Searching for Your First Los Angeles Rental Property
Did you realize that most new millionaires have been made during real estate recessions? Many millionaires were made through the Los Angeles real estate market. There were people buying and selling (flippers) along with holding the homes long term and renting them out. It can become a journey that you can enjoy for the rest of your life. The following will give you some hints to start:
- Find a Good Beginner Property. Look around your neighborhood with eyes of an investor. Is that house down the block or around the corner something you can afford to purchase and rent out? It's much easier to find a rental that is not too far away from where you live.
- Avoid Fixer-Uppers. Unless you are excited about peeling wallpaper and hiring contractors to redo the kitchens and baths, try finding a house that is on the newer side without as much fix up involved. You will not regret this.
- Find an Experienced Real Estate Agent. It's better to find an agent that has worked with investors in the past, they may have some great tips for you.
- A great loan officer is crucial. Get pre-qualified with a loan agent to be sure what is involved. Loans for investment properties are very different than acquiring basic home loans. Call an agent and find out, they will be more than happy to assist you.
If you see a property you think would be perfect, make a bid and see what happens. Keep looking for other properties for sale though, there may be other buyers also thinking that same property is perfect also. Don't ever think you lost out on a deal that can't be found again, there will be many more to pick from. One of the most important rules to remember is not to get too emotionally involved with a particular property. It's about the numbers, not how nice a home is. A lovely home is great, but will it bring you the income or resulting profit that you are looking for?
The biggest surprise for most new landlords is the maintenance cost. Although sometimes you will find a tenant that lives in the house for years at a time, I have found typically tenants will stay one to two years. There is a large expense when they move out such as advertising for a new tenant, cleaning, repainting, replacing carpet and general fix up From my experience, every five years required quite a bit of fix up to make the rental desirable.
Be sure to factor in the costs of an investment home such as insurance, which is more costly for a rental property than owning your own home. It might be wise also to provide a gardener for your property, in order that the grass and plants are maintained properly. Avoid a renter who wants a "cut" on their rent if they take care of the yard themselves. It's been realized by many a landlord that renter's are not the best gardeners and they've paid more in the long run to get the yard back in shape from such poor yard maintenance. Landlords typically pay for the water bill, renters will tend to water the yard less if they are footing the bill.
Finding a rental home with positive cash flow is a great investment that is highly recommended. Cities like Pasadena are a little harder to get positive monthly cash flow but are quite easy to rent out, whereas cities a little further out, like Palmdale or Lancaster, might be easier to get positive cash flow but maybe a little harder to rent out.
Today is a great time to buy in the Los Angeles real estate market. Home prices have dropped considerably, and great deals are all around. It's just breaking through the fear of actually purchasing that first rental home. Once the first one was bought the second one was a breeze.