House Hacking in Southern California

[Hector Bastida]

Hey BP folks after much research, books and countless hours listening to the BiggerPockets Podcast.... I have decided that it's time to take some action.  My goal is to house hack and buy a multi-plex closer to work since my commute is sucking the life out of me.  For over 3 1/2 years I've been commuting from West Covina to Marina Del Rey.  About 35 long LA miles.  Each way.  Every day.  

I've talked to a mortgage broker about getting an FHA loan for a duplex and based on my income and info (I have no debt of any kind and I pay no rent since I live with family) I'll most likely only qualify for a $600K mortgage. That includes factoring in the income I would be receiving from the 2nd unit. $600K isn't much for a multi-plex here in Los Angeles and even if I do get a duplex I'll most likely be stretched pretty close to my debt to income ratio.

I've come to find that multi-plexes are very expensive here in SoCal and very difficult to purchase coming in with an FHA loan (too much competition from cash investors). I've also learned that cash flowing in SoCal also difficult.

Would this still be a good way to enter the RE market here in LA?  I won't be cash flowing but at least I'll have a tenant helping me pay down the mortgage.  And if I'm Iucky, I can force a little appreciation and be in a better position a few years down the road.

I'd love to hear what y'all think.  Many many thanks!

Newbie,
Hector

[Account Closed]

This is my second attempt to post on this thread and hopefully I have no technical issues =] 

Hi @Hector Bastida

Hopefully my SoCal House Hacking story will shed a little light on your adventure. About 11 months ago, my boyfriend and I decided that we were going to find a 2-4 unit property in Los Angeles. For 9 LONG Months (as long as it takes to develop a child), we drove for dollars, drove neighborhoods, sent over 200 letters, explored open houses, searched various markets including Alabama and Arkansas, submitted multiple offers and scoured the MLS + ZILLOW. In my heart of hearts, I believed that South LA had a lot of untapped potential - nice structures, decent lot sizes, good zoning, proximity to downtown Los Angeles and various development. So around month 7, my bf (he's a commercial and residential RE agent) set up alerts on the MLS to fit the criteria of price, unit, and zip codes that I was looking for. I received daily alerts of new properties on the market and visited the new properties every weekend. 2-4 unit properties in South LA range from $350K-$700K depending on size, vacancy/tenant rents, proximity to USC or the Inglewood Stadium and modern updates. Investors are slowly creeping in to the neighborhood and the prices are slowly moving up. We purchased a duplex (two 2bed/1ba units) 3 blocks from the Coliseum and new soccer stadium and our monthly mortgage payment is the same as the monthly rent we paid for our 2bed/1ba apt in Mid-Wilshire. Our commute to downtown is maximum 20 minutes and about 12 minutes to Koreatown. The area is growing and maybe it'll be worth checking out. If you have any questions, feel free to send me a message or I can connect you with my bf since he was the brains behind this house hunting process. Best of luck!!!