Are there issues finding long term tenants for expensive houses

[Luther A.]

Hi I am looking to invest in Los Angeles, Ca and noticed real estate is very expensive especially in Santa Monica. 1+ million for decent properties and rents range $4000+. Will there be issues finding long term tenants when rents are so high?

[Greg M.]

Are you looking to buy a property in Los Angeles or Santa Monica? If Santa Monica, I wonder if you understand the City of Santa Monica. It is not like Los Angeles or California. It is its own unique communist enclave that is known for having some of the most anti-landlord / anti-property owner laws in the country. There is a reason that even the far left liberals here refer to Santa Monica as the People’s Republic of Santa Monica. 

High rents in Santa Monica won't be an issue. No one moves there looking for cheap. 

In Santa Monica you can find condos for $800K-$1M. Two possibilities. They are small, outdated, and relatively not that close to the beach and are usually converted apartment buildings. You will not get anywhere near $4K rent for them. Maybe $2.5K. Or they are close to the beach, but they are in the large buildings and for that money you're only getting a 500 sq ft studio. These can rent for $4K. Many of these are conveniently located across the street from the drug dealers. If you can't find a dealer, just ask one of the hundreds of homeless that are camped out in front of the building. 

If you're buying here, you're playing the appreciation game. I doubt you will find anything that comes close to being cash flow positive. Also, don't forget to factor in the HOA dues on these places. By the ocean can be $1K+/month dues.

If you're a newbie, I cannot recommend enough that you do not buy in Santa Monica until you fully understand the politics and laws.