Renting in America Has Never Been This Expensive ( Los Angeles )

[Francis A.]

Interesting article:

http://www.bloomberg.com/news/articles/2015-08-13/renting-in-america-has-never-been-this-expensive

[Francis A.]

@Kyle Atans

Your question is one heck of a hairy subject but at the same time it’s one I’ve grown to love.

Least affordable? That's what I'm told however, "affordable" has to be examined through the lens of variables too numerous to list in their entirety.

LA for the most part is a mature market and so to really “do LA” we have to be 360 degrees creative (numbers included) and see what others essentially may not be looking for. Easy to say, hard to do.

IE:

Affordable = can you see yourself living in that particular neighborhood for at least a year (till you move out and rent the whole dang place at “worthwhile rates”)?

Affordable = Will your mortgage be covered by incoming rents?

Affordable = If you wait to buy (ala your quote) will you really be able to buy a place after you’re really and truly “priced out”?

You get my drift. So the question is can you afford NOT to own, if owning is within grasp?

I was lucky in the sense that before I purchased a duplex in LA, I hadn't joined Bigger pockets otherwise I might have been discouraged by all the screams of “LA is WAY TOO EXPENSIVE”. Let’s not even get started on the 2% rule which drove me Totally Bonkers AFTER I had purchased. Fortuately, the duplex was a total rehab and so zero work save for a few tweaks here and there were needed. A heads up for you too btw. ;-)

Pre duplex, I went through intense despair as I hunted for an SFR. I was brought to my knees by the prices of SFRs in gentrifying neighborhoods like Highland Park and Leimert Park. And then through sheer necessity and a loving patient wife who was waiting in the wings probably thinking to herself "Duuuude…. We need to do something!!!, I stumbled on the idea of going the duplex route with the plan of back tracking to an SFR later (IF) we had to.

Without becoming a blowhard, fast forward a period of hard knocks (a very necessary process in any worthwhile endeavor), I’ll say this. During my stressing over where to buy I gradually discovered through sheer desperation, that Real Estate can be the ultimate creative space in terms of problem solving. Or at least it can be one of them. Now I've seen the proverbial light. Nothing will stop you when you see the light btw.

Once again variables kick into gear. Do you mind doing your own property management? Do we (you and I) have similar "what could be" visions when we look at the same property? And we have the stomach to go through with said plans. What do we want and how much sweat equity are we willing to input into the equation to make it happen? For instance in LA, an SFR in the right location can yield MFR numbers. I have heard and met people who are doing so, but I have yet to test this myself and so let's talk when I do.

All this is to say that essentially, you have to tune out all the “LA is too expensive” baying and gnashing of teeth. And this is especially so when folks who don’t live here are doing the shouting. Your tactical advantage is that you live here. You have to get to know your target neighborhoods - intimately. YES IT'S HARD WORK. I just went to see a property that I forgot I'd seen before. Yikes. And in some cases, gasp, YES you can cash flow in LA without causing your better half to leave you.

Creative techniques aside…. at the very least, armed with an FHA or a first time home owner 5% down and some seriously wise choices (location, choice of type of purchsse IE Duplex, SFR in the "right" place) you can do some serious damage! The glass is half full for the City of Los Angeles.

Don’t get side tracked by all the fancy number crunching. The equation is simple. Is your new purchase going to be relatively repair free for at least the 1st 5 years (hello inspection)? If you rent out all the spaces within this domicle, will you be able to cover your mortgage? If the answer is yes, you’re seriously on your way.

Find a potential neighborhood that matches your wallet and the "preferred ambience" you can tolerate while your investment percolates. [ Ambience is on a sliding scale btw :-) ]

And so in closing, like the rock song from the 80s that goes “What do you wanna do with the rest of your life”?

Your answer presumably is….

I WANNA ROOOCK! ;-)