing down. It needed a lot of work and the rent control rules in LA City are terrible. We knew it up front but it cost her $16,000 for relocation fee to move the tenant out and it takes 60 days. But we worked through it, the tenant moved out September 2019. We got her unit rehabbed and she moved into it in October. The other issue is the tenant in the other unit pays low rent and she is limited on how much she can raise the rent. But she's happy, got into to her first investment at 25. So it can be done. But obviously with only 3.5% down, living in one of the units she's paying about $1,500 per month after deducting the rent she receives from the tenant.