Those who own multiple homes and investment properties have some good news coming. With housing prices high and more or less remaining high (even with micro ups and downs), more people will remain renters. Many who have thought of buying will continue to rent longer. And more renters means more demand for rental housing. Landlords can expect to benefit from this.
A client of mine was planning on selling to buy a larger home. I ran some numbers and it turns out she would have pretty good cash flow on her current home since rents have gone up a lot in her neighborhood. And her property isn't under rent control laws. Her lender has increased her borrowing amount based on this potential income. She is now going to keep this property, rent it out, and buy her larger dream home. This is when real estate gets fun.
Showing posts with label investment properties. Show all posts
Showing posts with label investment properties. Show all posts
Sunday, March 24, 2019
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
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
Wednesday, February 7, 2018
The Art of Trading Up
A successful stock broker friend told me a long time ago that there's only one rule he lives by: "Buy low, sell high." It doesn't matter that you've bought low now and sold high a year from now, or 10 years from now, it only matters that you bought low and sold high.
This is also the key to real estate. If you do this, then you can really start to rake in that passive income.
But you can't just sell high and spend it all--you need to trade up. If you've made a killing on RE in the past 2-3 years like many of my clients did, nearly all of them ended up with either
1. Multiple properties
2. Multi-family properties
3. A wow factor trade up single family home
The ones that traded up to a larger pad in a better neighborhood will still make a killing because their neighborhood keeps getting better.
The ones that doubled their property portfolio or added multi-plexes into the mix, are now happily collecting passive income that increases every year (not to mention their prop values keep going up due to the LA housing market demand) They've basically turned their first profits into cash cows.
Congratulations to all my wonderful clients who are positioning themselves to retire a little earlier!
This is also the key to real estate. If you do this, then you can really start to rake in that passive income.
But you can't just sell high and spend it all--you need to trade up. If you've made a killing on RE in the past 2-3 years like many of my clients did, nearly all of them ended up with either
1. Multiple properties
2. Multi-family properties
3. A wow factor trade up single family home
The ones that traded up to a larger pad in a better neighborhood will still make a killing because their neighborhood keeps getting better.
The ones that doubled their property portfolio or added multi-plexes into the mix, are now happily collecting passive income that increases every year (not to mention their prop values keep going up due to the LA housing market demand) They've basically turned their first profits into cash cows.
Congratulations to all my wonderful clients who are positioning themselves to retire a little earlier!
Friday, October 20, 2017
Landlords in DTLA - Rental Market is Evolving
A while back I had "predicted" that the rental market in downtown will see a softening. This is true. It just took a little observation to come to this conclusion. Tons of new rental-only buildings coming on the market in downtown. So it's only natural that the those of us with rental units are going to have competition. And yes, this is causing the units to sit longer and in some cases, cut prices.
The gist is this: If you are a condo owner in a newer building (meaning not a historic building), then chances are you're going to have to do better to get your place rented. Do some light remodeling and updating. Put in a kitchen island. Freshly paint the walls. Put in nice window treatments. Do something, because the new stock on the market such as Oakwood, 8th and Grand, Windsor, Atelier, G12, etc, are newer and flashier. I know for a fact that just a little tweaking and your condo is just as marketable as any of the new stuff.
Rentals in historic condo buildings (e.g. Rowan, Eastern Columbia, Barker Block, Biscuit Lofts, Toy Factory) are steady, simply because there are so few historic rental buildings in general. What exists is what exists, unless we get some more conversions.
The gist is this: If you are a condo owner in a newer building (meaning not a historic building), then chances are you're going to have to do better to get your place rented. Do some light remodeling and updating. Put in a kitchen island. Freshly paint the walls. Put in nice window treatments. Do something, because the new stock on the market such as Oakwood, 8th and Grand, Windsor, Atelier, G12, etc, are newer and flashier. I know for a fact that just a little tweaking and your condo is just as marketable as any of the new stuff.
Rentals in historic condo buildings (e.g. Rowan, Eastern Columbia, Barker Block, Biscuit Lofts, Toy Factory) are steady, simply because there are so few historic rental buildings in general. What exists is what exists, unless we get some more conversions.
Monday, January 11, 2016
DTLA: A Good Investment Or Not?
