Setting My Anchor Down in Los Angeles: Tips for Buying a House and Why Public Schools Rock
I just recently bought a house in Los Angeles, CA. I am purposely not naming the city for privacy reasons and because I’ve watched too many home invasion movies. I bought it in this particular city for the following reasons, reasons that I believe every potential homebuyer should consider:
1. Excellent public schools: I myself am a product of the Los Angeles Unified School District system. I grew up going to public schools and received a terrific education. I’ve met a ton of people who went to private school and I don't see much difference between them vs the people who went to public school.
Los Angeles has many cities with highly ranked public schools, schools that are more than good enough for your children. Even if you don’t plan to have children, owning a home in a highly rated public school district directly correlates to a higher sale / rental price later on.
I don’t mean to keep harping on public vs private schools but I have some friends who are very insistent on only sending their children to private schools so that they have a better chance of getting into a great college.
All I’m going to say is this: Colleges don’t care if you went to Phillips Exeter, Groton, Choate or any other fancy school whose names sound like the names of people who came over on the Mayflower. Unless you are famous, a national champion in something, or the child of famously wealthy parents, top colleges are only going to admit you if you have high AP and SAT scores. They will not give a flying duck where you went to high school if you don't have high test scores.
AP and and SAT exams are standard across the nation and it is CRITICAL to do well on those exams (and to take as many AP exams as possible) to be considered for top schools. I hope you take my advice and save yourself the $400K per kid.
Screed over. Time for the hate mail to flow in!
2. Close proximity to other cities: This city is very much in the heart of the city and it’s super easy to get around from here to anywhere else.
3. Close proximity to my workplace and to some of my favorite places in the city
4. Safety: This particular area has one of the lowest crime rates around. Many of my neighbors have already introduced themselves to me and I feel at peace here.
5. Practically guaranteed return on my investment: You cannot go wrong with Los Angeles real estate. Yes, the prices are absurdly high. Everyone else around the country (other than San Francisco and New York City) tells me I’m living in another world. But when you put practically anything on the market in Los Angeles, it’ll get snatched up super fast.
When I was looking, I was told to go visit the house immediately (like the day of or the day after it was posted) and to make an offer over the asking price immediately (and to even expect COUNTEROFFERS to my offer price that was ALREADY ABOVE the asking price). Some people even place an offer without seeing the house!
I have friends who buy in other parts of the country and while the cost is much more reasonable, I have also seen them sit on their home for years before it sells or they sell it for breakeven / less than what they bought it for.
My only regret is that I didn’t buy a house sooner. I grew up a few miles from here and when I look at how much property values have increased, I think “UGH! Why didn’t I buy a house when I was 13!!” This particular city has always been very popular due to the type of companies headquartered here and the creative types that live here. As the years have gone by, it’s no surprise it’s gotten even more popular.
6. (Somewhat) close proximity to my parents: I never thought I’d say this but it’s nice being close to my parents. They are getting older and I feel better knowing that I’m physically close by and can help them whenever they need it.
When I started house hunting, I had a specific budget to stick to and the best piece of advice I got from my real estate agent was the following - Buy a more rundown or older house that will need some renovations. You’ll be able to get that for a better deal than a “recently renovated” house. As we looked around, she pointed out homes that had recently been flipped (they start to look alike after you’ve walked through a few) and which ones that hadn’t. I ended up buying a house that had a great core foundation but does need some remodeling.
Now that I’ve gone through the process, here is my advice for any of you looking to buy a house:
1. Be responsible and stick to your budget. DO NOT THROW AROUND MONEY THAT YOU DON’T HAVE. Do not engage in a bidding war. My first three offers were turned down and I only was successful on my fourth one. This is because I refused to play the bidding game. I had set aside a certain amount of money and planned to stick to it.
