First Purchase Neighborhood Advice

[Eric Tapia]

Hi all,

I have finally decided to take the leap into real estate investing. Due to certain circumstances and timing, I'm forced to purchase my first property in my local area which is Los Angeles. I'm hearing from my agent that this market is different than everywhere else and that the typical investment advice doesn't apply the same. It's hard for me to understand that when I'm learning everything from this wonderful community. I'm not the seasoned investor yet, you all are. The last thing I want to do is be selective with the fundamentals. So, here goes....

The Property:

I'm currently in escrow on a $1.2M property (VA loan 0% down) in Reseda, CA that has a 3 bed/ 2 bath detached ADU 1200 sqft and a main house that is 2 bed/ 1bath 1500 sqft. Worth mentioning that the ADU just acquired a tenant paying $3,700/mo while I plan on living in the main house for a year or two before moving on and, hopefully, leaving the property cash flowing. During my stay, I plan on adding a third bedroom and second bathroom to force some value.

The problem:

After driving around the neighborhood, we realized there is a homeless encampment. It begins as you turn the corner at the end of the same block that the propertyis in. One of the principles I always hear about is location and investing in a good neighborhood. There aren't any signs of gang violence or graffiti or anything like that, but having the encampment so close feels like a mistake. My real estate agent, who I believe to understand investing, doesn't see it as a concern. In fact, he's advising that this is a "slam dunk" deal. Homelessness is everywhere in LA, but I'm not sure about an encampment so close to home.

Should I  back out of escrow and run?

Has anyone ever made a purchase with a similar scenario?

Anyone have experience investing in Los Angeles/ San Fernando Valley?

Any and ALL advice would be really appreciated!

Thank you in advance!