Investing in Homes

While the majority of home buyers choose to live in their houses, some owners see their purchase as purely an investment. Many buyers in Los Angeles do not have the time or patience to actually remodel a property that needs work, and investors who purchase houses to fix them up and resell them know that buyers are willing to pay a premium for homes that are “done.” There are a number of investors who specialize in taking older homes and fixing them up with spectacular kitchens and baths.

Then there are the investors that we affectionately call “flippers.” These buyers invest in unfinished houses in new housing developments with the intent to close the escrow and re-list the property as soon as construction is completed. In most cases, the price they paid to secure the house is far less than it will be worth when they finally re-sell.

In Los Angeles, with housing and land prices rising by the decade, there are also some buyers who purchase houses as a long-term investment and rent them out to cover their costs. Since many first-time buyers cannot afford L.A.’s staggering home prices, such properties are and will continue to provide excellent return for Westside investors. Also, many people in transition are more than willing to rent a smaller home as a temporary situation after a divorce or while looking to buy a more luxurious property.

Learn about 1031 Tax Deferred Exchanges, where you can Exchange now, pay later

The first rule of real estate—location, location, location—is, if possible, even more important for investors. Is the area expanding and becoming more of a hub for city residents? Are there signs of upgrading and enhanced amenities that will attract future buyers?

Of course, investments must also take into consideration factors such as appreciation, depreciation, income and operating expenses, and investors would be well advised to speak with an accountant or CPA to discuss the upside and downside to owning and managing rental property. Among other costs, owners normally have to pay a commission to lease out a home—a process that could take a few months.

For long term peace of mind with no regrets, investors should aggressively research property records and neighborhood information. If you don’t feel comfortable doing this yourself, Coco Clayman-Cook can assist you. If you have questions or you’re ready to start shopping for investment property, contact Coco@WestsideLifestyles.com or 310-278-6033.

Some areas of interest on my site for those interested in Selling in the Greater LA area: