What's up BP crew? My name is Marcus and I want to create cash flow. I have a couple k's saved up with excellent credit and I would like to know strategies I could use to capitalize off of house hacking. I'm in the Southbay part of L.A and I would like to a buy duplex/fourplex in my area to rent out and create extra cash flow.
Los Angeles properties are expensive but I'm sure I can find a good deal somewhere near right? Any advice? Anyone in L.A that started out with what I'm starting out with? Is an FHA loan the way to go if one's sole purpose is to create cash flow, IN L.A?
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
You aren't going to create cash flow in LA while house hacking, you will however live in a unit for less than you'd pay in rent. FHA is a good place to start but you'll need more than just a couple thousand to cover down payment, closing costs and reserves for when things break.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
You aren't going to create cash flow in LA while house hacking, you will however live in a unit for less than you'd pay in rent. FHA is a good place to start but you'll need more than just a couple thousand to cover down payment, closing costs and reserves for when things break.
You aren't going to create cash flow in LA while house hacking, you will however live in a unit for less than you'd pay in rent. FHA is a good place to start but you'll need more than just a couple thousand to cover down payment, closing costs and reserves for when things break.
We're in a similar situation in NY-metro. Unless you're willing to live in a C/D area, cash flow is most likely off the table. However, I will settle for rent savings, tenant helping us build equity, potential force appreciation and brrrr down the line.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
@Marcus Green prices are just too high and rents too low for the math to work out in anything you'd actually buy, especially if you are living in one of the units.
@Aaron K. I see alot of investors here in L.A and North Hollywood turning SFH into a transitional house. Renting each room to two or more people. I've been watching vids and tuning into podcasts and I've learned that being creative beats all odds. What would you suggest for a newbie investor in L.A for creating cash flow?How do you feel about investing in tax defaulted properties?
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
As I said before there isn't a ton of opportunity for cash flow in LA while house hacking, I don't know about transitional housing as that isn't something I'd be interested in. Tax defaulted properties that actually go to county auction tend to be really really rough and 99% are going to be vacant land because of prop 13 the cost to pay off the taxes is so small compared to losing a property worth multiple hundreds of thousands that very few valuable properties go to auction.
Investor · Pasadena, CA · Member since 2015 · 269 posts · 189 votes
6y
You can do what you describe @Marcus Green, renting out by the room or putting up extra walls to create rooms, basically house hacking on crack. It's just harder to find and you will likely run into some issues w/ financing. Lenders hate to get creative. So yes, in a traditional house hacking sense w/ LA prices it's hard to cash flow. I wouldn't say D neighborhoods, but def require some creativity like putting in ADU or two house on 1 lot situation.
@Jason Hsiao Thanks for your reply J. It seems like L.A isn't the place for house hacking. Seems like I'm facing a brick wall. I'll just continue to do my research and figure out other options. Or if you have any suggestions I'd appreciate to hear them. What's a newbie to do in this climate? How can I win? How can I get that "pro" title underneath my Bigger Pockets account lol.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
6y
@Marcus Green
For LA you could buy a SFH and rent out the rooms. You could invest out of state and use cash flow to pay your rent. Keep learning and networking and ideas will come to you.
Investor · Pasadena, CA · Member since 2015 · 269 posts · 189 votes
6y
House hacking is EXACTLY for markets that are too expensive. So many of my investor friend got started that way. Getting it to cash flow is harder or a stretch goal and like I said you definitely have to be creative or MAKE a good deal. Good deals are not just handed to you on a platter these days.
That pro title you have to pay for @Marcus Green. BP took on outside money that's why they're pushing all these pro and premium accounts and why you hear prob 6-8 ads on each podcast episode now.
@Aaron K. Thanks for your reply! I'm interested in knowing why would'nt I create cash flow house hacking in los angeles?
Hey Marcus - Another option could be to scale up the number of units to move closer to cashflowing...i.e. look for triplex/quad (limit for FHA) to achieve a cash flowing property. In this case, you would probably have to save more for the upfront cost. Also, another thing to remember with a FHA loan is the property must be in a livable condition.
@Kevin Law Right. My goal is to invest in a fourplex. The prices out here are very INTIMIDATING but I notice that the numbers will add up quite fairly. I'll keep doing my good ole due diligence but 2020 I'm making a move. Thanks Kev!