Houston, TX · Member since 2016 · 3 posts · 0 votes
All,
I'm interested in understanding more about the apartment / multi-family investing landscape in the LA (Los Angeles) area. Without much diligence and using cap rates as a proxy, it looks to be pretty tough out there (~4%).
Would love the group's thoughts on the following:
What are some areas of the city that you find interesting?
How are you thinking about generating return given the high price environment? How are working creatively in order to get deals done?
What resources would you recommend to someone who is interested in learning more about the area and investing there
Dude, you are in Houston, TX which is a far better investment area. Why would you want to pay more money for a 4% ROI when you can pay less money and get 15-20% in TX with lower taxes?
@Ryan Aylward - The Los Angeles market is definitely heated up. What was once 5.5-6 caps in the outer cities of LA are now in the 4.0-5.25 range. If you are a cap buyer, then it can definitely be a turn off. However, a strong rental demand, healthy property value increases, supply lagging behind demand in the B & C property types, and continuous population growth can really make an LA commercial property a gem in someone's real estate portfolio.
Some of the areas I would find interesting are Eagle Rock and Highland Park. Those areas are corridor cities to established and massively growing cities.
@Anthony Dooley - You're right, Texas is typically more attractive. The desire to learn more about LA is due to that fact that I may be looking to live there in the long term, so would like to get acquainted with the opportunities there. If there are places to look locally first, that's usually my preference
@Joe Hughis - Thanks for the note. Will definitely keep those on my radar! Appreciate the tip
I feel that LA is better for appreciation, and Tx (and Florida, where I am) are better for cap rates.
I do lots of 1031's with LA & San Francisco owners, buying Florida property. Most of the California investors I work with rent their primary residences, and own Florida multifamily.
@Ryan Aylward "live where you want to live but invest where the numbers make sense"--Robert Helms
One of my favorite quotes of all time. With that said, move to LA. Just don't invest here. There is an exodus of investor money from CA to Midwest and South. I've just closed on two in Chicago-area. Why take 4% cap rates in CA when you can make 9-12% caps elsewhere (TN, IL, AL, OH) with 20-25% CoC?
There are hardly any opportunities here right now and the people that are finding them are few and far between. Granted, if you're moving down here in say 5 years, the landscape will be much different.
Why not? Appreciation. If you don't have more bucks to play, stay in cheap areas. Obviously these are the reasons why I don't invest, the money is too slow, but I see appreciation is much more money in the long run than any cap anywhere. It will have it, the question is can you guess the optimum time to sell, AND, do you have the funds to hold til then no matter what the roller coaster takes you.