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Hi all! Looking for a roomie in Culver City. New Yorker getting into the startup life and transitioning from data engineering to data science.
Looking at the Harlow for a 3 bedroom, want to convert the extra room into a home office: https://www.thewestsidecollection.com/harlow-culver-city-ca/
If you’re interested in the area lemme know!
Additional Posts in The Real Estate Bowl
From a qualifying perspective you should only look at 80% of the rental value. From the personal side you should be be putting maybe 75% to mortgage/tax/insurance and reserving the rest against vacancy and repairs.
The rental rate on the other side should be a good but more than half the mortgage/tax/insurance. It should take a good bite out of your side.
It all works on paper. What happens if one of you loses a job? What if that’s at a time in the market where you cannot sell this place at a good price or quickly? What’s your plan? That’s not to say don’t do the deal. Just think about the math of needing to move out of your side into a cheaper apartment and renting that side at a higher rate to cover the costs.
Finally, the crappy part of being a landlord is getting all those client calls to deal with problems or chasing after rent. The worst version of that is you live next door. The best way around that is a property management company, but then you need to slice another sizable percentage off the top. I have actually seen that done in this kind of scenario where the owner then says to the renter that they are also a renter and do a side gig for the property mgmt co as a handy man from time to time, but that the company has to handle the calls so they can get paid for it. Worked like a charm. But of course they take a big slice.
Overall the numbers don’t seem bad. Really look at market rents as they’ll be up versus even a year ago.
So you will bring in ~13k a month as a couple after tax, seems doable. I’d say that mortgage payment will be closer to 5k though. Scary part is that monthly payment is only if you have the other half rented. If the tenant leaves, you could be in trouble.
I did it before, it was great until it got really bad, mainly because of the tenants issue. Don't get me wrong, I still think it is a great idea and I still own rental property. My only suggestion is that you should not be relying on the rental income, in other words you should be able to afford it with or without the tenants, it's great if you can afford it without the tenants + some unexpected expenses that comes with home ownership, then you are building wealth, otherwise you could run into issues.
Mentor
How much do you have in reserves? Overall I think you would be fine but you are playing the long game here. You could have some months where things don’t go as planned or you have tenant issues so make sure you have some $$ for a rainy day. In 10 years you could look back and say it was the best financial decision you ever made but you have to make it long enough for that to happen.
Definitely playing the long game. Reserves would be around $50-60k.