Los Angeles Area Triplex - How does it make sense to buy in LA?

[Matthew R Boudia]

Hey BP Folks! 

I have started to play around with the Calculators and I don't know if I am doing something wrong, but how does it make sense to invest in the Los Angeles area? I am using a listing for a triplex in North Hollywood for this calculator posting and, based on what the Calc is showing me, the owner would not start cash flowing until around year 5 - and that is even with a 30% downpayment on the property! Am I missing something crucial to investing in a market like Los Angeles or any other coastal metro market? 

Ideally, we would want to get into a small multifamily unit, 2-4 units, and live in one of the units but I don't know how that makes sense numbers-wise for anyone. 

Thank you for your thoughts in advance! 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Lee Ripma]

@Matthew R

I’m not able to click on your link, however you’re likely missing several things:

1. Most deals are terrible. The job of an RE investor is to find or make a deal. 95% of properties are not a deal. Learning this made me feel much better about dismissing most properties I look at.

2. You're likely missing how much appreciation you can force in LA and that most ROI is from forced appreciation rather than cash flow. Cash flow does come later but we're not in a heavy cash flow market.

3. Watch out for tenants rights investing in LA. Until you understand the Rent Stabilization Ordinance (RSO) you should not be buying MF real estate in the City of LA or any of the local cities with similar policies, it’s most of them.

4. The returns on this deal might not work for you. There are amazing deals in LA and money to be made here in RE.