Tag: Investing

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Steven Taylor Explores the Future Trends of Los Angeles Real Estate in 2024

Los Angeles has long been a magnet for real estate investors and homebuyers alike, thanks to its booming economy, diverse culture, and pleasant climate. As Steven Taylor steps into the year 2024, the Los Angeles real estate market continues to evolve, shaped by various factors such as economic dynamics, urban development, and changing consumer preferences. In this article, we will delve into the future trends of Los Angeles real estate in 2024, providing insights for both investors and prospective homeowners.

Rising Property Values

One of the most prominent trends expected to continue in 2024 is the steady rise in property values across Los Angeles. Historically, this city has experienced consistent appreciation in real estate prices, and this trend is unlikely to change. Factors such as limited land availability, high demand for housing, and a growing population contribute to the continuous growth in property values. However, it’s important to note that while property values are rising, it may also lead to affordability challenges for first-time buyers.

Luxury Real Estate Boom

The luxury real estate market in Los Angeles is expected to see a significant surge in 2024. With Hollywood’s entertainment industry, tech executives, and foreign investors flocking to the city, demand for high-end properties is on the rise. Neighborhoods like Beverly Hills, Bel Air, and Malibu will continue to attract elite buyers seeking upscale residences and premium amenities.

Suburban Resurgence

While the urban lifestyle remains appealing to many, there is a growing trend of people seeking a more suburban or even rural living experience. The COVID-19 pandemic accelerated this trend, as remote work became more prevalent. In 2024, expect to see increased interest in suburban areas surrounding Los Angeles, such as Pasadena, Glendale, and Calabasas. These neighborhoods offer more space, larger homes, and a quieter environment, making them attractive to families and remote workers.

Sustainable Living and Green Developments

Los Angeles is known for its commitment to sustainability, and this trend will continue to impact the real estate market in 2024. Homebuyers and investors are increasingly looking for eco-friendly and energy-efficient properties. Developers are responding by incorporating green technologies, such as solar panels, smart home systems, and eco-conscious construction materials, into new developments. Areas like Santa Monica and Culver City are at the forefront of green living initiatives.

Tech-Driven Real Estate

The influence of technology on real estate transactions is undeniable. In 2024, expect to see further integration of tech-driven solutions in the Los Angeles real estate market. Virtual tours, augmented reality experiences, and blockchain-based transactions are becoming more common. Real estate agents and brokers will continue to leverage digital tools to enhance the buying and selling process, making it more convenient and efficient for clients.

Mixed-Use Developments

Mixed-use developments are gaining popularity in Los Angeles, and this trend is set to expand in 2024. These projects combine residential, commercial, and recreational spaces within a single development, creating vibrant, walkable communities. Areas like Downtown Los Angeles and the Arts District are prime examples of where mixed-use developments are thriving, attracting both residents and businesses.

Short-Term Rentals

The short-term rental market, including platforms like Airbnb, continues to be a hot topic in the Los Angeles real estate scene. While there have been regulatory challenges, some neighborhoods have embraced short-term rentals, and investors are capitalizing on the demand from tourists and business travelers. However, potential investors should be aware of local regulations and restrictions in this space.

Infrastructure Investments

Investments in transportation and infrastructure are poised to impact the real estate market in Los Angeles. The expansion of public transportation networks, such as the Metro Rail system, can increase property values in areas with easy access to transit hubs. Proximity to transportation options will remain a significant selling point for residential and commercial properties.

Waiting for 2024

As we look ahead to 2024, the Los Angeles real estate market presents a landscape of opportunities and challenges. Property values continue to rise, luxury real estate thrives, and suburban areas gain popularity. Sustainable and tech-driven developments are on the rise, and mixed-use projects are reshaping neighborhoods. The short-term rental market and infrastructure investments further add to the dynamics of the market.

For investors, staying informed about these trends and conducting thorough market research is essential for making sound investment decisions. For prospective homeowners, understanding these trends can help in finding the perfect property that aligns with their lifestyle and long-term goals. As Los Angeles continues to evolve, its real estate market remains dynamic, offering something for everyone in 2024 and beyond.

