Are you thinking of investing in the Los Angeles real estate market? If you are, Pinnacle Property Management can help. We have over 30 years of experience helping clients achieve the best real estate experience in the South Bay area.
Real estate investments can be lucrative. Buying an investment property can help you generate a consistent passive income for generations to come.
Los Angeles real estate is unique in many ways. Whether you enjoy skyscrapers, oceans, entertainment, Mediterranean climate, or ethnic and cultural diversity, LA has it all!
The Los Angeles economy is one of the world’s most diverse. It excels in almost every regard, from the high-tech industry to advanced transportation to a world leading creative economy.
For these and many more reasons, Los Angeles real estate is one of the most sought after in the nation.
That said, if you’re just starting out, following insider tips can make all the difference. You’ll be able to know what exactly to do to minimize risks and maximize your return on investment.
In this article, we here at Pinnacle Property Management will take you through the basics of purchasing an investment property in Los Angeles.
What is the Los Angeles Real Estate Market Like?
Los Angeles’ real estate has done extremely well in recent years. In fact, no other city has been able to capture the attention of both local and international investors as much as Los Angeles.
As recently as last year (2020), LA real estate was one of the fastest ways to realize capital appreciation, according to the Association for International Real Estate Investors (AFIRE).
Top Tips for Real Estate Investments in Los Angeles
1. Avoid Hot Areas
If you go after the hottest neighborhoods, you won’t be able to negotiate the deal down to the standards you want. Property prices are up and the competition has skyrocketed. So, consider investing in the slower areas in order to realize a good return on investment.
According to data by Mashvisor.com, the most affordable neighborhoods in LA right now are: Southeast Los Angeles, Central City, and Wilmington. The property prices are low, while the rental demand still remains relatively high.
2. Consider Investing in Multifamily Properties
If you have a sizeable budget, then we recommend you consider the multifamily market. Due to the housing shortage in LA, many people are looking to rent multifamily properties instead.
Since last year, the Downtown area has seen a ton of properties pop up. The new developments in the Downtown area have caused rent prices to slow down as renters have more options to choose from.
In other areas of the city, though, occupancy rates remain high. So, you may be able to make decent profits by investing in multifamily properties.
3. Consider Investing in a Foreclosed Property
A home becomes foreclosed when a lender repossesses the property due to nonpayment of mortgage payments. Usually, the lender is a bank that wants to price the foreclosure well for a quick sale.
If you look close enough, you’ll be able to find foreclosures in any real estate market and at every price point.
The biggest advantage of buying foreclosed properties is their low selling price. Banks try to make a quick sale by not holding onto foreclosures for long. Even if pricing isn’t a concern for you, don’t forget to check the foreclosure inventory. You may be able to come across a good deal.
That said, purchasing a foreclosed property can be challenging. If buying at an auction, you may need to pay for the property in cash. Other times, you may not even be permitted to do a property inspection before buying the property.
4. Crunch the Numbers
Don’t make a blind purchase. Calculate to see whether the property is going to be profitable or not. Play around with as many potential scenarios as possible to get a good overview.
Ideally, go with more conservative scenarios. Otherwise, you may find that overly positive calculations may turn out to be deceptive in the long run.
5. Boost the Rental Appeal
A vacant property is going to be a liability for you. Once you purchase the unit, there are some simple fixes you can do to make the property more desirable to prospective tenants.
You may want to start with assessing the curb appeal! First impressions matter. You want to make sure the exterior of the property looks up to par.
Here are some of the things you could do to enhance the curb appeal:
- Remove trash, weeds, and debris.
- Tend to the shrubbery.
- Plant new flowers and plants.
- Refresh the look of a dated mailbox.
You could also give the property a fresh coat of paint. Paint doesn’t cost much, but it has the potential to completely revitalize the look and feel of your property.
6. Consider Hiring a Property Management Company
If you are just starting out, hiring a management company is highly recommended. Self-managing a property can create a series of problems for you, from legal issues to bad tenants to high tenant turnover rates.
A good property management company can help you in all aspects of Los Angeles property management. They can help you fill your vacancies quickly, rent to a good tenant, care for your property, and more!
In a Nutshell: Real Estate Investing Tips in Los Angeles
The City of Los Angeles remains a promising real estate destination for savvy investors. That said, it’s easy to make potentially costly mistakes if you lack experience. Whether you are just starting out or are a seasoned investor, Pinnacle Property Management can help. We have over 30 years of real estate experience!
Contact us today for more information!