Should I buy in Los Angeles before it is too late?

[Kevin L.]

I qualify for up to 850k at the absolute MAX and I am able to pick up a 4 bed 2 bath in the San Gabriel Valley. All my friends and family are here and I lived here my whole life. It has always been a dream for me to own but I am scared to pull the trigger. If I do I will essentially be house poor and shackled to this mortgage for the rest of my life. 

My initial plan was to purchase enough rentals to help offset some of the mortgage of my future home in LA. I currently have 1 and I am looking for another but I feel like this plan can't catch up with how fast LA is appreciating.

My question is in the title. Should I just pull the trigger and buy in Los Angeles and give up on investing? Or do I keep investing for another few years hoping that I don't get priced out? Any advice is appreciated.

[Bruce Woodruff]

IMO, it is a bad business decision to buy a house at that price level unless you are paying cash. Yes, even counting the wonderful Cali appreciation.

If you run the numbers at 50% down, @ 7%, PITI is $4500 per month! For 30 years! You talk about being shackled and you are right. It's just not smart. Once again, IMHO.

So why would you want to do that? You could be making real money by investing wisely.

Also, I wouldn't be sure that Cali will always appreciate at the rate that it typically has. I took advantage of that for many years, but many people think that with the ongoing exodus of people from Cali, plus the continually increasing taxes and fees courtesy of your Governor, that Cali could very well start to fail. Yes it is just specualtion, but if you are basing your future on guaranteed appreciation, imagine having that huge amount to pay every month and NOT having the appreciation to reward you at the end. Just think about it. Remember, nothing is guaranteed.