Originally published at https://www.reddit.com/user/StevenTaylorLA on January 10, 2024.

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Steven Taylor’s Guide to Investing in Multi-Unit Real Estate in Los Angeles

Steven Taylor LA

Multi-unit properties have always been popular areas of investment in the burgeoning real estate market that is Los Angeles. In this field, representative native investors include Steven Taylor. In this article, seasoned investor Steven Taylor explains the ins and outs of investing in multi-unit real estate in Los Angeles.

1. Knowing Your Way Around the Los Angeles Real Estate Market

Los Angeles, famous for its lively land market, has special properties and players in the game. Its disparate population and constant growth, then, means that the city is a rich field in which to invest. Multi-unit properties such as apartment blocks are particularly attractive propositions for investors. Being familiar with market trends, socio-demographic shifts and economic factors is another key role of an investor.

2. The Appeal of Multi-Unit Properties

There are quite a few advantages to investing in multi-unit properties in Los Angeles. These properties, which include duplexes, triplexes and bigger apartment complexes offer an opportunity to earn more rent and are scalable. They also serve as a shield against market variations, because the risk becomes spread across several units. In addition, owning a multi-unit property can bring considerable tax advantages and room for increased value.

3. Location, Location, Location

It’s location, location in real estate. Steven Taylor stresses that one must select the right neighborhood to invest in multi-unit properties. Proximity to amenities, public transportation and employment centers are factors of great importance for attracting tenants. Los Angeles neighborhoods like downtown, Santa Monica and West Hollywood — all examples of strong rental markets — are popular with investors.

4. Financial Considerations and Funding

Finance management is an important part of real estate investing. Knowing prices-not only the purchase price but also renovation expenses, property taxes and maintenance costs is important. According to Steven Taylor, people who want to invest should have a financing plan in place. They could consider mortgages or real estate investment trusts (REITs), for example, alternatively they may choose some form of joint venture with others. Moreover, monitoring interest rates in this way and taking advantage of the power of compounding can greatly enhance an investment’s returns.

5. The Importance of Due Diligence

Before buying a multi-unit property, due diligence is very important. It involves appraisal of the property’s condition, researching zoning regulations and calculating possible rental revenue. In order to avoid being saddled with costly repairs and legal problems in the future, Steven Taylor emphasizes that a thorough property inspection is imperative.

6. Property Management Strategies

Property management is the most important factor in a multi-unit real estate investment. This means screening tenants, routine maintenance and timely response to tenant complaints. Hiring a professional property management company can be a wise decision for many investors, and in particular when they own more than one or are not local.

7. Navigating Challenges and Risks

But purchasing multi-unit real estate in Los Angeles like any investment is not without its challenges and risks. Some of the hurdles include market volatility, tenant problems and changes in regulation. investor Steven Taylor urges investors to keep their eyes open and be flexible, with contingency plans in case things don’t turn out as hoped.

8. The Long-Term Perspective

Multi-unit real estate is by its nature a long investment. With a long history of steady growth, the Los Angeles real estate market has excellent potential for long-term yields. According to Steven Taylor, investors should not just be thinking in terms of making profits now; instead, they need to pave the way for a long-term profitable investment portfolio.

9. Giving Back to the Community

Steven Taylor says that investing in real estate is not only about the money, but also giving back to society. Investors having a positive impact If investors provide quality housing, engage in sustainable practices and support local businesses then the neighborhoods they invest in will be both improved.

It takes a combination of market savvy, financial abilities and bold planning to invest in Los Angeles’ multi-unit properties. Learning from the steps and tricks of successful investors like Steven Taylor, those willing to take a risk can grasp the nuances; they may even become investor kings themselves. If investors focus on three main points — location, financial planning and effective property management — their own real estate businesses in Los Angeles can be made into worthwhile ventures.

