Rent in one city, invest in another, how can I scale from here?

Question

Hi everyone, I currently live / rent in Los Angeles and have an investment property in St. Petersburg, FL. I'm looking for strategies to buy my second property, but can't decide whether to try and house hack in LA or continue honing in on the Florida market. I've thought about selling in Florida and doing a 1031 exchange to build equity in Los Angeles, I've thought about a HELOC or home equity loan to buy a second property in Florida, etc.

Does anyone have thoughts / strategies on how best to scale from here? I'm itching to continue buying, but can't decide which direction to move.

Thank you!

Does anyone have thoughts / strategies on how best to scale from here? I'm itching to continue buying, but can't decide which direction to move.

Thank you!

Rick Albert · Answer

You can house hack here in Los Angeles with 3.5% down. I just closed on one for a client a few weeks ago. It was an FHA 203(k) loan.

I'm always in the mindset of owning the roof over your head. That way your income coming in has a good flow from one appreciating asset into another. Your rent will continue to climb. Intuitively, I'm thinking rents are going up at least 10% over the next 12 months. Inventory is remaining low.

Plus you can lock in a better interest rate with less money down house hacking. It just depends on the lifestyle you want/are comfortable with.

We also don't know how much money you have to play with. Knowing that could also help us in getting a better idea of your situation.

Jonathan Carmel · Answer

@Jordan Moorhead that's what im hoping to do here in LA, just trying to understand what the requirements are financially. Whether I need to pull equity from my investment property to make the transition.

Caleb Brown · Answer

@Jonathan Carmel

Hmmm. Do you have 3.5% saved for a DP? That’s all you’d need to house hack

Steven Foster Wilson · Answer

Okay, that makes sense. I think it is all about the numbers and what will be better for you long term. For myself, I want to be able to be financially free so I have choose to invest here in Columbus because I have got great cashflow, great appreciation, and I see the market turning into a place like Nashville and Charlotte. You cannot really get a property there anymore that is decent returns. If the numbers work in those places then go for it! Start to build your core 4 so you can continue to grow.

Charles Renn · Answer

Hey @Jonathan Carmel,

If I can add anything to this conversation it would be that when considering 3-4 unit properties, there are additional requirements for FHA buyers, specifically the projected rent needs to cover 100% of the mortgage. Your lender can clarify this, but it was added during COVID as a further hurdle for financing. If you'd like an introduction to an investor friendly lender familiar with the Los Angeles market, let me know.

Hope this helps!

Caleb Brown · Answer

@Jonathan Carmel

Yes it is competitive. But saving up that much cash for a house that doesn’t make much sense. Using low down payment is one of the best parts of house hacking. You might have to put in many offers but one will stick

Rick Albert · Answer

@Jonathan Carmel this was a single family with unpermitted 2 bedroom second unit. She is getting it permitted as an ADU.

Yes, there is a chance. You have to get creative and be flexible. Good news is in LA we have high loan limits, which opens up the possibilities.

Robert Reynolds · Answer

Hi @Jonathan Carmel,

I highly recommend house hacking in LA. The appreciation in LA is solid, because our supply is so low and the demand is always going to be high. This imbalance in the market creates high appreciation. One strategy could be to take a heloc on your investment property and then use that equity for a downpayment on a primary residence in LA. If you can find a good house hack situation, it will be hard to not come out on top. You can then repeat every year or two to scale your portfolio.

Matt Giacinto · Answer

Hey Jonathan, there's quite a few routes you can go as far as utilizing that equity here in LA. House hacking is a great way to get started out in a very competitive LA market. If you want, let's connect and talk more. I'm a commercial agent in LA and we can go over strategies of how to scale your portfolio.

Jordan Moorhead · Answer

@Jonathan Carmel can you househack where you are and invest elsewhere? I've done that for a few years and it's worked very well!

Rent in one city, invest in another, how can I scale from here?

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