Is East Hollywood a Good Place to Invest in Real Estate?
By Michelle Clardie on 12/14/2023.
Reviewed by Dan Gatsby.
East Hollywood is a classic Los Angeles neighborhood in the heart of the LA metro area. Still home to several smaller studios in the entertainment industry, East LA is also a thriving neighborhood for immigrant populations and a job hub for those in the medical field. But is East Hollywood a good place to invest in real estate? Or is the cooling buyer demand a warning sign for investors?
In this article, we’re taking a closer look at local market trends to see what opportunities exist for today’s real estate investors. We’ll help you decide if East Hollywood is a good place to invest in real estate.
Overview of East Hollywood, Los Angeles
Located between North Hoover Street and Western Avenue, East Hollywood spans from the 101 Freeway up to Hollywood Boulevard. Bordered by other exciting neighborhoods like Hollywood, Los Feliz, Silver Lake, and Central Los Angeles, Easy Hollywood is right in the middle of all the action.
A whopping 91% of locals rent their homes, while only 9% own. This rent culture can give investors an edge in the long-term rental market.
The population is a diverse mix of ages, races, and religions. You’ll find young professionals looking to be close to downtown and the financial district, aspiring actors who want to remain in the heart of Tinsel Town, and aging “lifers” who would never live anywhere else.
The median household income is on the low side, with the average East Hollywood household making just $49,000 per year (compared to the national average of $69,000).
East Hollywood Real Estate Market Highlights
Here is what you can expect from the East Hollywood housing market.
Good Rates of Appreciation. From October 2018 through October 2023, the median home price in East Hollywood increased by 32%. This is an average appreciation rate of 6.5% per year.
Strong Rental Rate Growth. The median rental rate for a one-bedroom in East Hollywood is currently $2,103, up 5% from this time last year. Two bedrooms are up 12% to $3,295. Three bedrooms are down1% to $4,424. And four-bedrooms are up an impressive 26% to $7,160.
East Hollywood Amenities
Much of East Hollywood is known as Little Armenia because this is where the Armenian immigrants settled in the 1920s. There is still a significant Armenian population in the area, but the area has become more culturally diverse with a growing percentage of Asian and Hispanic residents.
East Hollywood is home to several important institutions, including Los Angeles City College, the Cahuenga Branch of the Los Angeles Public Library, and the Children’s Hospital. In fact, there is an impressive medical district with Kaiser Permanente, Hollywood Presbyterian Medical Center, and the Children’s Hospital all clustered together. This district continues to provide employment opportunities for East Hollywood residents.
In addition to the many cafes, restaurants, bars, and boutiques, you’ll also find parks scattered throughout the area. Barnsdall Arts Park is a destination in itself.
Just to the West, you’ll find all the world-renowned attractions of Hollywood: The Walk of Fame, the Chinese Theatre, the Hollywood Bowl, and the Hollywood Forever Cemetary. Just to the North are more LA landmarks, like Griffith Park, the Griffith Observatory, and the Hollywood Sign.
With main thoroughfares like Sunset Boulevard and Santa Monica Boulevard running east to west, and the 101 running north and south, the entire metro area is accessible from East Hollywood. And, with three Metro Red Line stops in the neighborhood, it’s even easier to explore the rest of the city.
Real Estate Investment Opportunities in East Hollywood
The million-dollar average purchase prices and cooling demands have put some investors off the East Hollywood housing market. This means less competition for the investors who recognize the opportunities based on the rental rate gains!
Here are two investment strategies that are currently working exceptionally well in East Hollywood.
1. Co-Living Spaces
While one and two-bedroom rental units are seeing sustainable growth, rates on four-bedroom units jumped 26% this year!
Here’s why:
With the comparatively low household income and high rental rates in East Hollywood, renters are looking to bring in more roommates to split the rent. You could pay $2,103 to rent the average one-bedroom. Or you could pay $1,790 to share a four-bedroom apartment with three roommates (colloquially called “co-living” or “shared-living”).
Saving money makes co-living highly desirable for East Hollywood renters. And investors have a unique opportunity to meet this demand by investing in co-living developments. Co-living spaces are designed with multiple roommates in mind. All bedrooms in a unit are roughly the same size and come with private bathrooms, eliminating the need for roommates to argue over rooms, share bathrooms, or allocate rental splits based on unequal accommodations.
It’s easy to see why co-living spaces are in high demand among renters in areas where the rental rates are outpacing wage growth.
2. Affordable Housing
Given the considerable number of East Hollywood residents falling into the low-income bracket, investors have a prime opportunity to develop economical housing options for this underserved demographic.
By leveraging government-assisted initiatives such as Section 8 housing, investors can construct multi-family properties where tenants' rents are subsidized by the US Department of Housing and Urban Development (HUD). This arrangement allows eligible low-income renters to contribute only 30% of their housing and utility expenses, with the remaining 70% covered directly by the US government, ensuring investors receive a dependable market-rate rental income.
The Section 8 program has a rigorous qualification process and a years-long waitlist, which incentivizes participants to be model renters once they are placed in a unit. Section 8 tenants typically adhere to their lease agreements and make timely payments to maintain their eligibility. As an investor, you get the benefits of quick lease-ups, minimal turnover, and prompt rent collection, with a large portion of the rent reliably coming from the local HUD servicer.
Summary: Is East Hollywood a Good Place to Invest in Real Estate?
Based on the high demand for housing and the limited supply of affordable options, East Hollywood is a good place to invest in real estate, particularly if you can develop units that locals can afford.
Invest in East Hollywood Real Estate with Gatsby Investment
Gatsby Investment is a real estate investment company that specializes in maximizing return potential while minimizing risk for real estate investors. We offer crowdfunded deals, which allow you to passively invest in high-value, professionally managed deals. Based in Los Angeles, our team of real estate analysts are keyed into the conditions of local submarkets and know how to capitalize on economic trends.
We offer a wide range of real estate investment opportunities, including the co-living projects and affordable housing developments that are performing so well in East Hollywood.
