| When determining what type of real
estate to pursue, potential investors should consider their areas
of interest and expertise, their monetary goals and the market they
will be operating in. Real estate investments are generally categorized
as keepers and flippers.
As the name indicates, properties you buy and intend to keep in
the long term are keepers. Such properties are held for income,
future appreciation value and/or tax benefits. While flippers are
those you buy with the intent to sell for a profit as soon as possible.
The price paid is much more critical when buying a flipper rather
than a keeper.
 Los
Angeles Single-family homes
Single-family homes were long considered a poor investment because
of their small income potential in relation to the price paid. In
terms of appreciation, however, these homes have increased in value
at a greater rate than any other type of real estate. Moreover,
single-family homes are the most liquid real property investments.
They can be sold or rented, and the equity earned can be used as
collateral for other loans. There is also a tremendous amount of
financing available for purchasers. When investing in a home for
resale, look for good floor plans, solid construction and appealing
architectural styles. It’s also important to buy in a familiar
area so you can manage the property yourself.
Buying prior to subdivision approval
A deposit on a home or condo that’s still being built can
be re-sold for a profit in many states. Before a housing project
is complete, buyers can make reservations on properties they intend
to buy. Until the subdivision or condo project has received their
final local and state approvals, the buyer holding the reservation
can back out of the purchase and regain their full deposit. Some
investors speculate these reservations by waiting until demand increases
and the properties sell out, then selling off their reservation
for a profit. The only downside would be losing the deposit.
Los Angeles Vacation homes
After their primary residence, many investors purchase a vacation
home for enjoyment and even future retirement purposes. The property
taxes and interest are tax deductible. The property can be rented
for profit in the off-season; and, owners can take depreciation
on the home if they live in it less than 14 days a year.
Los Angeles Condominiums
Compared to single-family properties, condos and planned unit developments
have the advantage of being relatively easy to rent. They also tend
to have less problems because the grounds and common areas are maintained
by a homeowner’s association. On the down side, condos tend
to appreciate slower than other properties and may have restrictive
covenants prohibiting rental of the unit.
 Fixer-Uppers…
Investors can often find great deals on properties in need of repair.
However, unless you are a contractor, it’s best to avoid anything
that requires major structural work. Consider the costs of making
cosmetic repairs, improvements and renovations against the potential
demand for the finished product. What seemed like a bargain when
you bought it may not turn a profit if it’s located in an
undesirable area – regardless of the work you put into it.
Apartments
Excellent financing is available for purchasers of smaller buildings
where the owner occupies one of the units. The other units in the
building provide cash flow from rent payments and those units can
be depreciated to lessen the owner’s tax liability. Smaller
buildings are also easier to sell than larger complexes. Disadvantages
to consider: maintenance and repair to do or pay someone else to
do; you give up the privacy of a single-family home to live on the
premises or you must constantly monitor the property. Problem tenants
and their difficulties are hard to avoid, even with an on-site manager.
<< Back to Investing in Los Angeles
Real Estate
We at Valerie Fitzgerald and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy. Should you have any questions, please feel free to email us at info@valeriefitzgerald.com or call us directly at 310-285-7515. If you or anyone you know is looking to buy or sell a home, please note that we can provide detailed information and access to:
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