First investment property in LA. Am I crazy?

[Dan L.]

I've recently move to Los Angeles and I'm eager to learn about RE and to purchase an investment/rental property. Much to my chagrin, property is very expensive here. I wonder if some of you experts wouldn't mind answering a few questions that I have about the market:

1) Do the 50% and 2% rules even remotely apply? At the prices I'm seeing, I don't think that it's possible.

1b) If no, then how do you find a good investment? Even with 10% down and all the rent going to the mortgage, I would be losing thousands a month. 

2) I'm sure this is said often, "the prices are so high, can they possibly go any higher?" It is worth waiting and seeing if another housing bubble will pop? I can't imagine people saying these prices let alone higher ones.

[Ali Boone]

Hey! Welcome to LA and BP. Where'd you move here from? For your questions:

1) No.

1b) Correct. You either have to buy out-of-state, hope for appreciation, or flip properties (high capital) instead of holding rentals.

2) They can definitely get higher, but as far as I understand it, they are pretty high for what they can be right now. Definitely if any kind of crash happens, that'd be your best time to jump in and buy and plan for the appreciation later, but as far as buying right now...you'd have to ask the appreciation buyers on here about that one.