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Updated almost 5 years ago on . Most recent reply
BRRRR in Los Angeles Santa Monica / Venice
My wife and I have been saving for a while and have lived by the beach in LA for a long time. We always thought our plan was to just do the traditional home purchase and save for retirement via 401k, etc. We are both successful and have lived in a rent controlled apartment by the beach for almost 10 years. With Covid, I have had some time to reflect and realized that we need to invest, rather than move to a tiny house in an "up and coming neighborhood" that we barely like for $1.5M. Then, maybe in a few years, we can afford to move somewhere else with passive income, or subsidize our mortgage with passive income,.
I am just really curious if anyone has tried starting their journey in a larger market. The only two markets I know are Seattle and Los Angeles and both are pretty expensive. We have a lot of cash to play with, but without the previous experience, it means risking--but also potentially gaining--a lot more.
I don't have a specific question, but am looking to start a discussion on here or a private conversation with someone who understands the market. As I see it, the options in my comfort zone are 1. buying and rehabbing STRs in Joshua Tree, 2. House Hacking in Santa Monica/Venice (although I am 37) 3. BRRRR in Los Angeles.
My goal is to move to more BRRRR long-term, but I think I have to prove to my wife that real estate investing is working before I can go all-in.
Most Popular Reply
I would say the easiest way to start is to use FHA 203 to buy a Duplex and add value to it. You can put up just 3.5%~5% to get it started. Granted, the FHA loan amount has to be under 980k combined. Then you could use your on hand capital to build 1-2 additions on the same lot to create more appreciation. Eventually, you will turn your property from cash flow even to cash flow positive. Once stabilized, you cash out refi the remaining equity out. Rinse and repeat until you hit a wall with max loan amount to carry on hand. That's when you start looking at 5+ for commercial MFRs.