Originally published at https://www.reddit.com/user/StevenTaylorLA on December 21, 2023.

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Navigating the Commercial Real Estate Market in Los Angeles: A Comprehensive Guide — Steven Taylor

Steven Taylor Los Angeles Real Estate
Steven Taylor Los Angeles Real Estate

Los Angeles, a thriving hub for commerce, innovation, and cultural diversity, presents a myriad of enticing opportunities for commercial real estate investors. Commercial real estate in Los Angeles is as multifaceted as the city itself, ranging from retail spaces and office buildings to industrial properties and multifamily apartments. However, investing in this high-potential market requires careful strategizing and in-depth knowledge. This article offers comprehensive insights into purchasing commercial real estate in Los Angeles.

Understanding the Los Angeles Commercial Real Estate Market

Investing in the Los Angeles commercial real estate market means becoming a part of one of the world’s largest and most dynamic economies. Los Angeles is home to numerous Fortune 500 companies and budding startups, making it a prime location for office spaces. In addition, the city’s vibrant tourism industry bolsters demand for retail and hospitality properties. Finally, Los Angeles’s vast population and continuous growth make multifamily properties a promising investment.

However, the L.A. market also presents unique challenges. The city is known for its high property prices and competition, as well as complex zoning laws. Understanding the market dynamics and legal landscape is crucial for investors planning to venture into Los Angeles’s commercial real estate scene.

Strategizing Your Investment

Firstly, investors must define their investment strategy. This involves deciding on the property type – office, retail, industrial, multifamily, or a mix. Each type has unique risks, rewards, and management requirements. For instance, multifamily properties often offer a more stable income but may require more hands-on management compared to office buildings.

Next, location is key. Los Angeles is composed of numerous distinct neighborhoods, each with its own economic characteristics and market trends. Downtown L.A., for example, is a bustling business hub with high demand for office spaces. On the other hand, neighborhoods like Hollywood and Beverly Hills offer lucrative opportunities for retail and hospitality investments due to high tourist traffic.

Investors should also consider the potential for property appreciation. Some areas of Los Angeles, such as the Silicon Beach region, are experiencing rapid growth and gentrification, which could lead to significant property value increases.

Understanding Legal and Financial Considerations

Before buying commercial real estate in Los Angeles, investors need to familiarize themselves with local zoning laws and building regulations. Los Angeles’s zoning code dictates what types of businesses can operate in different areas of the city and impacts property value. Consulting with a real estate attorney can help navigate these complex regulations.

Furthermore, financing is a critical component of commercial real estate investment. Most investors rely on commercial real estate loans, which differ significantly from residential mortgages. These loans typically have shorter terms, higher interest rates, and require a substantial down payment.

In Los Angeles, property taxes are also a significant consideration. The tax rate is applied to the assessed value of the property, which may increase annually based on inflation and improvements. Understanding these costs is crucial in calculating the potential return on investment.

Working with Real Estate Professionals

Engaging with experienced real estate professionals can be highly beneficial in the L.A. commercial real estate market. Brokers and agents with local expertise can provide invaluable insights into market trends and identify promising investment opportunities.

Similarly, property managers can handle the day-to-day operations of the property, including rent collection, maintenance, and tenant relations. Their services can be particularly valuable for out-of-town investors or those with multiple properties.

The Importance of Due Diligence

Due diligence is a critical phase in any commercial real estate transaction. It entails thoroughly investigating a property before the final purchase to uncover any potential issues or liabilities that could impact its value or profitability. In Los Angeles, the due diligence process may involve:

  1. Property Inspection: This includes a physical inspection of the building to identify any structural issues or needed repairs. It should also involve an assessment of key systems like plumbing, electrical, HVAC, etc.
  2. Environmental Assessment: Given California’s strict environmental regulations, a Phase I Environmental Site Assessment (ESA) is generally recommended. This assessment identifies potential or existing environmental contamination liabilities.
  3. Title Search: This ensures the property is free from liens or encumbrances that could affect ownership. In Los Angeles, title issues can be particularly complex due to the city’s age and rapid development.
  4. Lease Analysis: If the property is already leased, carefully review the lease agreements to understand the terms and any obligations that will transfer to you as the new property owner. For instance, some leases may require the property owner to undertake certain property improvements or maintenance duties.

