Is East LA a good place to buy?

[Saemi Jung]

Hi,

I recently found a place in East LA (very close to USC medical center). The price was a bit high but the rent they're collecting is pretty good. The only problem is that it is located in East LA, which is not the best neighborhood. 

Do you guys recommend this area? Or should I look for more in city? 

Also, the dilemma has been since I started looking is that if I find something that's within the city or at least close proximity, the rent is low b/c of long term tenants but the price is high. So the trade off is low rent for good location vs decent rent and low price but not so good neighborhood. How would you go out choosing? 

FYI, we are doing no to minimum down payment using VA loan.

I'd appreciate any input. 

[Will Barnard]

Quote from @Account Closed:

The major problem with anything for sale in Los Angeles is Los Angeles Rent Control where you can't increase rents more than 3% and if you want to terminate a tenant you have to pay your tenant a relocation fee of something like $18,000. If you want to rehab a rental unit you have to re-rent the unit to your existing tenant for the same rent as before you remodel the apartment. Where is the monetary incentive to remodel your rental units.

 It is very difficult to bring rents up to the market rate when you can increase rents only 3% and it is very disturbing to know that inflation is always higher than the 3% rent increase cap.

 I would give very careful consideration to properties under Los Angeles rent control and especially when rents are below the market. I look for properties every day, own several properties and never purchased a property under Los Angeles Rent Control.

Some of this information is not accurate. If a landlord follows the laws in LA (set in 2005), which includes paying for temporary relocation including food, lodging, telephone transfers, moving expenses, etc, the landlord can apply 50% of the costs of improvements on to the lease (capped at 10% increase). 
The relocation fees (if the tenant agrees to permanently vacate) range from $8,500 - $21,200. Landlords may also offer cash for keys which is legal so long as both parties agree and notice is provided to the city per rules.

Back to the original question, you should identify if this particular neighborhood is good or bad, is it in the path of re-development, what are the facts on the rental growth, population growth, income growth, crime rates, school ratings, etc.

NELA (North East LA) is a hot market with lots of old homes but already in the path of re-development and many new construction and remodeled units exist.