@Jeremy Pelle, if you're a first-time homebuyer, definitely go with a duplex or triplex on an FHA loan. For a duplex in LA County, you max purchase is just under $1M, but the down payment will only be $35K. It's important to keep some cash reserves to cover the full payment if you lose your tenant (or spend a month finding a new tenant).
A duplex beats a SFR for two big reasons: one, a duplex isn't significantly more expensive than a SFR, neighborhood-by-neighborhood. I live in a $2M duplex down the block from $2M SFRs. Secondly, you'll have more rental income when you eventually move out. Having a duplex with two 2/1 units, in almost every neighborhood in LA, will generate more rent than a 3-bed house you're renting to 3 individuals.
And if you have a day job, I wouldn't go out-of-state. Buying an inexpensive SFR or multifamily in a less-expensive market will certainly produce a little more cashflow, but you'll lose out on the appreciation we see in LA -- which is a massive builder of wealth. As a friend and mentor and BP podcast guest once told me, cashflow is just your buffer; equity is your wealth. So, if you don't need the cashflow today, buy an LA duplex that would pay for itself if fully rented. Move in, live there for a few years, and when you move out, the property will cashflow. Plus, if you buy a $1M property today, it'll likely be worth $1.2M+ in five years with no additional effort on your part. I'd rather see no cashflow for five years while building equity than see $100/month for five years while building much less equity.
Anyway... I'm working on a project right now to database all the residential multifamily (2-4 units) properties for sale in LA county by metrics that actually matter to househackers and investors. If you're interested in exploring duplexes, I'd love to help you out. It'll help me build a better database!
Best,
Jon
