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Updated almost 7 years ago, 01/21/2018
Gentrifying Neighborhoods in Los Angeles
Hi All!
I'm looking to identify my target location for my first real estate investment. I understand Los Angeles is a tough area to get started, but I believe I can find a way to make it happen. Before I do, I'm trying to understand the best location to make my first investment and I know gentrification is an important indicator to look at. Does anyone have any idea of some locations where gentrification is happening in Los Angeles?
Any thoughts or links to useful resources would be greatly appreciated.
Thanks
Thank you so much for the info and invite! Just requested to join on FB.
Originally posted by @Account Closed:
Hi @AJ
@AJ Spileundefined
I recommend avoiding the neighborhoods where gentrification has already started because the prices have already jumped, making it tough to cashflow. Look for the neighborhoods that will be next to change in a couple years. As I mentioned below, look at curbedla.com, urbanize LA, Los Angeles Business Journal and as much content as possible to gain an informational edge on where development will occur and that should be your next neighborhood to focus on. My fiance and I recently purchased a 4bd/2ba duplex near USC (Vermont Harbor area) for less than what it costs to purchase a standard SFR on Crenshaw. Also, look for pulled permits and transactions of larger multifamily properties in your target neighborhoods and you'll identify the larger investors. I've found that larger investors typically have an informational advantage or they have a project in mind.
We have a few flippers in the South Los Angeles area and as the elderly leave their homes and the local turnover increases, we're going to see more RE transactions and flips because these neighborhoods have homes that maintain a lot of character, they're still relatively affordable compared to the rest of LA, and the commute to DTLA is also really short (it takes us 15-30 minutes to get to DTLA depending on the traffic). Drive the neighborhoods and work your magic.
We also have a South LA BP meeting every month - our Facebook group (South Los Angeles Biggerpockets Meeting) has meeting updates and we also post the events on BP. Hope this helps!
Originally posted by @Account Closed:
Hi @AJ
@AJ Spileundefined
I recommend avoiding the neighborhoods where gentrification has already started because the prices have already jumped, making it tough to cashflow. Look for the neighborhoods that will be next to change in a couple years. As I mentioned below, look at curbedla.com, urbanize LA, Los Angeles Business Journal and as much content as possible to gain an informational edge on where development will occur and that should be your next neighborhood to focus on. My fiance and I recently purchased a 4bd/2ba duplex near USC (Vermont Harbor area) for less than what it costs to purchase a standard SFR on Crenshaw. Also, look for pulled permits and transactions of larger multifamily properties in your target neighborhoods and you'll identify the larger investors. I've found that larger investors typically have an informational advantage or they have a project in mind.
We have a few flippers in the South Los Angeles area and as the elderly leave their homes and the local turnover increases, we're going to see more RE transactions and flips because these neighborhoods have homes that maintain a lot of character, they're still relatively affordable compared to the rest of LA, and the commute to DTLA is also really short (it takes us 15-30 minutes to get to DTLA depending on the traffic). Drive the neighborhoods and work your magic.
We also have a South LA BP meeting every month - our Facebook group (South Los Angeles Biggerpockets Meeting) has meeting updates and we also post the events on BP. Hope this helps!
Hey Kysha,
Would you be able to share where you found the deal and cap rate / CoC returns?
I'm curious to see what other investors are finding - my partner and I are actively sourcing deals in the USC market.
Thanks!
I would also very much advocate for the View Park/Windsor Hills region. Have seen lots of appreciation on the SFR's there.
South LA along the expo line is a good bet- the light rail is a great alternative to sitting on the 10.
@Account Closed- I've been loving curbed LA- so much information...highly recommend it to anyone looking to learn more about the market in LA. They have sites for nearly every big city in the US as well.
@Account Closed I'm glad you're enjoying curbed LA! We just learned that an investor bought 7 multifamily properties along exposition to convert into USC housing. As great as USC housing is, I think there's also a lot of potential in the area to flip homes the area to also make them suitable for middle class families who work downtown. There are a lot of homes that are south of the 10 that are older and need some TLC. There are a lot of options in our area.
Hello Kyasha and others interested in these gentrifying areas. LA is very rent controlled and those areas you mention as well. How are you dealing with repairs while tenants are living in the propety and/or raising rents to make the cash flow after improvements? I would think expenses are high if yo have to pay for relocation. Are you able to work good numbers if the property is sold with full or high vacancies?
Thanks for your insight!
Kiki Helland good question . Much of L.A is rent controlled . I've heard of people doing "cash for keys" deals but I don't know how common that is.
I don't know about the legality of it either.
Also rent control does not apply to single family homes .
I've noticed some on the forum buying rentals in areas like East L.A too which doesn't have rent control .
Kysha McNeal that's interesting about the investor buying 7 buildings to turn into USC housing .
I knew a guy that owned several properties that he rented out to students right by USC.
I know he had some trouble with the city when he wanted to make some modifications to one of the buildings .
I graduated from USC, but haven't been back to campus for a while . The USC Village development sounds pretty awesome. I'm sure a lot of people will want to live near that even if they aren't students
For the homes you mention that could make good flips . What are you seeing as purchase prices and how much to rehab and what sale price ?
