Investing In Real Estate In Los Angeles

Though it's seen much growth over the years so that early investors could reap the benefits of rising prices, the City of Angels is now crowded enough that the sprawl has spread to areas like Riverside and San Bernardino. To put it briefly, it can be tough, but it's certainly not impossible to succeed.

Real estate prices are still expected to bump up in the future; certain factors like rising populations, as well as certain building and use permits and restrictions, may mean that that supply is limited and property values may increase. So, for those who want and can afford to snap up real estate in LA, the time is now.

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And based on trends, potential investors may want to look into multi-family properties. With high and rising prices of homes, people in the area prefer to rent rather than buy, and investors can take advantage of having their property rented out for a good price.

But aside from residential properties, investors can also consider commercial or retail property. Certain growing communities in and around Los Angeles are very open to retail and restaurants opening in their areas, and it would be wise to take advantage of this.

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Fortunately, for those who can invest in real estate in LA, there are property tax limits in California, also known as the Proposition 13. This sets the state apart from others in that California property tax only increases at a maximum of 2 percent a year while property tax in other states increases yearly depending on the real estate value.

Proposition 13 aside, investors, especially those from out-of-state should do their due diligence about other taxes in California such as sales and income tax, as they're relatively higher than other states' and will have a significant impact on buying, building, and maintaining property in LA.

LA-based financial executive Bharti Jogia-Sattar has multiple areas of expertise ranging from financial and corporate management and real estate investment. Visit this LinkedIn page to learn more about her professional experience.

Financial Considerations Before Investing In Real Estate

Investing in real estate is by no means easy, even if it has a risk-reward profile that is relatively better than other investment types. Numerous factors must be considered before purchasing a property, namely, location, valuation, and current market trends. There are also financial considerations, such as the following:

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Financial situation

Before pursuing a real estate investment, an individual or organization’s income should be stable first. Picking up a mortgage or paying a sizeable down payment when there is still no financial security at present or in the near future is far from a wise decision. A real estate investment, or any investment, for that matter, should fit the investor’s current situation.

Financial goals

Real estate investments have low liquidity, therefore venturing into it with no clear purpose may lead to unfortunate, unexpected results, including financial distress. The purpose of the investment should be identified first, whether it is for self-use or to obtain profit out of it.

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Financing options

Outright cash payment in real estate purchases is rarely the chosen alternative in transactions. Multiple financing options provide the investor flexibility, the most commonly known are traditional financing through loans, and the subject-to method and seller-carry-back methods. These involve loans that come at a big cost, but leveraging strategies can be applied depending on what best fits the situation.

Bharti Jogia-Sattar is an independent finance and accounting consultant who had previously worked in various industries including real estate. Visit this website for more insights on the real estate industry.