All Forum Posts by: Rachel S.

@Jonathan Anderson
Ok.  well since your entire argument, and the profitability of your plan, is based on one HUGE if..  which is if the owner of the property can rent the place for enough to cover ALL of the costs of ownership including, but not limited to
a 300k mortgage payment,

Or buy a house in LA....maybe break even on cash flow... and at the end of 7 years... maybe..maybe break even on house value. 

Oh... forgot to mention forbes reported in december 2019 on L.A.    awwww...no appreciation in 2019 for LA homes...
https://www.forbes.com/sites/johnwake/2020/12/31/no-house-price-appreciation-in-new-york-los-angeles-chicago-or-san-francisco/#cffec8f1af84

If you invested in L.A. with the 100k down strategy in 2019.... there goes that whole year of profit.  

While I think most of your points about the 400 k condo are correct, LA is not a market where you typically get cash flow. The best you can do is buy a multi family in a transitional area at a discount, rent it out to for enough cover your costs 100%, pay down the principal and hold it long term. If you hold it long term the chances of it *not* appreciating are slim. Nothing is certain though and you take a chance with most investments. The numbers have to work for that strategy, but I think it is valid.

The part I disagree with is this. 

"Looks to me like you can rent a place for less than the cost of ownership. (which is generally speaking the rule.... otherwise no one would ever rent.) which means that There is most likely going to be at least a little negative cash flow at 100k down. " 

This is not true in the LA rental market. The barrier is not the monthly payment in a lot of cases, but the ability to save up enough of a down payment to get a similar monthly payment (as their rental payment) in terms of P+I, taxes, insurance and necessary maintenance.

When I said "uncertain", I mean the current climate. I would not invest at a time when I cannot evict non paying tenants. Plus I am not seeing any deals. People are pushing prices up artificially because they are seeing the low inventory and engaging in FOMO buying.

Pedro is in the path of progress, between LB demand, SpaceX interest on terminal island, the waterfront development and the fact that it is one of the least expensive coastal cities in the LA area.  I sold my sister a duplex (that her and her family are house hacking) a few years back.  Then and now you see Watts duplexes and San Pedro duplexes listed for the same price, I choose Pedro, especially for my sister.  I actually showed a client a few Pedro duplexes over the weekend and though they are South Bay natives they looked at Pedro like a hidden gem.  This is not to mention the droves of other buyers that were visiting the same properties.  @Delbert Standifer I just purchased a SFR in Carson, hoping the mall development and Victoria Park sports complex gives the city a boost. @Allan C. South Central is gentrified, just certain areas, my sister has gained about $200k in equity in her 3 years in Pedro.   @Rachel S. good call, I have been suggesting San Pedro, Hawthorne and Gardena as cities in the path of progress the last few years.  My clients that are looking in Inglewood and Pedro tend to favor Pedro as the properties in the $700k plus price point are in areas that are further established than the $700k properties in Inglewood.  I love Inglewood and it will soon be more walkable and cool than ever, but that's my recent experience.  

You might as well rent it - you're not making money if it's not rented.

@Jim Debenham - Your going to have more credibility if you're grammar is improved

If you're going to cut someone down at least be correct... You're going to have more credibility if your grammar is improved (period). 

I was hoping this person included the errors to be facetious.

I like the debate, and tend to agree that San Pedro may have better days ahead. The question that I have is whether we will see gentrification of south-central before we see San Pedro growth. There is massive appreciation in south bay that puts pressure inland.

@Allan C.ok what is the entry point everyone is talking about? Pedro real estate is just as high as everywhere else in Los Angeles. I’m trying to tell everyone I pass by the city everyday it’s not a gold mine as everyone think. I would have been all over the city as in regards to investing. I’ll see how this turns out but in my opinion it’s an overrated investment.

Really? San Pedro, Hawthorne and South Central are as high as places like West LA, and other beach cities in the south bay (Manhattan, Hermosa etc, etc)? I think not. I agree that there is no "cheap" real estate in LA, but there are some areas that definitely haven't realized their full potential yet.

I am a firm believer that there are opportunities out there...But I look around and see that houses are being purchased like crazy here in Los Angeles...Is Warren Buffets advice about being afraid when everyone is "greedy" and being "greedy" when everyone afraid applicable in this instance ? I don't mean to call anyone greedy or afraid....its more of a figure of speech.  

@Dan Goeckel - "There is something to be said for getting in the game but there is more to be said for being patient."  You hit the point on the head, especially for a new investor.  Every market that I am in hot to VERY hot.  Complete seller's market and prices are increasing/appreciating.  While there are good deals to be found, you really need to be on your game and be able to act fast.  The ability to that, IMHO, comes with lots of actual RE experience.  Anyone can buy a property, not anyone can make a property a successful long-term investment.  I believe in the idea that you make money when you buy.  There are many ways to do that of course (buy/rehab, find new use, add value, current rents under market...). 

With that said, if I were a new investor, I would continue to 1) conserve cash, 2) secure funding with as many banks as possible, 3) focus on building your "team" and educating yourself and lastly 4) continue to look and walk properties.  In this market, it will not be super easy due to the limited inventory and given how fast properties go pending.  It will be a grind, but there ARE deals out there, just just need to grind it out.  Just be cautious.

I have one investment property but I haven't bought in a while. Even if I had, this would still be my strategy.

I used to work at a law firm in San Pedro in the early 2000s. During lunch I would always wonder about purchasing investment property there. It was right off the 110, and on the other side of the hill was PV, RPV, PVE. I would ask the partners at my firm why there was such a price difference. They all answered the same thing. Pollution. San Pedro faces the ports and gets the brunt of the pollution for this reason I never really saw the crazy appreciation in San Pedro vs other cities.