Inherited property in LA, seeking advice from experienced investors

[Michael Adamo]

Hello all,

As a single father, I am reaching out to the community for some advice on a property that my sister and I recently inherited in Los Angeles, in the 90036 zip code. The lot is 6500sqft, with a 3 bed 2 bath 2000 sqft house built in 1925. It's currently zoned R1-R3 and has a rear detached garage with two exits, one from the driveway and one from a connected 15' alley. It's not in an HPOZ neighborhood but is very close to a new Subway station development. The house has been taken down to the studs and completely remodeled in 2000, including new plumbing and electrical. However, it was recently inspected and the foundation has issues and the roof is in good condition but showing signs of wear and tear. The house itself is charming but could use a repaint. The value is $2,000,000. I checkrd the local market and called a few property management companies, they mentioned that i could rent it out for about $6000 a month. Current Property taxes are $3000 a year. 

My goals and obligations are complex and expensive. I need to provide housing for multiple people, including my disabled family in the San Fernando Valley, and a place for myself to live. I would prefer not to live with family unless it was in a multi-unit building where I could occupy one unit. I need a minimum of 2 bedrooms and would like to stay local. However, I also need a 2 bedroom space in the Phoenix area where my children are living with my ex, and I need a place to spend time with them while I am out there. I am willing to temporarily leave Los Angeles for them, but would also like to live back home.

My goal is to utilize this property to supply housing and create generational wealth for myself and my family. I am self-employed and currently eligible for an FHA loan for around 400k and don't mind house hacking. It's not much in California, but I'm thinking it could be useful for a property in Arizona.

I am interested in hearing strategies and ways to utilize this year's interest rates and strategies going into 2023, as well as what people are doing in Los Angeles and Phoenix with the current market. I am also interested in hearing about other safe cities to invest in other than California and Arizona.

As a shark, I know the value of a good investment, and I am confident that this property has the potential to be a great one. I am open to all suggestions and am willing to put in the work to make this a successful venture.

Thank you in advance for your help and advice.

Best,

Mike 

[Michael Adamo]

@Bob Okenwa, @Scott E., and @Nabil Suleiman,

Thank you all so much for taking the time to offer your valuable advice and insights. Your suggestions and strategies have definitely given me a lot to think about and consider.

@Bob Okenwa, I am definitely intrigued by the idea of leveraging the $2,000,000 from the sale of the LA property to acquire multiple properties in better areas and potentially house hack in a multi-unit building. Can you share some examples of properties and areas in Phoenix that you would recommend for this type of strategy? Also, what kind of return can I expect to receive on a $2,000,000 investment?

@Scott E.,You mentioned that the burden of supporting my extended family is all on me and I appreciate your concern, but I want to take on this responsibility. I want to make sure that my family, especially my sister and children, are taken care of.My sister is also very important to me, we both have children and I think with the right people around us and this property, and due diligence we can make something of ourselves. We aren't rich, we just got blessed that our family was smart enough to buy and hold. I want to continue that legacy. My children are my world, and we definitely need some financial support for custody battles and their needs and wants. The ex was just a girlfriend, so I got lucky there.

@Scott E., I appreciate your thoughts on selling the property as-is and the potential tax implications of inherited property. Can you elaborate on the potential risks of holding onto the property and renovating it? Also, what are some good neighborhoods in Scottsdale, Chandler, and Gilbert that you would recommend for investment?

@Nabil Suleiman , Thank you for your input and suggestions. I appreciate the insight you provided about the potential for development on the property. I am definitely considering this option, but I am also weighing other options as well. I have been looking into the possibility of adding an ADU to the property, but I am not sure if that's the best route to go. I've heard from a neighbor that they've been having a hard time leasing their ADU, so I'm not sure if that's a viable option for me. I am also interested in starting a new construction project on the lot, and building a new single-family house and renting it out. I am still doing research and considering all my options, but I am definitely open to the idea of development. I researched on ZIMAS, my property is currently zoned R1R3-RG and falls under Transit Priority Area, Additionally, it has modifications to SF Zones and SF Zone Hillside Area Regulations, It is eligible under SB 9, it is also eligible under AB 2334 and AB 2097. Can you share more information on what are the pros and cons of developing the property compared to selling it? and also maybe costs to build.