Looking to House Hack a Duplex in Southern California

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Looking to House Hack a Duplex in Southern California

Destin E. ThomasPro Member
Investor · Los Angeles, CA · Member since 2020 · 30 posts · 8 votes

Hey everyone,

I'm in the process of trying to house hack a Duplex in southern California (my first investment property) and haven't been having much luck on the MLS, so figured I'd try BP!

  • I'm pre-approved (with proof-of-funds) for financing up to $675k - $700k (depending on the property)
  • Credit Score: 790 (average of 3 credit bureaus)
  • FHA approved at 5%+ Down Payment
  • Looking for units with minimum 2 bed, 1 bath
  • Preferably Class B neighborhood (Class C doable as well if necessary)
  • Only looking for cosmetic fix-up or better condition (no fixer-uppers)

Thanks!

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Chris Collins
Rental Property Investor · Los Angeles, CA · Member since 2020 · 35 posts · 19 votes
5y

The FHA financing on an offer could be a non-starter to some sellers. You may want to try targeting properties that have fallen out of escrow at least once and offering a high earnest deposit and/or appraisal gap to show you're serious. I'm up in LA, but I've been seeing a few duplexes in your price range go in and out of escrow. They all need work/rent increases, but not necessarily a full rehab.

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    Hey @Destin E. Thomas that is good you are narrowed down to some good solid numbers and the house hack prospects are still a good strategy with that lower down. You are approved for an FHA loan 5% down or more, there are a couple questions there.

    Are your challenges getting consistently bid out or is it that you do not find good properties in the areas you want? What areas are you looking as well?

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  • Andreis Bergeron
    Member since 2021 · 134 posts · 46 votes
    5y

    Hi Destin,

    Is your main issue that you can't find a solid property, or is it that people keep overbidding you? These are both common issues for many people right now. Happy to connect and chat more about it with you.

    Thanks.

    Dre

    1Reply
  • Destin E. ThomasPro Member
    OP
    Investor · Los Angeles, CA · Member since 2020 · 30 posts · 8 votes
    5y
    Originally posted by @Peter Mckernan:

    Hey @Destin E. Thomas that is good you are narrowed down to some good solid numbers and the house hack prospects are still a good strategy with that lower down. You are approved for an FHA loan 5% down or more, there are a couple questions there.

    Are your challenges getting consistently bid out or is it that you do not find good properties in the areas you want? What areas are you looking as well?

    Hi Peter, 

    Yes, so far it's been putting in offers that get outbid by those offers going well over asking (no surprise there), so just starting to look off-market since it's pretty dry on the MLS at the moment. I've been looking primarily in Long Beach, Torrance, Carson, Azusa, kind of all over Los Angeles county as it seems. I'm not picky either, I'm all for deferred gratification and know it doesn't have to be the best deal, but it can't be a bad one either. Thanks for reaching out!

    0Reply
  • Destin E. ThomasPro Member
    OP
    Investor · Los Angeles, CA · Member since 2020 · 30 posts · 8 votes
    5y
    Originally posted by @Andreis Bergeron:

    Hi Destin,

    Is your main issue that you can't find a solid property, or is it that people keep overbidding you? These are both common issues for many people right now. Happy to connect and chat more about it with you.

    Thanks.

    Dre

    Hi Dre,

    Yes, both. My agent and I have been putting in offers that get outbid by those offers going well over asking (as you mentioned), so just starting to look off-market as well now on any potential leads. Thanks for reaching out!

    0Reply
  • Andreis Bergeron
    Member since 2021 · 134 posts · 46 votes
    5y

    I see, yes I am not surprised. The market is so hot right now!

    1Reply
  • Chris Collins
    Rental Property Investor · Los Angeles, CA · Member since 2020 · 35 posts · 19 votes
    5y

    The FHA financing on an offer could be a non-starter to some sellers. You may want to try targeting properties that have fallen out of escrow at least once and offering a high earnest deposit and/or appraisal gap to show you're serious. I'm up in LA, but I've been seeing a few duplexes in your price range go in and out of escrow. They all need work/rent increases, but not necessarily a full rehab.

    2Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Destin E. Thomas yeah, the off market deals are good to look at especially when the market is this hot. The one key piece to this is that even with those off market deals, they get spread thin between being a deal and selling for top dollar in markets like this one. My experience is the seller either lists the property with a traditional agent, or has a wholesaler send out an email blast for the property at top market value.

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    1Reply
  • Destin E. ThomasPro Member
    OP
    Investor · Los Angeles, CA · Member since 2020 · 30 posts · 8 votes
    5y
    Originally posted by @Chris Collins:

    The FHA financing on an offer could be a non-starter to some sellers. You may want to try targeting properties that have fallen out of escrow at least once and offering a high earnest deposit and/or appraisal gap to show you're serious. I'm up in LA, but I've been seeing a few duplexes in your price range go in and out of escrow. They all need work/rent increases, but not necessarily a full rehab.

    Yeah I hear ya about the FHA, which in my situation though I'm actually well-qualified it's just hard to get the 20-25% down payment that a lot of lenders are requiring, so FHA seemed the most viable route at this time. But yeah you're right, I've seen a lot of properties popping in and out of escrow so I've been keeping a list of the ones I'm keeping my eye on. I've been using the traditional 3% EMD amount and the appraisal gap kind of falls into the down payment category since the lender would eventually make me pay for the difference anyway. I feel/sound like I'm making excuses, and I'm really not, it's just been so hard to find anything lately. But I'll take your advice as well and keep a look out for the ones that fall out of escrow too and see what happens. Thanks for the input Chris!

    0Reply
  • Destin E. ThomasPro Member
    OP
    Investor · Los Angeles, CA · Member since 2020 · 30 posts · 8 votes
    5y
    Originally posted by @Peter Mckernan:

    @Destin E. Thomas yeah, the off market deals are good to look at especially when the market is this hot. The one key piece to this is that even with those off market deals, they get spread thin between being a deal and selling for top dollar in markets like this one. My experience is the seller either lists the property with a traditional agent, or has a wholesaler send out an email blast for the property at top market value.

    Yeah man you're right, guess I'll just have to keep being as creative as I can and just find something that works. I'm going to incorporate a few of the strategies (driving for dollars, direct mailing, those that fall out of escrow, etc.) and keep grinding it out until something hits. Thanks again Peter!

    0Reply
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