Post-Purchase Management and Growth

After purchasing a commercial property in Los Angeles, implementing effective property management strategies is crucial to maximize your returns. This can involve finding and retaining reliable tenants, maintaining the property to a high standard, and promptly addressing any issues or disputes that arise.

In addition, consider strategies for growth. This may involve making improvements to the property to increase its value, or raising rents in line with market trends. With the dynamic nature of the Los Angeles market, opportunities for growth are abundant if you keep a keen eye on market trends and tenant demands.

Commercial real estate can also provide tax advantages, including depreciation deductions and potential for capital gains tax reduction or deferral through mechanisms like the 1031 exchange.

Wrapping Up

Investing in commercial real estate in Los Angeles is not a decision to be taken lightly, but the potential rewards are significant. With its diverse economy, vibrant tourism industry, and continuous population growth, Los Angeles offers a variety of opportunities for the savvy investor.

However, succeeding in the L.A. commercial real estate market requires an in-depth understanding of the local market, clear investment strategy, comprehensive due diligence, and effective post-purchase management. By applying these strategies and leveraging the expertise of real estate professionals, investors can unlock the true potential of the Los Angeles commercial real estate market.

Remember, real estate is a long-term investment, and patience often yields the most rewarding results.

Originally published here.

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Interview with Steven Taylor, Los Angeles Real Estate Specialist

Though residential real estate may not change quite as dramatically as runway fashions, it nonetheless has cycles and can quickly transform based upon sudden market variations. Navigating these unstable conditions takes knowledge, attention to detail, and not a little intrepidity.

Steven Taylor Los Angeles
Steven Taylor Los Angeles

Numerous factors, from overall economic health to population spatial patterns and demographics to available property characteristics, make for a complex mix that any would-be developers must be willing to handle. The rewards can be significant, both personally and financially. However, failures can be equally dramatic.

Some nonetheless plunge into this uncertain environment, like real estate developers and landlords, working to flip as well as refurbish properties for profit. Not all succeed, but those who do find much wealth in this industry. There is no one road that leads to a successful career as a real estate developer and property owner and landlord. Some industry experience or related knowledge is common, but if property development is your passion, this field is open to those willing to work hard and take chances.

Steven Taylor is one of those who has found great success in this volatile field. A successful and experienced property investor and landlord in the Southern California market, Mr. Taylor has been named as one of the region’s “30 under 30” real estate moguls. He has handled more than $500 million in property transactions and is a Principal at NEME Capitol. He also is the founder of Taylor Equities, a family company that purchases multi-dwelling structures such as apartment buildings.

He knows the real estate industry inside and out and stays current on up-to-the-minute conditions and changes. Such work can be all-consuming, but Mr. Taylor has found a way to keep his real estate work growing even as he concentrates on more personal matters and passions closer to home.

We wanted to learn even more about Steven Taylor Los Angeles real estate specialist, so we were able to ask him a few questions recently. Please see the great responses below:

What was it that inspired you to become a landlord?

The concept of passive income has always been attractive to me. My goal has been and continues to be to create a sufficient passive income on a monthly basis that will support me and my family. Also, one of the benefits of being a Landlord is that you to develop and reposition assets in emerging markets which is always fun.

You have been redeveloping apartments for a long time, how has your business model changed over the years?

Yes, you need to evolve with the market and demands of your residents, but the fundamentals remain the same. Focus on location, appreciation and deprecation.

What do you find to be the most rewarding portions of your career?

Achieving Stabilization. Once a property hits stabilization, meaning that the business plan has worked and the property is performing and its generating positive returns, there is a great sense of accomplishment.

On the other hand, what has been the most challenging project of your career?