@Armand Farr We found the deal on the MLS - we paid $400k for a two- 2bed/1ba R3-zoned duplex and we're walking distance from the Coliseum. The market is hot for the USC housing locations, especially within the USC security boundaries.
@Kiki Helland LA has rent control which is applied to 2+ units and the property is built before a certain year (I think its 1974 but double check that). Rent Control is what has kept the property prices in the south LA area low but thanks to the rest of LA being overpriced and the aging population in South LA as well as other factors, there's been more gentrification occurring in areas such as Crenshaw District and West Adams. If you find a completely vacant 2+ unit property, you will pay a premium but you'll be able to set your rents at market rate. If you find a single family home, you're in luck because those do not fall under rent control and depending on the zoning, you can add additional units.
@Joseph M. You can pay rent control tenants to leave (cash for keys) and it is completely legal, however there are laws requiring that owners provide required documents to tenants before tenants trade their keys for cash but I suggest you seek legal advice. Shoot me a message if you need a contact. Cash for keys is common. You can also evict tenants but you must have just cause and depending on your reason for eviction, then there may be a relocation fee required.
You'll notice the areas that do not have rent control are extremely expensive compared to the rent control areas but even rent control locations go through their own rejuvenation process (Santa Monica, Pico-Union, etc).
The USC Village is great! There's quite a bit of development planned for 2018 - they've already started on the Honda Dealership on King, there's new affordable housing going up near McDonalds, the Soccer Stadium is coming together, there is a plan for new hotels going in across from the soccer stadium, and they're supposed to break ground for the George Lucas Museum next year (2018).
There a couple flippers in the South LA area and I'm most familiar with @shawn
@Shawn Wardundefined and his work. He flipped a beautiful craftsman styled home about 5 minutes away from our duplex and he has his story posted on Bigger Pockets along with pictures. If I remember correctly, he purchased the SFR property for around $400K, put in about $95K, sold at about $650k? Shawn, feel free to chime in (I'm sorry if I left anything out). Homes on the MLS in our area range from $350k to $600k depending on the condition, if it's flipped, the number of units, the lot square footage, zoning, vacancy, etc.
Hope this helps
Hi All!
Just registered on BP and found this thread, I would like to know what y'all think about buying in Boyle Heights (East Los Angeles), is this an up and coming in area since everyone is getting pushed out of downtown LA, Echo Park, etc.? Potential opportunity to purchase 2 houses and a studio apartment on one lot, these properties were built in the 1910's and remodeled in 1980's, they will need a lot of work (take it down to studs, electrical, plumbing...all of it). I was thinking I could tear them down and rebuild but the current owner stated if I tore them down I could only build two properties on the lot, LA changed zoning or some ordinance years ago, so I am thinking of just rehabbing them and keeping the 3 units. This area is rent controlled, these units have average to low rents (part of the reason the owner wants to sell, they have family living in one and the others have not had rent increase in years) and asking price is at top of the market. This property is not listed, it's a for sale by owner. I will likely have to pay to move renters out (ugh) or should I have the current owner move them out before I purchase?
Should I do it? Should I buy and hold or buy and flip? Or pass? Thank you in advance for all your feedback.
Originally posted by @Laura Ellinger:
Hi All!
Just registered on BP and found this thread, I would like to know what y'all think about buying in Boyle Heights (East Los Angeles), is this an up and coming in area since everyone is getting pushed out of downtown LA, Echo Park, etc.? Potential opportunity to purchase 2 houses and a studio apartment on one lot, these properties were built in the 1910's and remodeled in 1980's, they will need a lot of work (take it down to studs, electrical, plumbing...all of it). I was thinking I could tear them down and rebuild but the current owner stated if I tore them down I could only build two properties on the lot, LA changed zoning or some ordinance years ago, so I am thinking of just rehabbing them and keeping the 3 units. This area is rent controlled, these units have average to low rents (part of the reason the owner wants to sell, they have family living in one and the others have not had rent increase in years) and asking price is at top of the market. This property is not listed, it's a for sale by owner. I will likely have to pay to move renters out (ugh) or should I have the current owner move them out before I purchase?
Should I do it? Should I buy and hold or buy and flip? Or pass? Thank you in advance for all your feedback.
Check the San Fernando Valley areas such as Sylmar, Pacoima, San Fernando and surrounding areas. I’m a realtor in the valley. PM me if you’d like for me to send you some fixers
I am cash flowing in Gardena, not sure it will gentrify, but it has appreciated already and has potential to go up more with a halo effect of Rams Stadium etc. The place is less then 8 miles from Manhattan Beach pier. Still can find some C class cash flowing deals.
@David Gonzalez very true. I’v lived and grown up In the San Fernando Valley. I also currently have been living in the water center for the past nine years and I have seen the major changes not only within one or center but across the San Fernando Valley! There are still many areas in the valley that need some form of rehabilitation, particularly north eastern part of the valley. However I did not hear of the Amazon headquarters potentially looking at the rocketdyne Canoga location. From what I’ve been reading they are looking in the Pomona Fairplex area?
Anywho OP , checkout the Valley and PM if you want to talk more!
Originally posted by @David Gonzalez:
Although I don't see Amazon moving to la
Some other major company should totally do that if Amazon doesn't
Especially since I am long multiple properties in the area :)
Here's to hoping