Mutifamily Tri in Los Angeles. Deal or No Deal?

[Sergio Avina]

Hello BP community,

I could use your help on a potential property purchase in Los Angeles. All responses welcome (yes/no response & detailed responses). The property is a triplex with converted garage (unpermitted) into a one bedroom with kitchen and 1 bathroom. I plan on co-habitating one house (3+1) and renting out the rest.  My current rental cost ($1,750/month), own zero properties, wish to stop paying rent, and purchase my first rental property.  Cash-flowing properties in LA are nearly impossible to find.  Do you think this is a good deal in the LA market? It seems like a good deal from the perspective of paying minimal rent ($185 out of pocket rent). 

Accepted price: $700,000 in City of Commerce. Combined Rents: $5,000/month (based on 3.9% int rate). Property mix is 3+1, 2+1, 2+1 & converted garage (1+1).

Monthly Expenses:

• P & I (based on 10% down): $2,958
• HO insurance: $130
• Mortgage insurance: $394
• Property tax: $741
• Vacancy and property management: 5% of rents (managed by me): $290
• Repairs: 1% of purchase price per year: $6,300 ($525/mo)
• Various city expenses: (trash, water, etc) $150

P&I (plus PMI): $4,220

Total expenses/month: $965

Monthly rents of $5000 - $4,220 - $965 = cash flow per month -$185 (this is my rent while co-habitating one house. total rents will come up to $5,700 when I move out). 

What am I missing? Is this a good long term deal? 

I appreciate everyone's feedback!

SA