Hello! Any LA house hacking success via duplexes out there?

Question

Hello Los Angeles BP community!

This is my first official post, just wanted to reach out and introduce myself!  I'm currently in the beginning stages of looking for my 1st investment to started, which will be a duplex to house hack so that I can get some help on the mortgage.

I'm originally from Texas, so these California prices are a bit intimidating as compared to what I'm used to seeing, so I'm wondering if anyone else in the LA market has successfully house hacked a duplex recently?  If so, I'd love to hear about your experience!  I'm been attending open houses for duplexes in the Mid City and Inglewood areas, just to get an understanding of what's out there and what the pricing is looking like.

Currently, I'm reading The Book on Flipping Houses and next I have the Estimating Rehab Costs books, both by J Scott.  After that I'll read the 2 rental property investing and managing books by Brandon Turner.  I do understand I should have read the rental property books first, but I like the idea of understanding the rehab process before I get a rental so I can avoid those properties that need deal sinking repairs.

I'm also going back into the BP Podcasts to catch up, I'm focusing on the ones related to my areas of investing interest first, and then will circle back on other areas.  I'm also trying to attend as many of the webinars as the 9-5 will allow me to attend.

Sorry for the long message, I appreciate any responses and I'm truly grateful of how open and informative you all are on the forums, I've learned so much just by lurking and reading other's posts, so it's about time I posted myself!  Haha!

-Bobby Ray

Timur Salikov · Answer

Currently I have a duplex in Boyle Heights that I bought in 2015 for 455,000.  3 red 2 bath in the front, 1 bed 1 bath in the back. I've rented each room in the front separately, everyone pays me $2200 total.  My mortgage is $2,555 so I pay $355 to live in the back. Have a huge backyard and I'm thinking of adding an Airstream trailer for airbnb .

Jacqua Le Fleur · Answer

Hi @Bobby Cauley Jr.. Welcome! I am in the same boat as you. I purchased 2 houses on 1 lot in November in the Eastside. Everything is a first for me, home ownership and becoming a landlord. I live in one house and plan to rent the other. The process of turning the rental unit and the lot into a more modern, safe and inviting environment has been slow since I am doing everything myself. I can't offer you too much advice from a landlord's perspective because I am still green in this area but I can offer some advice with purchasing. Others have recommended that you focus to points near metro subway stations. I completely agree and I am happily situated 1/2 a mile from 2 separate subway stations. If you feel comfortable about the purchasing process, escrow, inspections, and you aren't loaded with purchasing power (like I was not), I would advise you to consider working with the Seller's Agent.

I went through so many purchasing agents during my vigorous search to buy duplexes or SFR homes in various NELA neighborhoods. I came to realize that my budget was not alluring enough to the sellers agent because it didn't generate enough commission for them. I couldn't compete with the other offers who were going All Cash, or dropping all contingencies and going over the asking the price. I learned a lot during my 1 year search. I placed many offers, came close on many, walked away from a handful of houses that accepted my offer, and got outbid by many other offers.

In the end I chose to trust myself and my knowledge of the "game" and the "incentives" for the agents and I bought my properties by working with the sellers agent. The 6% commission they made from working with me was able to beat out other peoples offers because I was also flexible with the terms of the offer. Money talks but if your like me and not "loaded" with cash, you can still hack the purchasing process to your favor. Just know your area of interest, know the direction that your area is going in the future, follow the Metro stations, know the sacred pillars of a good home (foundation, roof, plumbing, etc), and one more thing, pay more attention to homes with ugly photos on the MLS. I think they are better because less people will have an interest and they will decide not to go to the open house. Good luck :)

Clarence Johnson · Answer

Hi Bobby and welcome.  I house hacked a duplex in Inglewood in 2011 and passed the blueprint to several of my clients since.  I purchased for $289k, values are currently in the $550k range, I obtained a Heloc to facilitate my flips (when I find one), and plan to buy a single family residence by the end of the year using fha or 3% conventional financing.  The current figures don't look anything like 2011, but rents are higher and you can get your foot in the door, midcity and Inglewood are good, also pay attention to areas surrounding the metro developments.

Account Closed · Answer

@Bobby Cauley Jr.  Definitely recommend making it out to the South LA meetup that Kysha McNeal organizes. There are a couple of South LA house hackers that attend those meetings.

Clarence Johnson · Answer

Very good points @Jacqua Le Fleur, however be careful of the listing agent theory, they have a fiduciary duty to their sellers, you are secondary.  Ultimately, they will not negotiate against there self.  There is no way would I ask my seller to give up $17,500 to a buyer, but I ask listing agents to do this and more for my buyers all the time (usually after offer is accepted and we are in escrow).  It is a very good strategy to obtain a property, but not so good to get the best deal.

Jacqua Le Fleur · Answer

@Timur Salikov Hi Timur, I just moved into to Boyle Heights this past year. I have a very similar setup as you do. Do you mind if I pick your brain a bit?

Bobby Cauley Jr. · Answer

Nice @Clarence Johnson I'll keep at it, and keep saving in the meantime!  Going to a couple open houses this weekend.

Clarence Johnson · Answer

Don't be discouraged, there are still deals out here....I'm closing a duplex for client next week that she will be house hacking for a year and then purchasing a sfr...the duplex was acquired off market in Inglewood adjacent LA for $515k in a $560k area...mortgage is about $3400, existing tenant pays $1400, and her out out of pocket expenses including downpayment, closing, appraisal and inspection did not exceed $20k.  In short, you can do it.  This was about a 4 month search but we'll worth the wait.  Be patient and diligent!  No, diligent and patient lol.

Corey McKinney · Answer

Welcome Bobby!

I have been keeping an eye on the potential house hacking market in LA but it is TOUGH to find a good deal that does not have 5-10 all cash offers already going for it. The deals here go extremely quickly and lately for above asking as I'm sure you know. This has caused me to start looking out of state until the prices here correct or there is another major drop.

Aliz Raksi · Answer

Hi Bobby and welcome to BP! The first step is definitely to get educated, and get to know your target area, and it looks like you're on the right track. You're right, prices are insane and it's hard to find properties that make sense as a rental. Rent control doesn't make it any easier, either, but the good thing about house hacking is that you can be guaranteed to be able to renovate at least 1 unit that way.

With regards to house hacking, do you plan to hold on to the property long term, or are you thinking more 2-year live-in flip? If it's the latter, I'd be careful, because the market is hot and I wouldn't want to risk a drop in those 2 years. But if you're holding it long term, that's less of an issue, in that case the tough part is finding anything that would cashflow with financing. For example, in Inglewood, it seems that properties are already pricing in the future development that's happening in the city.

In addition to learning through books and webinars, I would definitely recommend attending some local RE meetings; FIBI has some great events, and there are a couple unofficial BP meetups around LA. It's great to network with local investors and hear of the different strategies that are working in LA, specifically. Best of luck with everything!

Hello! Any LA house hacking success via duplexes out there?

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