The bureaucratic and red tape of the city permitting and approval processes can be very challenging. The inconsistencies between building inspectors and field inspectors can be frustrating and exasperating. I have personally been in several situations where I obtain a permit from the city but then the field inspector wants something entirely different which can put a project on hold until resolved.

In your expert opinion, what do you find works best when it comes to keeping an income property turning a profit?

Managing the revenue side. In my opinion, on the expense side, there are a fairly large number of fixed operational expenses which sort of handle themselves, and the variable expenses can be managed with a good budget and a good team. However, the revenue can be tricky because you constantly need to assess your competition, but if high-occupancy is constantly maintained, the property should turn a profit.

What processes do you have in place that allow you to ensure a redevelopment is running efficiently?

Like most business, real estate ownership and management is all about having the right people in place. We have several systems in place to have real-time intel on property performances, so as weekly and monthly OPEX budgets, weekly and monthly vacancy details, snapshots of expense to income ratios of each property and so on.

I am sure some projects can become stressful quickly, how do you maintain your composure under pressure?

I love what I do. I am constantly thinking about how to improve my business and how to grow my business, but even more so, I believe in work life balance. I think that if you can manage to have balance in your life, then situations that can become stressful quickly can be compartmentalized and handled appropriately.

When you first inspect a property you are interested in, what are your main point of focus?

Typically, location is a top priority in conjunction with some basic metrics like cost per unit and cost per foot. Then I’ll assess the unit conditions and the conditions of the systems of the building so that I can accurate assess the costs associated with modernizing the building.

When it comes to advertising a property, what do you find to be the most effective method?

We use all the traditional advertising channels, such as online media marketing, banners, signs and flyers. Having a well thought out and easy to use leasing website is key.

As the real estate industry changes, what resources allow you to stay up-to-date on trends?

I live and breathe real estate and feel like I have my finger on the pulse, but I read all the local trades on a daily basis as well as national publications like the WSJ.

Millions of people, both women and men, seek a successful equilibrium of their work and home lives. Mr. Taylor seems to have found that balance, one that lets him achieve business goals of creating a steady passive income to support himself and his family as well as meet personal aims of working at something he loves and challenging himself daily. Finding such stable poise is not easy in any industry, but certainly in one as potentially risky as property development and ownership.

No single real estate deal is like any other. Each is unique and brings individual challenges. Even veteran developers must continue to learn and grow if they do not want to get left behind. Professionals such as Mr. Taylor must stay current on every aspect of property acquisition and development, from the cost of modernizing older structures to patterns of urban growth.

Once properties are found, funded, and in hand, developers must focus on planning and acquire all needed permissions, licenses, and permits to move forward with renovation and construction. Entrepreneurs dealing with real estate cannot overlook important details if they want projects to move forward in a timely way. Every day that schedules are not met means money out of the developer’s pocket.

As complicated as this industry sounds, there are particular ways that professionals handle real estate transactions. The bottom line is that successful landlords and property developers such as Mr. Taylor know the industry basics, quickly learn everything they need for each deal, and take care of all aspects to ensure each project is carried out on schedule. Perhaps the most important thing winning real estate developers with flourishing businesses do is carry over the knowledge they gain from each project into successive ventures. They build on top of the firm foundation they already have to create a new, solid enterprise that will last.

Originally published at https://realtybiznews.com on October 19, 2019.

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Steven Taylor Taylor Equities on 3 Different Ways of Investing in Apartment Complexes

Steven Taylor Taylor Equities on 3 Different Ways to Invest in Apartment Complexes
Steven Taylor Taylor Equities on 3 Different Ways of Investing in Apartment Complexes

Investing in multi-family units can be a fantastic way to add to your portfolio and earn passive income.  According to Steven Taylor Taylor Equities, there are many different ways to invest in apartment complexes. The strategy you use will depend on your desired level of involvement, your available capital, and other factors.