Yes, now is a great time to buy because interest rates are low but don’t forget that you still need to pay the bank back ALL THE MONEY THEY LOANED YOU. Some people seem to have this “out of sight, out of mind” mentality with their mortgage payments. “What’s another $200K addition to our offer? We’re still paying the same monthly amount to the bank!” Please don’t have that mindset. Don’t owe more money than you need to.
If you can pay with cash, even better. As Kathy Griffin said, “I bought my house for $10.5 million cash outright, because as Suze Orman taught me, if you can’t afford to buy a house in cash, you can’t afford it."
And besides, there is no such thing as a perfect dream home. Every week, new homes come on the market and you’ll find one that you like pretty frequently.
2. Don't be afraid of renovations. You should think about the future rental or resale value of the house ten years down the line. Just like you should think about your personal finances (how will my investments now compound in ten years) or a potential marriage (is this person going to be a good financial and semi-life partner who will make my life better), you simply must think about how your house is going to increase in value in the future. Don’t just accept a house for what it is. Think - what I can do to make this better? Here’s what you should be on the lookout for for a house:
a. Have a bathroom for each room. The best combo is 3 beds, 3 baths. (It’s okay if the house doesn’t have that currently. With the approved permits, you can always add a bathroom and / or room depending on the layout of the house and how big the backyard is). People LOVE bathrooms. An extra bathroom increases your property value greatly.
b. Don’t live close to freeway because of air pollution
c. Don’t live close to high voltage towers due to the possible health risks. I found one house in this neighborhood that looked terrific but was suspiciously cheap. When I got there and stepped out of the car, I immediately heard loud buzzing coming directly from the high voltage towers above and noped it out of there.
d. Don’t live close to a school (loud noises and rowdy children)
e. Don’t live close to a commercial area (noise and safety issues).
f. Don’t buy a house with a pool. It presents a lot of liability and your homeowner / landlord insurance rate will be super high.
g. Don’t buy a house that has a high owner turnover rate. There’s a reason why previous owners are leaving and you’ll find out yourself if you live there.
h. Try to buy a house with a 6000 sq ft lot minimum. This would then allow you to build an Attached Dwelling Unit in the backyard to rent out.
i. Do not buy a house where you have to deal with a HOA. HOAs are great at making sure this is a safe, clean, and and beautiful community but they can get very picky about weird things. This is just not something I personally wanted to deal with.
j. Do not buy a house with big trees physically close by. The tree roots will get into the water pipes leading to some terrible sewage problems.
k. Check the cabinets of the house to see if you need to replace them! I made the terrible mistake of not looking inside my kitchen cabinets before moving in. I just saw the exteriors, said "They look fine! No need to replace!" and after I moved in, discovered the cabinet interiors were quite dirty. There were lots of stains that I couldn't scrub out. I ended up replacing all the shelves with melamine wood and putting hardboard panel "skins" over the cabinet walls.
l. Shortly after I began looking, it became clear very quickly that homes in the hills in Los Angeles were a terrible fit for me. The streets are absurdly narrow and parking is atrocious, even at your own freaking house. Congratulations, you just spent $1.5 million on a house with one parking space.
m. Get a really good realtor to work with. Mine was really terrific. She was incredibly knowledgeable about every house we visited. She pointed out all the flaws (foundation problems, water damage, insurance risk, etc) and vetoed homes that, in her eyes, would not be a good fit for me, even if they were expensive. It was very obvious to me that she was not out to just get the highest commission possible by pressuring me to buy the most expensive house I could. In fact, she encouraged me to buy a cheaper house and do my own renovations.
Her strategy is: Why buy a house that has recently been remodeled (which many homes in this city were) when you can do your own renovations and build the house to the specifications that YOU want? Don’t get a realtor that just parrots back what you yourself can read on realtor.com. Get someone who knows what she’s doing and can bring a tremendous amount of value to your real estate journey. I was very impressed with her and will work with her again.
I moved around a lot in my 20s and it’s nice to finally set an anchor down. I grew up in Los Angeles and it’s nice to be back home.
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An anthropological look at how people think about money. Created and edited by Star Li.