Buy to live, then rent in SoCal

[KC Emerson]

Friends on Bigger Pockets-

I need some opinions. I am 23 and in the expensive Southern CA market (specifically northwest LA suburbs, past the SF Valley) but dying to get into real estate investing. I have been going back and forth on how hard to pursue a purchase. 600SF 1BR Condo listed at $220K (would not go above $200K for principal). Quoted at a 4.125% rate, 30 year and 20% down to avoid PMI. It's currently renting for $1500/ month but needs work and would aim to rent it for $1600- $1650, which is supported by comps in the area.

I am currently renting a room on a month to month basis and need my own place, but have not found anything less than $1675/ month when all living expenses are accounted for (rent, utilities, internet). I am looking at $1350/ month for the same living expenses (with CA taxes, $300/ month HOA , insurance and internet tacked on to the standard mortgage payment) if I buy this place. The HOA has a requirement that you must live in the place for a year before renting. So I would live there for a year and could put in a little sweat equity to renovate a bit and aim to bump the value to around $230K appraised ( feasible based on location and market comps). Then I would rent it out, refinance and pull some cash back out to help pay myself and the Bank of Dad back on some reno costs and the downpayment.

My strategy would be to buy and hold in the longer term- cash flow is $220/ month without the refinance and $146/ month with the refinance based on appraisal at 230K. Definitely not the greatest cash on cash return compared to some of the other deals I've heard. This is a very strong part of the LA Suburbs (Calabasas/Agoura Hills) with a high rent base so am confident I would be able to rent it. The condo may not appreciate too much past year 1, but at that point it's not my money going towards the equity, its the renter's.

Other factors to consider- may not be in the area long long term (no less than 3 years though) and the opportunity cost of my part of the downpayment and renovation- about $28K. And of course, getting over the hump to do my first deal while simultaneously getting my own place at a discount to the going rental rates of the area.

What do you think? Should I make an offer at $190K and see what happens? What factors am I not considering?