Author Topic: Housing in Los Angeles... What to do in this situation  (Read 1825 times)

Kash101

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Housing in Los Angeles... What to do in this situation
« on: March 30, 2018, 08:11:55 AM »
Hi All!

New to the forum, making some aggressive moves, want to hit the retirement button asap.

Heres my situation:

Self Employed in Los Angeles, and ideally want to live ~ 10 miles ( ~ 40 minutes in traffic ) from office, to minimize commute.

Married about 2 years now, and we purchased a home about 1 year ago. In an amazing part of the city, 2.6M. 5b/5ba. 10 miles from the office. As far as I would like to go. We put ~ 200k in remodels after purchase.

The monthly nut on the property is do-able at this point, but pretty high, and obviously pushing me away from retirement any time soon.

Currently , just me and my wife. Looking to expand the family soon hopefully with little rascals .

Median home price in or around my office is ~ 2M. even townhomes and condos are in the 1.9 - 3M mark.

Spoke with my realtor, could POSSIBLY sell the home for ~ 3m, which would break us even with realtor fees/ remodel expenses etc. But it aint over until its over, so this number is a maybe until its not.

If we sold, bought something for 2M, moved , fees etc, I dont know if we would be saving enough to justify it.

the LA real estate market is comically high compared to the rest of the country, so these numbers may sound ridiculous but its the norm in LA.

Question:

1. What would you do re: the primary home ? Luckily my wife is on board with almost anything.
2. Keep the home for now?
3. Sell the home and then just rent for awhile , knowing I am " throwing away" money?
4. I also recently got rid of an expensive leased vehicle, so only one car payment currently, which is my wife's lease, and this is done in about 1.5 years , and very affordable generally speaking. My DD is paid in full and gets the job done.

Any and all thoughts or questions welcomed and appreciated.

Thank You !
« Last Edit: March 30, 2018, 07:48:34 PM by Kash101 »

trojans10

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Re: Housing in Los Angeles... What to do in this situation
« Reply #1 on: April 04, 2018, 12:03:03 AM »
Don't have much input, I'm 36, but I'm moving to LA soon for work. May I ask what you do to be self employed?

Abe

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Re: Housing in Los Angeles... What to do in this situation
« Reply #2 on: April 04, 2018, 12:17:46 AM »
Hey, I'm living in Santa Monica temporarily so feel your pain (though I'm renting so it hurts more?)

If you want to retire soon, I don't think buying a 2 million dollar house is going to work. You'll have to move somewhere else in LA that's cheaper and either work from home, or move the business if possible. Is there any specific reason you can't move somewhere cheaper? I'm guessing you have a lot of kids or relatives with the 5 bedroom house. If not, you could rent out rooms?

Another option is buying a house with a guest house that can be rented out. I'm renting from someone who's doing that and probably pay 60% of what his mortgage would be if he has one. Then, retiring soon may be possible since your fixed expenses would be manageable.

LightStache

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Re: Housing in Los Angeles... What to do in this situation
« Reply #3 on: April 04, 2018, 08:33:02 PM »
I would advise you to keep it until you hit the $500k cap gains deduction mark. Buying and selling property comes at a HUGE transaction cost. For you to sell will be $3M x .08 = $240k, then $2M x .03 = $60k to buy. So you're going to fork over $300k in fees if you swap houses.

People make money on appreciation in their primary residences and if you wait ten more years, the property could be up another million and that will be great for your retirement kitty.

Of course, you didn't mention how much of your income is going to the house. If it's going to be unsustainable to stay, then you should bail while the market is hot and move into something WAY cheaper. There's lots to be had in LA for <$1M if you go ten miles from anywhere (except maybe Malibu). Did your business take a hit in 2008/2009?

The Mustachian answer would be to rent our your rooms to cover your mortgage. If you're living in a $5M pad, that's probably not the type of lifestyle you're used to, but you are on MMM.
« Last Edit: April 04, 2018, 08:35:28 PM by RyaninLA »

Dicey

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Re: Housing in Los Angeles... What to do in this situation
« Reply #4 on: April 04, 2018, 10:26:06 PM »
You have no children yet you bought a FIVE bedroom, FIVE bath home?

Kash101

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Re: Housing in Los Angeles... What to do in this situation
« Reply #5 on: April 16, 2018, 09:12:57 AM »
all good tips... renting out rooms is unlikely as me and wifey would not be comfortable w strangers in our home... and the transaction cost to sell then buy pretty much kills any potential upside... at this point the expenses are within affordability, and we are still saving monthly quite a bit... so I think we will probably stay for at least 5 years, let the property appreciate , then re consider... in my business , there is a recent change that my prompt us to leave the state for increased income and lower cost of living , and we are looking at states with no state income tax... so considering all these factors, sit and hold seems the most wise.

ysette9

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Re: Housing in Los Angeles... What to do in this situation
« Reply #6 on: April 16, 2018, 09:19:42 AM »
I’m with Dicey here. Before figuring out what to do about this challenge, can you tell us the reasoning behind buying such a large house for two people with no plans for housemates. The obvious thing to do would be to carefully vet and then bring in housemates to help with the mortgage. Otherwise, can you do AirBNB?