LA Real Estate Investing Strategy Discussion

[Mylen Tansingco]

Hi Everyone!  Here's the research I gathered during quarantine to potentially apply to an investment property.  Have you done something similar?  Is there anything else to look out for?   Is this strategy incorrect?  It'll be my first investment property.  I am very new to this.  But excited to start!

Objective: Purchase a duplex in Los Angeles/Greater LA. Property ideally has room for additional ADU build.

Lifestyle check: I plan to live on the property and rent out the other units. Ideally place the new ADU on airbnb.

Step 1: Apply for the FHA Loan for 3.5% down.

Step 2: Get MCC Tax Credit in place before closing. 

Step 3: Do light remodels to increase property value. Add an ADU to turn duplex into a triplex.

Step 4: Reappraise property.

Step 5: Ideally property value has increased due to additional ADU, remodeling and appreciation (considering it's LA).

Step 6: Turn FHA into a conventional loan in order to get 20% in home equity and get rid of the PMI.

Step 7: Continue to live in one unit, rent out another, airbnb the new ADU.

Other notes:

-I own 1 business that is WFM so I plan to do a lot of tax write offs on the property.

-If a separate property is under my husbands name (not mine), am I still able to apply for an FHA loan?

-I'm also finding it incredibly difficult to find a multifamily unit in LA that provides at least a 10% cash-on-cash return.  Should I stop trying to find this in LA and stick to the above strategy?

Thanks for your feedback!