South Pasadena, Monrovia, Pasadena Areas

[Allen Wu]

Hi Friends,

I'm looking to buy a SFH in the Los Angeles, CA area specifically in South Pasadena, Pasadena, or Monrovia area. This home will be used as a primary, but potentially converting into a rental investment in future years. Purchase price will range between 800-1M, but people are submitting 10-30% above listing. Couple of questions:

1) Market is competitive. Is it worth to “over pay” by 10-20% and waive appraisal?

2) How do fellow investors buy a primary? I find it tough to buy a primary without my investor lens. My wife is focused on the “emotional buy”.

3) Would you overpay and waive certain contingencies if buying in a hot market like these cities for a primary?

4) Any general recommendations? Our thought is to continue to rent, but at an age now where we want a primary to start a family.

[Jackson Wu]

I live in Monrovia, Own 19 apartment units in Pasadena. A bunch of others scattered through out LA/OC. 53 units altogether and in the process of buying 2 more right now and building 10 more. I am where you were 10 years ago.

1) Market is competitive. Is it worth to “over pay” by 10-20% and waive appraisal?

Value is derived from what you get out of it. If you're over paying for a 1500 sq foot house on 10,000 sq feet of land with the intent to build on it. then yeah, sure. 

If you're a high income earner that is also hunting for a tax write off. Yeah, that might work.

Going to turn it into an Airbnb, Managed Care facility, Home day care and this property happens to have the rightt lay out. Go for it.

Those are very specific though. I wouldn't overpay if i have the time. 

2) How do fellow investors buy a primary? I find it tough to buy a primary without my investor lens. My wife is focused on the “emotional buy”.

Everyone is different. You really do have to keep the wife happy, or share your vision with her. Stuff like. If we buy the duplex instead of the single family. We can retire 10 years earlier.  We live in an aparment right now with 10 neighbors, this duplex is going to be like that except we get to pick our neighbor. If we just live here for 3-4 years we can retire 10 years earlier and our kids college fund will be funded.

3) Would you overpay and waive certain contingencies if buying in a hot market like these cities for a primary?

This is slightly different from your 1st question, but also the same. Yes. If it was for my primary. You said wife, so I'm assuming your at some point had to buy an engagement ring.  Perfect houses are like perfect diamonds. the more boxes they check off for desirability the more expensive they are; and that expense ratio is not linear, its exponential.  If the house really checks off all your boxes and you won't see another one like it pop up for a long time. Go for it and bid to win.

4) Any general recommendations? Our thought is to continue to rent, but at an age now where we want a primary to start a family.

Duplex and Triplex.  Owning a duplex/triplex is like living in an apartment where you get to pick your neighbors.