Here are 4 different ways of investing in apartment complexes:

1. Purchase units yourself.

The first way of investing in apartment complexes is the most simple – buy the building yourself. This would require extensive upfront capital. For many, this method might sound impossible. You would need to do extensive research and the responsibility of the deal would fall on you alone. In order to purchase multi-family units on your own, you would need to first save the proper amount of funds, and come up with a clear picture of your budget. Research the market and examine different deals. You may choose to take out a loan. This method requires you to later find property management and other decisions in regards to handling the property.

Purchasing on your own requires more work, but also has many benefits. As the sole owner, you get to choose your investment strategy, how you would like to run your property, and when you would like to sell.

2. Purchase with a partner. 

For many new real estate investors, it is easier to purchase for the first time with a partner. If you don’t have all of the funds you need to get started, partnering up with someone you trust can be a great way to pool capital. Another advantage of buying with a partner is that you can learn and grow in your strategy together. Having someone to discuss a deal with can be valuable. 

The negative aspect of purchasing with a partner is that you will not get to make decisions on your own. For this reason, I only recommend going into business with a partner if you are someone who can handle compromise. Before you get in too deep, make sure you are on the same page about your strategy, vision for the building, and what you are hoping to achieve. Document everything, and get anything important in writing. Working with the right partner can be a rewarding experience, but communication is key.

3. Purchase by Syndication

A syndication is a group pool of funds used to purchase a property, usually run by one person (the syndicator). In this case, the syndicator, or general partner, is running the investment. As an investor, or limited partner, you would be joining in to purchase a small stake of the property. Usually, general partners make decisions, run the property, and follow their own strategy. As a limited partner, you are a passive investor. But, you still collect a share of the profit when the property is sold. This option can be a good way to invest in apartment complexes without spending a lot of time or getting extensively involved.

There are many other ways to invest in apartment complexes, but these three options are some of the most common ways to get started. If you’re interested in learning more about how to invest in multi-family real estate, consult a professional or mentor like Steven Taylor Taylor Equities.

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Steven Taylor of Taylor Equities on Understanding Real Estate Investing

Steven Taylor of Taylor Equities with his wife Natalie
Steven Taylor of Taylor Equities with his wife Natalie

While it is technically possible to profit from a deal without thoroughly understanding real estate investing, those stories are often the exception to the rule. If you want to succeed at building wealth through real estate, it is vital that you do your research and build your knowledge of the industry first. Real estate investing can be a very profitable business, but only if you have a solid understanding of the market and do your diligence before purchasing properties.

Steven Taylor of Taylor Equities has compiled a checklist below of a few aspects of real estate that everyone should have a solid understanding of before entering the business. If any of these concepts seem foreign to you, you should consult with a mentor or expert before investing.

Learn how to evaluate potential properties.

The most important aspect of understanding real estate investing is knowing how to evaluate a property you are considering investing in. Before you enter the real estate industry, take the time to study evaluation techniques for acquiring buildings. As you build your investments, it will be important that you only add assets that contribute to the big-picture of your portfolio. There are many resources that can teach you how to inspect properties, research potential areas, consider neighborhoods, and integrate comparative market analyses with your plan. Ultimately, you will want to determine a property’s profit potential before buying in.

Understand the many ways in which you can profit.

Before investing in real estate, you should be aware of the different types of cash flow that come with real estate investing. The most common way to profit from a real estate investment is known as flipping – owners fix up investment properties and then sell them at a higher price. But, there other factors to consider when looking at cash-flow, such as your annual income, taxes, tenants, and vacancies. To understand real estate investing, you must understand the plethora of ways that your cash flow could be affected.

Be aware of the reality of leverage.

For many new investors, purchasing a property without a down payment can sound very appealing. But, this real estate investment strategy can come with many risks. When an investor doesn’t have enough capital available to purchase a property outright, they may borrow money to acquire the asset. In some instances, investors can utilize financing as leverage in order to purchase a unit or building. It is extremely important that investors have a solid understanding of the risks that come with using leverage before taking on any debt.

