From the San Fernando Valley to Coastal San Pedro, from Venice Beach to Highland Park, the Los Angeles real estate investment market offers something for every real estate investor!
Our Los Angeles real estate market trends report shows how property values and rental rates have climbed since the onset of the COVID pandemic in 2020. And with so much investor demand, the experts here at Gatsby Investment thought it would be helpful to provide an insider’s look at investing in real estate in Los Angeles.
We want to dive into individual neighborhoods to show you the best places to invest in Los Angeles real estate! And we want to share some of our best tips for investing in LA, based on our years of experience specializing in this market.
Here is everything you need to know about investing in real estate in Los Angeles.
Best Neighborhoods to Invest in Real Estate in Los Angeles
With so many diverse neighborhoods across LA, investors can tailor their real estate investment strategy around their goals. Your personal investment goals play a key role in determining which neighborhoods in Los Angeles are the best for real estate investing. Some areas command high rents, some offer affordable properties, and some are seeing exceptional appreciation.
Here are some of the best neighborhoods to invest in Los Angeles real estate, depending on your goals.
Downtown Los Angeles
- Median Two-Bedroom Rental Rate: $4,078
- Year-Over-Year Rate Change: 13%
- Median Sale Price: $642,500
- Year-Over-Year Price Change: 9.8%
Downtown LA provides comparatively high rental rates for comparatively low home prices. While $642,500 might seem high in some parts of the country, it’s a bargain in LA where the city-wide median home price is $955,000.
Despite the reasonable purchase price, Downtown LA commands high rents of over $4,000 (compared to a city-wide average of $3,295. With lots of older apartment buildings, Downtown LA is a prime candidate for multi-family renovation projects.
- Median Two-Bedroom Rental Rate: $2,200
- Year-Over-Year Rate Change: 19%
- Median Sale Price: $851,500
- Year-Over-Year Price Change: 8.5%
North Hollywood, commonly called NoHo, is situated between Burbank and Valley Glen in the San Fernando Valley. With close proximity to the Hollywood Burbank Airport and many of the largest film studios in Los Angeles, NoHo is a comfortable location for up-and-coming actors and performers. As housing in nearby neighborhoods like Hollywood and Studio City has become more expensive, we have seen increased demand for the Valley in general, and North Hollywood in particular.
With recent zoning law changes, NoHo is prime real estate for purchasing formerly single-family lots and building multi-family developments on them.
- Median Two-Bedroom Rental Rate: $3,450
- Year-Over-Year Rate Change: 23%
- Median Sale Price: $1,665,000
- Year-Over-Year Price Change: 26.1%
Silver Lake offers exceptional growth potential in both rental rates and long-term appreciation. This quintessential hipster LA neighborhood is full of vegan eateries, artisanal cafes, trendy music venues, and boutique shops.
With much of Silver Lake being developed in the early half of the 1900s, single-family renovation investment opportunities abound in this neighborhood.
- Median Two-Bedroom Rental Rate: $3,860
- Year-Over-Year Rate Change: 19%
- Median Sale Price: $1,425,000
- Year-Over-Year Price Change: 18.3%
Like Silver Lake, Mid-City combines rental income growth and solid appreciation. Sitting mostly between the 10 and Olympic, Mid-City is the ideal central location, with easy access to much of LA. Museum Mile and the Grove are nearby, you can get downtown in 10-15 minutes, and you can even be at the beach in 15-30 minutes, depending on traffic.
Being central and in high demand by locals and out-of-towners alike, Mid-City is an excellent market for multi-family rentals.
South Los Angeles (formerly South Central)
- Median Two-Bedroom Rental Rate: $2,195
- Year-Over-Year Rate Change: 12%
- Median Sale Price: $752,500
- Year-Over-Year Price Change: 29.2%
Property prices in South Los Angeles are far below the city-wide average, but South LA is becoming a more desirable area with each passing year. Labeled a “dangerous” neighborhood in the 1990s, South Los Angeles has seen heavy gentrification over the last 10-15 years and is now in high demand by renters and owners alike.
As with North Hollywood, South Los Angeles holds great opportunities for multi-family developments, which can help ease the housing crises by creating more units.
Tips for Investing in Real Estate in Los Angeles
Whichever neighborhood you choose to invest in, here are a few of our insider tips for investing in Los Angeles real estate.