It sure seems like it is. Take for example, my client who bought in Little Tokyo in 2012. They were told by everyone they knew that they were crazy to buy when the market was still in the dumps. What they found out through me was that the condo they were interested in was going to be surrounding by a slew of new upscale development, so if they were investing, now was the time. Today, their condo has $220k in equity, is cashflow positive by $1200/mo, and rents out in about 2 weeks each time they put it on the market (because it's heavy on the student ratio, and students tend to leave every year, meaning the owners can charge market rental rates each time they have a new tenant since most of the properties in DTLA are NOT under rent control. Sweet investment).
Another client bought a loft in 2014, after living in a rental for 2 years and was getting sick of paying his absentee landlord increased rents every year. He wasn't thrilled that the market had gone up quite a bit when he bought his pad, but decided it was the lesser evil than continuing to pay his landlord. Today, his place has $100k in equity and he is paying himself, not a landlord.
A friend of mine from NYC just bought a DTLA investment pad in 2015, because she felt that she was only just now able to see some substantial investment in DTLA, making her confident about the area. Back in 2007 when everyone was buying like it was going extinct, she waited to see if there would be more growth in residents and necessary amenities to sustain residents, such as supermarkets and restaurants (smart girl). We low-balled and offered to pay for some piddly services such as termite, HOA docs, and Home Warranty, and she got the pad. It's now worth about $85k more than she bought it for.
It's 2016, and several buyer clients are looking for choice properties in DTLA--meaning large size, top floor, good views. Size will be a big deal in DTLA in the near future. What was once considered too small for a 1-bedroom is now considered huge. Nearly all of the new developers are chopping up the units, and the average 1-bedroom is now about 610sf, while back in 2007, the average 1-bedroom was 900sf.
When investing in DTLA, low price is always good, but you also need to look out for what will become the rare, coveted attribute in the long term because this is what will add further value.
Another client bought a loft in 2014, after living in a rental for 2 years and was getting sick of paying his absentee landlord increased rents every year. He wasn't thrilled that the market had gone up quite a bit when he bought his pad, but decided it was the lesser evil than continuing to pay his landlord. Today, his place has $100k in equity and he is paying himself, not a landlord.
A friend of mine from NYC just bought a DTLA investment pad in 2015, because she felt that she was only just now able to see some substantial investment in DTLA, making her confident about the area. Back in 2007 when everyone was buying like it was going extinct, she waited to see if there would be more growth in residents and necessary amenities to sustain residents, such as supermarkets and restaurants (smart girl). We low-balled and offered to pay for some piddly services such as termite, HOA docs, and Home Warranty, and she got the pad. It's now worth about $85k more than she bought it for.
It's 2016, and several buyer clients are looking for choice properties in DTLA--meaning large size, top floor, good views. Size will be a big deal in DTLA in the near future. What was once considered too small for a 1-bedroom is now considered huge. Nearly all of the new developers are chopping up the units, and the average 1-bedroom is now about 610sf, while back in 2007, the average 1-bedroom was 900sf.
When investing in DTLA, low price is always good, but you also need to look out for what will become the rare, coveted attribute in the long term because this is what will add further value.
Monday, July 6, 2015
Get an Art Deco Pied a Terre Before The May Co. Building is Completed - Eastern Columbia #202
The jewel of downtown, Eastern Columbia, has a new unit available for sale. #202 offers concrete floors, stainless steel kitchen appliances, bathroom designed by Kelly Wearstler. The building features a rooftop pool, front desk security, courtyard, gym. Price have been consistently rising with the recent addition of the Ace Hotel, Acne, Tanner Goods, Oak, Aesop, Om Nom Organics, Il Cafe, Urban Outfitters, APC, and soon to arrive just steps away is the revamped May Company Building (to be creative office space, retail, etc.), Clifton's, Big Gay Ice Cream, Case Hotel, Empire Hotel, and more. 1150sf, 1 parking space. Faces historic Broadway. Asking $790k.
Friday, June 12, 2015
DTLA is in the Top 5 Most Expensive Places to Rent in Los Angeles County
According to Zumper, DTLA has among the highest median rent prices for 1 bedrooms, even topping Beverly Hills and Bel Air. From highest average prices:
1. Santa Monica -$3160
2. Ocean Park - $2700
3. Venice - $2560
4. Marina de Rey - $2520
5. DTLA - $2410
Those looking into investment properties should be looking into DTLA. And did I mention no rent control as well?
1. Santa Monica -$3160
2. Ocean Park - $2700
3. Venice - $2560
4. Marina de Rey - $2520
5. DTLA - $2410
Those looking into investment properties should be looking into DTLA. And did I mention no rent control as well?
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