Wednesday, July 11, 2018

Flipping in DTLA

I've been getting requests from investors about flipping in downtown. Flipping is not as common in condos. It's just such a hassle to buy a condo, get board approvals, deal with building restrictions, and, with the way prices have been (especially in DTLA), sell for a modest profit at best.

But it does happen, and sometimes, it can be very easy. The best type of condo is often one that has been banged up a bit due to years of tenants living there. Appliances are in bad shape, cabinetry needs updating, flooring needs an overhaul, etc.

Typically, a condo that's been overhauled can fetch about twice the amount of remodel money put into it. For instance, a condo with a market price of $800k with a remodel that cost $75k can end up being worth $950k to the public. Not a bad return on your money.

What are the typical remodels that generate the most ROI?

1. Kitchen (Appliances help, but more than that, modern cabinetry and ventilation.)

2. Bathroom (Just changing out the sink makes a huge difference. Then of course, tiles are a big deal right now, and you want to err on the light color side)

3. Flooring (Worn, stained, dated flooring needs to be replaced asap! It's the biggest turn off for buyers)

4. Storage (Add an extra closet, pantry space, etc. So many options these days. The biggest cheat is a floating wardrobe that is fixed to the wall.)

5. Lighting (Please add nice, modern lighting to dull, dark spaces. Even $2k worth of electrical work to add more ceiling lights will hugely add to value)

6. Paint (Please choose flat white for your walls if in doubt. Do not go crazy with colors unless you have a designer who can put the room "together" for you. I know wallpaper is hot right now but honestly, it has to be done right)

Sunday, July 1, 2018

Just Leased - Douglas Lofts #4D at 740sf - Highest Leased Price for Floorplan

Douglas Loft #4D - 740sf + 1 parking
North facing unit with views of City Hall and mountains.

Listed at $2450/mo, which was already just above market rates for the building, this studio ended up getting $2550/mo, the highest price ever paid for a rental for a studio in the building. Rentals are slowing down in general due to an influx of new construction competition, but good units are still going strong.

Wednesday, June 27, 2018

Apple Store Forging Ahead on Broadway

Photo: Tower Theater Group

After a long period of silence, the Apple store coming in the Tower Theater space on Broadway has made more movement. Renderings are hush at the moment, but something exciting while preserving the integrity of the historic theater. The opening might coincide with the Broadway Trade Center restoration across the street. 

Why Downtown is So Exciting

For those of us who have properties in the area, it's been exciting. Growth has been steady year over year since the crash. Some of my clients are at 100k up on their investment in just 12-18 mos. Most are about 200k up on their investment. And few of them are more than 500k up on their investments in just 5 years. The point is, everyone is up on their investment. (Know which buildings to buy in, please do the homework or use someone who has the info!)

For those who are pioneers, DTLA is a blank slate. So many pioneers creating some very interesting spaces, shops, and experiences. And it's all in one dense area.

And most important of all, there's still a lot more to go. You wouldn't believe the plans in place for neighborhoods like Bunker Hill, or the areas just south of South Park. And the Produce District. And the Industrial District just north of Chinatown.

While some are saying it's too late to get in, I say we're only 10% there. That's exciting.

Friday, June 22, 2018

Pocket Listing Alert - Beautiful Rowan Loft on the 12th Floor with 30+ Feet of Windows

Unit #1205 is just below the Penthouse level, and features 2 beds, 2 baths, and windows that span the entire length of the unit. It's also the only unit that has a fireplace! Comes with 1 parking space. Skyline views and overlooks the Spring St Park for the ideal downtown view. Within a few blocks to Grand Central Market, Grand Park, Orsa & Winston, The Continental, Kazunori, galleries, Whole Foods, and so much more. Asking $4500/mo or negotiable on a longer lease.

Friday, June 1, 2018

What $1Million Buys you in DTLA

For about $1 Million:

Photo: TEN50 Trumark; U-Click

Building: TEN50 
Neighborhood: South Park
Floor Level of Unit: 8th
SF: 1140, 2+2 with 2 parking spaces
PRICE: 980k


Building: EVO
Neighborhood: South Park
Floor Level of Unit: 21st
SF: 1170, 2+2 with 2 parking spaces
PRICE: 995k

The Agency

Building: Metropolis
Neighborhood: South Park
Floor Level of Unit: 22nd
SF: 843, 1+2 with 1 parking spaces
PRICE: 985k

Friday, May 18, 2018

Sad Facts About Current LA Real Estate

1. You will likely have to overbid to be in the running

2. Rents are super high everywhere

3. Cash buyers are lowballing and Sellers are taking the bait (but then Sellers do a multiple counter back and drive the price right back up)