Clarify Your Investment Goals
With so many options in LA real estate, it’s important to decide what you’re looking for from your investment. Do you want a quick return on investment? Are you looking for long-term appreciation? Would you prefer a low-value market that’s easier to access or a high-value market that can generate greater cash flow?
Add Value to Increase Rental Rates and Resale Prices
Adding value to real estate can be as simple as making cosmetic changes, or it can be as complex as completely demolishing to rebuild..
Currently, one of the best ways to add value to real estate in LA is to create additional living spaces. In 2021, Governor Newsom signed a new bill, allowing owners of single-family lots to add new dwelling units to their properties to accommodate a second household. And these accessory dwelling units (ADUs) are currently one of the best real estate investments in Los Angeles! You can convert the existing attic or garage space into an ADU or build one from scratch. Either way, you now have rental income from an entirely new unit for much less than the cost of buying a new property!
Pursue Off-Market Deals
When a property is listed for sale on the market, every homebuyer and investor watching the market knows about it. And that means you have lots of competition and less negotiating power. But when you can find deals before they reach the market, you gain a competitive advantage.
The downside is that it takes a lot of time and legwork to find these deals. Here are a few ideas to help you find off-market properties whose owners might be willing to sell.
- Couples who have recently filed for divorce may be looking for a quick sale.
- Property owners who have recently filed for bankruptcy might be looking to liquidate assets.
- Owners of property with deferred maintenance might prefer to sell rather than renovate.
- Absentee owners might be tired of managing the property from far away and might prefer to cash in on their equity.
Watch for Foreclosures
When property owners fail to make payments on their financial obligations (like their mortgage and property taxes), they can lose the property to their creditors. In most cases, the creditor has no interest in holding the property and is willing to sell for a price below market value in exchange for a quick closing.
Foreclosure investing comes with a few more risks than traditional real estate investing. But for many investors, the potential upside of getting a property below market value is well worth it!
It’s tempting to use top-of-the-line fixtures and finishes when remodeling your investment property in Los Angeles. After all, Angelinos can have discerning taste and may be willing to pay more to live in a space that will impress their friends.
But in many neighborhoods, renters are already spending as much as 50% of their paycheck on rent. And they aren’t in a position to pay more to help you recover your renovation costs. You’ll have a better ROI if you focus on what’s most important to renters in your area and stick with cost-effective materials in areas that are less important.
Pay Attention to Local Ordinances and Laws
Before purchasing a real estate investment in Los Angeles, review the local laws to make sure you understand what you can and cannot do as a property owner and landlord.
Short-term vacation rental investments, for example, are heavily regulated in Los Angeles. There are local ordinancesrequiring registration as a home-share property, limits on how many nights a property can be rented, and rules about how many people can stay on the property.
Consider Syndication to Reduce Your Upfront Investment Amount
If the Los Angeles real estate market forecast has convinced you of LA’s strong potential, but the high purchase prices are holding you back, consider real estate syndication. With real estate syndication, your investment capital is combined with funds from other investors to purchase a property that might otherwise be outside your reach.
Real estate syndication allows you to invest in Los Angeles real estate with a prestigious Los Angeles real estate investing firm for as little as $10,000!
Investing in Los Angeles Real Estate with Gatsby Investment
Based locally in Beverly Hills, Gatsby Investment is a premier real estate syndication firm, helping investors all over the world capitalize on the dynamic Los Angeles real estate market.
- Historical high returns, between 10% and 25%, annualized.
- A wide range of real estate investment types.
- Options for short-term investors and long-term investors.
- Access to valuable deals, some of which are found off-market for increased ROI potential.
- Professional project management from some of the most accomplished real estate experts in the market.
- Deal-by-deal control, so you can choose which specific properties you want to invest in.
- A secure, transparent ownership structure, in which you share in the ownership of the underlying real estate.
- A user-friendly online platform so you can choose your investments in just minutes and monitor their performance.
The best part is that Gatsby’s team does all the work for you. We scout neighborhoods to find the best market conditions in rapidly changing environments, then vet potential deals to find the property with the greatest potential. With our team of award-winning architects, builders, designers, and property managers, we can minimize risk and focus on maximizing returns.
All you need to do is create a free account, be verified as an accredited investor, and choose your investment(s)!
Investing in real estate in Los Angeles is a smart financial decision. And with Gatsby Investment, the LA market is more accessible than ever before!