Understand the many types of mortgages available.

To have a full understanding of real estate investing, you must understand the many different types of mortgages available. By taking the time to research the variety of mortgages on the market and the pro’s and con’s of each, you can secure your investment from the beginning. Take the time to shop for the best mortgage with the interest rates that will benefit you the most. Always be careful with mortgage deals that sound too good to be true – if there is zero down, and adjustable rate, or a deal that just sounds unrealistic, take a second look. There should never be a rush to invest in real estate. Take your time, and consider all of your options carefully.

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Steven Taylor of Taylor Equities – The role of a Real Estate Private Equity Firm

Steven Taylor Taylor Equities
Steven Taylor of Taylor Equities

According to Steven Taylor of Taylor, Equities a real estate private equity firm raises capital from investors. These investors are called Limited Partners. They then use the capital to obtain and develop real estate properties.  The firm can also be involved in operating, improving, and reselling the properties in order to see a return. Firms use an active management strategy and take a diversified approach to owning properties.

There are many different types of outside investors or Limited Partners. A few examples are insurance firms, high-net-worth individuals, pension funds, family offices, and endowments.

Real estate private equity firms most commonly focus on commercial properties such as offices, retail, industrial, multifamily, and other properties, although it is possible for a REPE firm to purchase residential buildings.

Who can participate in private equity real estate?

If you’re interested in getting involved in private equity, there are a few things to consider. Your ability to take part in investing in private equity real estate will be determined by the amount of money you have available to invest. A traditional private-equity fund requires partners to invest a minimum of $250,000. In general, firm managers prefer institutions and individuals who can contribute above $25 million in a long-term investment collective in combination with other investors. 

Individuals who are interested in getting involved in real estate private equity should examine their options of firms, and further their options of funds within that firm.

How do you examine a private equity fund’s investment structure?

To take part in most private equity funds, you must pay a number of fees for management and performance. Many REPE funds include annual fees in order to pay for legal services, data costs, firm salaries, deal sourcing, research, marketing, and other variable and fixed costs. If you are considering getting involved in private equity real estate, it is essential that you understand these fees before investing.

Most REPE managers also collect “carry.” A “carry” is a fee based on performance that is typically 20% of excess gross profits of the fund. 

Individuals should also examine what would happen in the case that they fail to meet a capital call. In some cases, a fund may force and individual or institution to default and forfeit their ownership shares.

What types of strategy does private equity real estate employ?

In PERE, there are a few main strategy types:

  1. Core PERE strategy: Core strategy is generally the most conservative strategy. This method sometimes only includes properties that offer low risk and therefore lower potential returns. These types of properties usually exist in popular and high traffic locations. Core strategy may focus on high-value properties that don’t require much development or upkeep.
  2. Core-plus strategy: Core plus strategy requires more of a gamble, but can also offer a higher ROI than a core method strategy. These properties usually require more modest amounts of upgrades and improvements.
  3. Value added strategy: Value added is a moderate risk method with a medium-to-high-return. This approach is more focused on property development and working the market. Managers often purchase properties, redevelopment them for improvement, and then resell at the right time with added value.
  4. Opportunistic strategy: An opportunistic strategy returns the highest amount but assumes the most risk. Managers usually purchase properties that involve undeveloped land, or properties that are in markets with low traffic that typically don’t perform well. – Steven Taylor, Taylor Equities
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Steven Taylor of Taylor Equities – Red Flags to Look Out for When Buying Commercial Real Estate

Steven Taylor of Taylor Equities Commercial Property picture

All real estate investment comes with risk, but commercial real estate in particular requires that liquid assets be readily available. As an investor, it is essential that you are careful about the properties you invest in – you don’t want all of your capital tied up in a building with a high risk of failure. If you are diligent about research and observant in your showings, you can pick up on red flags that could keep you from getting involved in a bad deal.

But how do you know when a commercial property is a major risk? If you look out for these warning signs, you can avoid signing a deal for a property that won’t serve your goals.

