Building New Construction in Canoga Park CA

[Sarah Purdum]

Hello BP,

I have been learning tons about buy and hold real estate and have been using most of my effort to find out of state properties that have a high rent ratio. However, lately I’ve been thinking about investing closer to my area in Los Angeles County.

I live in Canoga Park and have seen some homes that could be split into two lots and I’ve seen vacant lots. The price of homes in my area go for around 550,000-600,000. It seems to me that new construction couldn’t cost more than 300,000 or 350,000 which brings a single new construction sale to 250-300k in profit. I’m thinking this is the best way for me to invest in Los Angeles where rent doesn’t even cover the cost of the mortgage, taxes and insurance.

Am I missing something here? It sounds too good to be true. 

[Scott Choppin]

@Sarah Purdum

Thanks for the heads up. It would be worthwhile for you to go see these sites, in the link you sent me, you can see two things that are a dead giveaway for hillside sites to avoid:

1. They have pictures of a great views, which means they are on the side or top of a hill, "looking out" over the valley.

2. On the map on the link you sent, you can see they are in the hill area, the area with topography. If you look at my map from the previous post, you'll see lots of vacant sites on the rim of my map, most of those are on the hills around the valley and hence why they are available.

This is the reason their so cheap, hillside, usually not buildable, and it they are, much more expensive to build, caissons, stilt style framing, crazy parking (like on top of the house, from the up hill street). 

Keep your eyes out on the flatlands, for cheaper sites, that's your best bet. Or just do the ADU thing you mentioned, that will be one of the new trends, and with updated zoning, it's just getting started.

One other item, ZIMAS is only for City of LA, and since you're in the valley, that should cover most of what you need.

Good luck!!

~ Scott