House Hack in Very Tenant-Friendly Los Angeles Area or Rent To Avoid Risks

Los Angeles County, California

House Hack in Very Tenant-Friendly Los Angeles Area or Rent To Avoid Risks

Member since 2025 · 7 posts · 2 votes

I read a lot about why tenant-friendly places can be so bad e.g., strict rent control, just-cause evictions, months long eviction process, relocation fees, etc. It has me a bit hesitant to house hack there with a multi-family where I could have up to three separate tenants. That leads me to contemplate renting for myself (and invest elsewhere), but that is also a bad idea because my largest expense is going into another landlord's pocket, and I don't benefit from all the wealth makers of owning my primary residence.

One possible solution I thought of is purchasing a large single family home and doing short-term rentals for each room with Airbnb. This should minimize the risks of any eviction chance, especially if stays are less than 30 days. It will require more time, but will make me focus on developing a good team & processes (eg cleaner/maintenance). However, there is a strong correlation between tenant-friendly and more red tape and regulations on short-term rentals. So I will need to jump through some licensing hurdles as well and pay additional fees/tax.

What would you do in this situation? A multi-family where it can be more passive (and I can even Airbnb out part or all of my owner-occupied unit eg when traveling). Or, a SFH (stronger demand, easier to sell) and go all in on STR with a more active approach?

I also noticed there's some variations between LA city, LA county, Orange County, etc. Let me know if people have thoughts on optimizing there too.

52 views

4 Replies

Jump to latestLatest

Sort by

Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
1y
I have house hacked twice in LA (I'm actually a case study in the BP book, The House Hacking Strategy).

1. STR is tricky in LA. There are limitations to how many days you can rent in a given year. Last I read it was 120 days a year and you may ask for an exception. I would not bank on this strategy. Plus STR was a very "it" thing to do. This created a lot of competition.

2. You are correct, the rent control laws are tricky. Studies have shown though that because of rent control, it keeps vacancy low and rents high. This can help with future cash flow if done right. The rent between my current tenant to the previous one is up 18% (3 year span). Out of state my increase in rents are not coming close to that.

3. Vetting is key. Most of the time when a landlord has a bad tenant, it was probably red flags during the vetting process. Not always, but many times.

4. It's really about appreciation. I'm up to 19 doors including my personal residence between a few different states. 15 of those doors I bought with no money out my own pocket (or if I did I got it back via BRRRR). It was all because I started with house hacking in LA.

Do the math:

You have $50K to play with. You can buy a $1M property with 3.5% down (plus the closing costs). You now have appreciation on a $1M asset.

First year if appreciation is 3%, that's $30,000. That's a 60% cash on cash return on your equity. This doesn't include tax benefits, loan buy down, and higher rent per room.

Using that same $50K, you are buying say a $200,000 property.

Using that same 3% appreciation, you make $6,000 in equity, which is a 12% Cash on Cash return on your equity.

I don't have all your information, but I would look into mid-term rental.

3 Reply
Tom T.
OP
Member since 2025 · 7 posts · 2 votes
1y
@Rick Albert Thanks for the response.
Your case study was inspiring, I read that book and found it very insightful.
1. Yes 120 days with the normal permit ($80 or so). Then $800 to get the 365 day/year permit. I have read about people waiting months for their permit to be approved and losing rental income. So I agree this may be bad to bank on.
2. Agreed, I think people underestimate how much you can still increase rents with CA/LA rent control. 5% plus the change in the local Consumer Price Index (CPI), but not exceeding 10%. That seems like plenty ie last year that'd be about 8%
3. Curious, have you had any tenant issues in CA? Any evictions? You said 19 doors, are the only CA doors former house hacks? Have you gotten investment properties just for investments in CA or do you go out of state for that
What makes you think mid-term rental? I think there are some tenant rights that don't go into effect until 1 year later. Rent for a furnished room could also be higher. I am not sure how to source these without airbnb. It looks like Zillow allows rent by room listings now, I also know of furnished finder.
0 Reply
- Rick Albert
  Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
  1y
  Quote from @Tom T.:
  
  @Rick Albert Thanks for the response.
  Your case study was inspiring, I read that book and found it very insightful.
  1. Yes 120 days with the normal permit ($80 or so). Then $800 to get the 365 day/year permit. I have read about people waiting months for their permit to be approved and losing rental income. So I agree this may be bad to bank on.
  2. Agreed, I think people underestimate how much you can still increase rents with CA/LA rent control. 5% plus the change in the local Consumer Price Index (CPI), but not exceeding 10%. That seems like plenty ie last year that'd be about 8%
  3. Curious, have you had any tenant issues in CA? Any evictions? You said 19 doors, are the only CA doors former house hacks? Have you gotten investment properties just for investments in CA or do you go out of state for that
  What makes you think mid-term rental? I think there are some tenant rights that don't go into effect until 1 year later. Rent for a furnished room could also be higher. I am not sure how to source these without airbnb. It looks like Zillow allows rent by room listings now, I also know of furnished finder.
  