4. Unless your budget is about 1Mil (Eastside) and 2Mil (Westside), you will likely be getting a less than perfect looking house

5. Prepare to downsize from what you originally wanted

6. Prepare to expand your search into areas you never thought you'd venture into

7. Prepare to submit noncontingent offers

8. Expect to forego any requests for repairs--Sellers are basically not wanting to deal with buyers who pick apart the property

9. Prepare yourself for a possible rejection or what seems to be an unreasonabl counteroffer to your offer

Wednesday, May 16, 2018

Some Of Us Are Wishing For a Bubble

This is crazy, but I've heard more homeowners and renters wish for a bubble lately. Yes, even homeowners. (Note: these are the same folks who bought in the crash and will do it again every time--I know I would).

When things crashed, there were many jumping ship, and just as many were clamoring to scoop up one, two or more properties. It sounds like crazy speculation but really, it's logic. These same properties at the crash were selling for crazy low prices such as $200-400k. Previously they sold for double those numbers. When you know that demand for these homes were there at double the price, why wouldn't you buy that property when it's half the price?

That's the past, and with no real bubble in sight for the next 2-3 years, prices are high. Some say it's unsustainably high, but that's all relative. Our friends in NY and London and SF are laughing at LA prices because they are so "low." In fact, folks from these cities are buying a second home in LA.

So what hope is there when inventory is low and prices are high and you want an investment property or a first home because renting sucks?

Two things:

1. You have to take advantage of the still very low interest rates

2. You have to give up the fantasy of buying a 3+2 in Silverlake or a 2000sf loft in DTLA for $600k.

Hot areas that are half dumpy but cleaning up:

1. Frogtown
2. Atwater Village
3. Glassell Park
4. El Sereno
5. West Adams
6. Leimert Park
7. Lincoln Heights
8. Garvanza
9. Hermon

Areas that people say are hot but will probably take 10+ years to see ROI:

1. Boyle Heights
2. East LA
3. Inglewood
4. Compton
5. Cypress Park (Some parts)

Areas that are so hot, it's over:

1. Echo Park
2. Mt. Washington
3. Montecito Heights
4. Highland Park

Friday, May 11, 2018

Pocket Lease at Eastern Columbia

Beautiful 12th floor unit facing the glorious Orpheum Theater. Off market! $4200/mo. Nearly 1500sf! Viking Kitchen, Kelly Wearstler bathroom, chic+luxe DTLA living.

Sneak peek below:

Friday, May 4, 2018

AirBnB Causing High Rents?

More and more articles are coming out stating that AirBnB is contributing to the high rents. It's hard to say if this is true across the board, but there seems to be some merit it it. What it comes down to is that Landlords are laughing and renters are getting salt poured on wounds. Activists in LA and NY are taking measures to fight AirBnB.

According to the NY Times:

In Manhattan’s Hell’s Kitchen and Chelsea neighborhoods and the Midtown Business District, which accounted for about 11 percent of all Airbnb listings in New York City in 2016, average monthly rents increased by $398 between 2009 and 2016, of which $86, or 21.6 percent, was a result of Airbnb’s presence, the report said. In Greenpoint and Williamsburg in Brooklyn, the study said, rents went up 18.6 percent in those years because of Airbnb listings.
Airbnb makes it easy to rent apartments to tourists, taking units off the market for full-time residents, the report said.
“For years, New Yorkers have felt the burden of rents that go nowhere but up, and Airbnb is one reason why,” the city comptroller, Scott M. Stringer, said in an interview. “It’s just simply supply and demand. Fewer apartments to rent means higher prices, and that’s the Airbnb effect.”

According to the Wall Street Journal:

Researchers looked at rents and home prices in the 100 largest metro areas in the U.S. between 2012 and 2016. They found that a 10% increase in Airbnb listings leads to a 0.39% increase in rents and a 0.64% increase in house prices.
From the LA Times:
The rental crisis is real: Far too few units are available, and residential rents are far too high. Airbnb does contribute to the problem. Landlords remove rental units from the long-term market because they can make more money from short-term Airbnb rentals. Reduced supply, coupled with constant demand, means higher prices.
What really matters, however, is not whether Airbnb drives up rents — it's by how much. And the truth is that we don't know the magnitude of the problem, because it's been insufficiently studied.
Airbnb critics often cite a 2016 article in the Harvard Law and Policy Review that claims the service has caused rent increases approaching 3% in some Los Angeles neighborhoods.