FIGUEROA FANTASIES. CASH FLOW INCLUDED.

CRAFTSMAN COOL AND MID CENTURY MONEY A BLOCK OFF THE HIPPEST NEW STRETCH OF EASTSIDE IN LOS ANGELES.  

125 S. AVENUE 52. LOS ANGELES CA 90042. The price just dropped to $870,000. RUN!

Highland Park has been the buzzword for years.  It's a just a matter of minutes to walk to the new new in Eastside cool. Recently the starlets of a VOGUE insider story, this remodeled stretch of Highland Park on Figueroa, also one of the oldest stretches in Los Angeles, boasts go-to's such as Cafe Birdie, Good Girl Dinette, Kitchen Mouse, An Arts and Craft Revival Bowling alley, Civil Coffee and the list goes on and on.  

And nearby sits this large 4 bedroom Craftsman home on the front half of the lot and a 3 bedroom mid century stucco style smaller home on the backside of the lot. There is a 2 car garage and fruit trees.  I would say you could add a fence between the two and increase the privacy factor so these truly feel like separate little homes. There is alley access behind the back house so those tenants don't need to walk through the front.

LETS DO THE NUMBERS.

It's what we are interested in right? Good investments and good deals. This is those. This is a deal we would be interested in if we were in that place now. 

SCENARIO 1:   INVESTMENT NON OWNER OCCUPIED. 25% DOWN. 

AS IS:  Lets assume the front house is delivered vacant. It seems as if this is the case. The current rent is $3500 but it also sounds seller occupied. When the seller moves, market rent for a remodeled version of this craftsman house is closer to $5000.  The back house AS IS receives $2100/mo rent. That is a total of $7100/mo in rent. That would be a $2750 cash flow and a 13.5% cash on cash return **estimated**  if you assume $100k in renovations for the front house.

Lets think "down the line". That back house is below market rent. A 3 bedroom mid century style little house in this new hot hood could easily get $3000/mo in rent.  That would bring the rent total up to $8000/mo. This would increase the cash flow to $3600/mo. The cash on cash return might decrease a bit as one would assume you would need to do some renovations on this back house to get the best rent. I have increased the renovation budget to $150,000.  However, depending on the actual layout and size of this back house, parking and the trajectory of the neighborhood, this $3k rent could also be an understatement. A good remodel could possibly fetch closer to $3500/mo for a 3 bedroom house. So... the sky is the limit. You could net a monthly cash flow between $3600-4100/mo. THOSE ARE GOOD NUMBERS. THIS IS A GOOD DEAL.

SCENARIO 2: Owner Occupied. 20% down. 

You can update and remodel the front house and have a huge craftsman home to call your own with enough bedrooms for a couple of kids and an office/guest room. You still collect the rent from the back house and here is the best part. You are getting a big break on your living expenses. Above I said you could rent this 4 bedroom craftsman for $5000/mo. By collecting the rent on then  back house you have essentially offset your mortgage. You essentially get to live in this $5k/mo craftsman home for  closer to $2500/mo (including property tax and interest) and YES you can still write off property tax and interest up to 10k/year on your primary residence.  AND YOU OWN BOTH. And the in the "down the line" view, this offset increases. If you can increase the back rent to even $3000, then your adjusted mortgage is closer to $1600/mo.  If you can rent the back house for $3500/mo, your adjusted mortgage is only $900/mo.

Lets me tell you the best best part.

This is a prime location. Have you ever wished you could have bought in Sunset Junction or Echo Park 10 years ago??  This is that. Figueroa is SO HOT. In my opinion, its hotter than York. It's charming and full of life. In the past 2 years it has literally transformed. A walkable life is an amazing life and whether that is true for your family or for your renters, the home is more valuable for it.

Let me tell you the fun part.

This is a home with beautiful bones. From a creative standpoint, I would love to remodel a craftsman and a mid century. They are both styles I love. 

Intact moldings, high ceilings, wood floors, original windows. A front and back staircase. DESIGN DRAMA.  This craftsman has so much character.  For me the fun part is when you roll up your sleeves and get to it. Check out the below fireplace and built ins in the dining room. Swoon right?  How about that wide window bench? So in love already. You have to see past the red moulding and tile floor. Easy to repaint and easy to demo. I would bet you there are original wood floors under that tile. I have a feeling.

THE OTHER FUN PART

YES, the other fun part is making money. That is not to be underestimated. 

Let me throw you a new bone. Say you up the ante. Remodel her, make her shine. Make this an AMAZING compound. Offer this front house empty and get the back one remodeled. This land and these homes I bet, with the stylish remodel, could be resold for $1.3-1.4M? I would guess. That's a guess, but I bet there is a pretty wide spread for homes like these in a hood like this. Take a few years to accomplish this task. Let the neighborhood grow and percolate. If you live here 2 years owner occupied.. then you can resell without the tax hit. If you come out a few hundred thousand ahead and you don't have to pay tax on that, you have a whole new nest egg to play with. Just some food for thought.

If you want to check it out, please reach out and we will imagine the potential together.

If you want to run numbers for your unique situation on this or others like it, this is what we do. Let us help you. Even if you just need to think about what this next step to income looks like down the line... helping you plan is part of the plan.

Best,

Craig Ekedahl and Jamie Haller

Link to Buyers and Sellers in the menu to contact us.

xo