  Most of my rentals now are out of state. At one point I had two doors here from house hacking and down to my ADU. Once I move out, I'll make my current primary a new rental. Good news is because of LA appreciation, my main house will cash flow all of the expenses on it's own and we keep the ADU income.
  I've gone through four tenants here in LA and so far so good. The worst was just the condition left. But I would take that over an eviction any day. For those that I know had tenant issues, sometimes it came from poor vetting or making exceptions.
  I think mid-term is interesting because you get around the laws for STR and rent control. But you really have to run the numbers. I looked into it for my ADU and I was going to make the same versus a long term tenant. If that's the case, put the long term tenant in and call it a day.
  If you are in a desirable area, mid term can be profitable. Keep in mind that includes insurance claims, people coming for work, and some people here just for a short term change of pace. I have family that traveled to Panama for a month because they work remotely.
  0 Reply
- Tom T.
  OP
  Member since 2025 · 7 posts · 2 votes
  1y
  Quote from @Rick Albert:
  
  Quote from @Tom T.:
  
  @Rick Albert Thanks for the response.
  Your case study was inspiring, I read that book and found it very insightful.
  1. Yes 120 days with the normal permit ($80 or so). Then $800 to get the 365 day/year permit. I have read about people waiting months for their permit to be approved and losing rental income. So I agree this may be bad to bank on.
  2. Agreed, I think people underestimate how much you can still increase rents with CA/LA rent control. 5% plus the change in the local Consumer Price Index (CPI), but not exceeding 10%. That seems like plenty ie last year that'd be about 8%
  3. Curious, have you had any tenant issues in CA? Any evictions? You said 19 doors, are the only CA doors former house hacks? Have you gotten investment properties just for investments in CA or do you go out of state for that
  What makes you think mid-term rental? I think there are some tenant rights that don't go into effect until 1 year later. Rent for a furnished room could also be higher. I am not sure how to source these without airbnb. It looks like Zillow allows rent by room listings now, I also know of furnished finder.
  
  Most of my rentals now are out of state. At one point I had two doors here from house hacking and down to my ADU. Once I move out, I'll make my current primary a new rental. Good news is because of LA appreciation, my main house will cash flow all of the expenses on it's own and we keep the ADU income.
  I've gone through four tenants here in LA and so far so good. The worst was just the condition left. But I would take that over an eviction any day. For those that I know had tenant issues, sometimes it came from poor vetting or making exceptions.
  I think mid-term is interesting because you get around the laws for STR and rent control. But you really have to run the numbers. I looked into it for my ADU and I was going to make the same versus a long term tenant. If that's the case, put the long term tenant in and call it a day.
  If you are in a desirable area, mid term can be profitable. Keep in mind that includes insurance claims, people coming for work, and some people here just for a short term change of pace. I have family that traveled to Panama for a month because they work remotely.
  
  Thanks this is very helpful information.
  I think the main options I am still debating are:
  1. Smaller house hack property - lower purchase price, SFH or duplex, easier to manage, lower risk with tenants (e.g., fewer tenants, mid-term tenants), longer time to cash flow, higher payment out of pocket per month, higher down payment to get reasonable PITI monthly payment
  2. Larger house hack property - higher purchase price, triplex or quadruplex, because of economies of scale it often can cash flow after one year, more tenant risk (i.e., long-term tenants, more tenants), lower payment out of pocket each month, lower down payment to get reasonable PITI monthly payment
  If I go with option 1 I have more capital to invest elsewhere in more landlord friendly states. If I go with option 2, I can more quickly turn my LA house hack into a cash flowing asset (but perhaps that is undesirable to have an investment property in a very anti-landlord state).
  My temptation is to do a debt snowball on a quadruplex. Average rent would be ~10k/month. Once it's paid off that is enough to cover my living expenses.
  1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.

Log In Join for Free