Picking a marker for short term rentals out of state

[Alex K.]

I am looking to find a property to Airbnb but I want to do it out of state.

I'm debating two possibilities.

One is buying a place in Los angeles for about 700k (2/3) with 10 percent down that has a detached two car garage in the back and putting in about 120k in for adu to rent it out and get a one percent or so deal.

85k plus 120k means I would be all in for about 205k .

And the return would be 1200 monthly for the rental in the back for a studio with a kitchen and a fridge.

14400 a year in income after 120k roughly invested cash.

85k invested in front house with 3300 per month for piti.

And I would have two room mates at about 800 a month 1600 a month.

And I would pay about 1700 a month for my room to make the mortgage payments.

That seems like alot of cash to put out for over 200k to lose on the front house every month. I have rent control on my apartment I live in now.

So , I would only have about a $ 300 increase in my rent to go from my one bedroom apt to a small room within a 3 / 2 with a back unit. And I can try short term rentals in the back but due to Los Angeles restrictions I think I can only do 120 days a year for 30 days or less.

Or I can find a property somewhere else that works as a long term or short term rental that might cashflow better. Any suggestions on any areas?

I don't expect people to just hand me areas. I suspect Houston and Scottsdale would be great ones.

Any thoughts on this guy's ? Btw I have ran an Airbnb before in Los angeles in the past.

So I do have some experience running one rental and have been thru some crazy stuff with that lol. But it was stressful fun and I want to do it again.

My goal is to really have healthy cashflow I can duplicate and if I get appreciation great if I don't I'll just pay off mortgage over the years and just retire on cashflow 30 to 40 years down the line.i rather manage and hustle for more cashflow. I'm in my early 30s now with great credit and healthy savings with decent income for Los Angeles standards and I have great energy levels to take something down.

[Jon Schwartz]

@Alex K.,

For somebody in your position (strong savings, good income), I highly recommend house hacking and Airbnbing here in LA. I’m in a similar situation, and my longterm plan is to keep my investments in LA for at least the next decade, then sell my LA portfolio and buy buildings in growing southwest markets for cashflow.

In the meantime, while I earn a living outside of the my estate portfolio, I’m happy with limited cashflow while I become rich on paper. My duplex house hack didn’t produce positive cashflow this past year, but it did reduce my cost of living by thousands of dollars while adding about $200K to my balance sheet.

As for Airbnbing in LA, the rules are strict, but workable. You can’t Airbnb anything outside of your primary residence for less than 30 days at a time. You can Airbnb all 365 nights of the year; you have to purchase an $850 permit to do so. All of LA’s regulations are here:

https://www.airbnb.com/help/article/864/los-angeles-ca

The best Airbnb hack in LA — and I have two friends doing this — is to rent a private space that is legally part of your residence. A friend of mine is house hacking a duplex in East LA that, when he bought it, was a triplex. One of the units, a studio, was non-permitted and carved out of a larger unit. A 2/1 became a studio and a 1/1 — so my friend moved into the 1/1 and rents the studio to short-term tenants on Airbnb. Technically, the studio apartment is part of his primary residence; it just happens to have an exterior door and a kitchenette.

Best,

Jon