Former Bartenders Seek Los Angeles Home with Rental Income

Lauren Plaxco and Bryan Keith, former bartenders, embarked on a search for a home in Los Angeles that could generate rental income. Initially, their focus was on investment potential, but their priorities shifted after the birth of their son, August.

Living on a noisy street in Hollywood, they realized the pressing need for a quieter location for their growing family. Their subsequent home search primarily targeted areas within the San Fernando Valley and Pasadena.

Their home search focused on areas within the San Fernando Valley and Pasadena, aiming for properties such as a turnkey duplex or triplex, or a single-family home with space for an accessory dwelling unit (ADU).

Strategic Renovation Loans and Budget

Ms. Plaxco, a lender by profession, played a crucial role in shaping their strategy. She identified renovation loan programs like FHA 203k and Fannie Mae HomeStyle Renovation as key to achieving their goals. These innovative programs offer a significant advantage: they allow renovation costs, including the construction of an ADU, to be integrated into the mortgage. This is made possible by basing the loan amount on the property's estimated appraised value after the renovations are complete.

The couple, collaborating with real estate agents Alisandra Morisi and Rae Olivier, developed specific materials to educate sellers about these unique loan types. This proactive approach aimed to smooth the purchasing process. Their budget for this ambitious undertaking ranged from $750,000 to $1.3 million.

Properties Under Consideration

Three distinct properties captured their interest, each offering a different pathway to their income-generating and lifestyle goals:

Highland Park Hillside Home

This property presented an updated three-unit configuration. It included a primary two-bedroom, one-bath house, alongside a separate building featuring a one-bedroom unit situated above a studio.

Asking Price: $1.175 million
Estimated Annual Tax: $17,000
Projected Monthly Rental Income: Approximately $3,500

Van Nuys Corner Lot

A 1949 two-bedroom, one-bath house situated on a corner lot. The property also featured a detached two-car garage, which was deemed suitable for conversion. Furthermore, adjacent space offered additional potential for constructing an ADU.

Asking Price: $835,000
Estimated Annual Tax: $10,000
ADU Potential: Constructing a two-bedroom ADU was estimated to cost just under $300,000, with a projected monthly rent of $3,400.

Reseda Detached Garage

This option included a 1949 two-bedroom, one-bath cottage. Its large backyard and a detached two-car garage both offered considerable potential for ADU conversion, aligning perfectly with their income strategy.

Asking Price: $779,000
Estimated Annual Tax: $9,200
ADU Potential: Building a two-bedroom ADU was estimated at $300,000, with a projected monthly rent of $3,200.