Cash Flow Multi-Family in LA
I'm trying to find a cash flowing rental property in LA and having a hard time finding one. Is LA just an appreciation play? Curious if any of you have rental properties in LA and how much cash flow I should aim for per door. I would like to invest locally if possible and would even consider buying within a a few hour drive. In LA I am realizing the following:
-I would have to put a large downpayment to make it work
-Most properties have tenants paying well below market rate and with LA rent control laws it would be expensive to pay cash for keys
Most Popular Reply
The challenge of looking for investment property in Los Angeles is the sub-par return. Cap rates typically don't go above 5%. At this rate, you would need to put down 35-40% to break even in terms of monthly cashflow, with a slight cushion for some minor repairs and occasional vacancy.
Another challenge is the acquisition cost: typically $200k per door, which could go up to $300-350k/door in desirable upper-middle-class areas. For this much money, you could get 4-plexes in many major markets of the country.