All Forum Posts by: Amy Wei Ru Chang

I agree with what some people are saying here and disagree on some.

Regarding condos, they can appreciate really well here in Los Angeles. I doubled my money is 7 years. Granted that appreciation train is slowing down but you have to be particular as to what you buy.

MOST of my condo investor clients in LA are selling. The HOAs are getting difficult because buildings are getting older and with people working from home, there is more usage on the pipes and water. That's why the average HOAs are creeping up to $500/month or more. 

The other issue is condos built prior to 1978 in Los Angeles are likely subject to LA Rent Control. You can raise rents whatever you want thanks to the Costa Hawkins Act (at least for now) but all of the other rights for tenants are in play.

It depends on how you define cash flow, but with $500K down you may have cash flowing properties because you will have a low LTV. Some of my clients do this, others don't because leverage is key in real estate. Otherwise investing in the stock market or better yet, a high interest savings account (mine is at 5.5%) can actually be a safer bet.

If you are set on condos, I would be looking in Ventura County. Good appreciation, rents are creeping up, and you avoid the LA County rent control BS.

Or, you house hack. You buy a very nice house with an ADU and you rent out one of the units. You live your best life and get some rental income. You could even buy a property and convert the garage with the difference (although you don't get dollar for dollar value from an appraisal perspective).

You do have options here in So Cal and there are some benefits to investing here. High appreciation, high dollar appreciation (3% increase in rent on a $3K/month is better than 3% appreciation on $1,000/month). I invest locally and out of state by way of reference. 

@Amy Wei Ru Chang

I invest in the Bay Area and in the Indianapolis metro area.  Great job on the Texas property.  I agree with Allan, I wouldn't pay cash with that $500k. You'd be tying up a lot of money on one property. I run my numbers using 20% down.  I think it's important to have lots of liquid reserves. Do you have a primary residence already or could you house hack? 

LA area:

- you have more control being local and can see the property, check on renovations

- I wouldn't buy 2 condos. The HOA fees go up and you have no control. They can also put in rules restricting rentals. I sold a condo here, really wanted to keep it but HOA was badly managed, 4 increases to HOA fee in 2.5 years. Many HOAs won't allow any type of AirBnb.

- Could you buy something within 2 hour drive? 

- Maybe consider Mid-term rentals in an area with hospitals or businesses with traveling corporate people - you'll need to furnish it, pay for utilities and WiFi but this is what some Bay Area investors I know that are doing and AirBnb to cash flow.  

- landlord tenant laws not favorable in CA. Need to vet your tenants carefully, would recommend a RE attorney to review your lease. 

Out of State:

- If you have $500k in capital I personally would go for appreciation: Nevada or Arizona. Those states have low property taxes and I think they're more landlord friendly than CA. Other areas I considered: Nashville, Tennessee and Florida Panhandle (Fort Walton Beach, Navarre Beach). I know a few investors buying in San Antonio (multi=unit) - their numbers work even with high Texas property taxes. 

- I can't speak for other Midwest states but in Indianapolis metro area, my property taxes are pretty high 2.77 and 2.78% and the taxes go up with no limit (17% with my last assessment). I'm still positive cash flow on my Class A but just barely with the tax increases. I have 2 Class C homes. If I ever 1031 exchange those I'm looking at Northern CA, Nevada or Arizona. 

- OOS investing is challenging. Buying a property based on video tours and pictures isn't the same as seeing it in person, plus all the renovation and repair issues, winter weather issues, hurricanes, etc. Need to have a trusted team to do OOS. 

-  I would personally rather have a few high quality properties in appreciating areas, fewer roofs, HVAC etc  to replace, fewer tenant issues than 50 cheaper units. 

Quote from @Amy Wei Ru Chang:

Hello!  First post for long time forum reader.  Had a succesful investment with College friend 10 years ago and now we are cashing out and going our separate ways.  The property is in Texas and has been handled by the friend for the most part and I was working abroad for the majority of the time of the past 10 years, so sadly to say I am just starting out on my own.  Right now, I am anticipating 500+k cash soon and is trying to find the best place to put it to work before the interest rate goes down, i.e. acquire worthy assets and hold.  I have been looking around the LA county area with an agent for months and 600k can only get me a 2b2b condo for the most part, if I want to stay away from San Bernardino or other ghetto areas.  A friend who is a mortgage borker has been telling me to split the capital into 2 and buy 2 condos with mortgage instead, paying 50% downpayment.  I didn't like the idea at first but after the tiring search with no good targets at sight, I am beginning to toy with that idea.  If you were me, what would you do?  Newbie desperately needs some advice!  TIA!! 

Are you able to do a 1031 or are you cashing out? If you are cashing out then don't forget your taxes. The other thing I found about the forums here is that the majority of people who post and respond to posts are simply trying to generate leads. The conversations on here can be interesting but I found the people responding didn't really have my interests in mind.

Quote from @Amy Wei Ru Chang:

If you were me, what would you do?  Newbie desperately needs some advice!  TIA!! 

Thoughts:
1) Even though $500k is a nice sum of money (congrats!) it does not go far in good ole SoCal.
2) I'm in the camp of - don't buy Condos - less appreciation, HOAs, Etc...
3) I would be reluctant to buy rentals in Cali right now with the squatting issue
4) What do you think/feel about buying OOS in a better market?
Just my $0.02.......