Red Flags to Look Out for When Buying Commercial Real Estate

The neighborhood is going down hill

It can sometimes be difficult to tell the difference between an area that is on it’s way up and one that is going downhill. Low value can be an opportunity to get in before prices skyrocket. But this only works if the surrounding area is growing steadily, experiencing job growth, and bringing in new people.

If a neighborhood is on the decline, with businesses closing and residents moving out, think twice. The best way to assess the status of an area is to spend time in the neighborhood and talk to local business owners and residents directly. While the goal is to acquire a commercial property in a booming area, accidentally purchasing a building in a declining part of town can be a major loss.

The property needs major repairs to be usable

It is common for real estate investors to purchase properties that need fixing up or redevelopment. There is a difference between adding value to a property by improving its appearance or conditions and needing a complete overhaul. Some repairs will be more expensive than you imagined and could take your deal south. Take the time to research what repairs or improvements will cost you before you purchase a money pit.

            Here are just a few signs I look out for:

  1. Low ceilings: Many users of commercial spaces require high ceilings for their business to function. It is essential that you ensure your ceilings fits the needs of those you are hoping to rent it to, without major construction.
  2. Damaged roof: Repairing the roof of a commercial building is much more costly than a single-family home. Be on the look-out for leaks or damage.
  3. Cracks and settling: Walk through the interior and exterior of a commercial property to check for cracks or signs of settling in the walls or floor. If you find a large crack, it could be a flag for a larger issue.
  4. Environmental contamination: If you are purchasing a property in an industrial area, there is always a chance that you will find contamination. Environmental contamination can affect your property and cost you. Watch out for chemicals and items that are stored improperly and may be damaging to the living conditions.

The numbers don’t add up

You can’t always accept the value the seller tells you to be the truth. Evaluating a commercial property requires a lot of research and appraisal beyond the physical conditions. Assess financial projections. You don’t want to purchase a commercial property where rental vacancies are projected to increase in the coming years. Look at any documents such as loss/profit statements that you can get your hands on. Never trust the seller’s estimates.

As with any investment, purchasing commercial real estate is a gamble. While risk is always going to be part of buying a property, the goal is to acquire a profitable building. If you know what red flags to look out for when buying a commercial property, you can save significant energy, time, and money. – Steven Taylor of Taylor Equities

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What a First Time Landlord Needs to Know

What a First Time Landlord Needs to Know - Steven Taylor

Being a landlord can be a profitable and rewarding experience. As a landlord, you can build your wealth, utilize second properties you may already own, and run your own business. But, managing a property also requires extensive time and effort. Regardless if you are just leasing an extra property to a friend or family member, or running an entire apartment complex on your own, you need to be prepared. If you’re a first time landlord, take the time to thoroughly research the industry and you will be set up for success.

Here are five tips that first time landlords should keep in mind before renting out a property.

1. Examine your rental price range.

If you’re like most first time landlords, you’ve likely invested substantially into your property. You are also likely going to be dependent on the income the rent generates monthly in order to keep up with the mortgage. While your instinct may be to raise rents to increase your profits, you must first consider the rental market of your region. If you live in a popular area, you may be facing strong competition. As a first time landlord, you’ll want to ensure that your building is enticing to potential renters, while also keeping your expenses in mind.

2. Set clear expectations with tenants.

This may sound obvious, but you must make collecting rent on time a priority. Your property is your business, and without your primary source of revenue – rent – it will fail.  Be clear about your expectations when your tenants move in so there isn’t any confusion on policy. Let your residents know the rental due date, as well as how many days the grace period is for payments that are late. If rent is paid beyond the grace period, it is important to enforce penalty payments. Be sure to screen all potential tenants before they move in. By checking their rental history, asking for references from past landlords, and running their credit, you can help ensure that you rent your units to responsible residents.

3. Prepare yourself for vacancies.

If you have loss-of-income insurance, you may be protected from vacancies during a disaster or other external damage to your property.  But if you have vacant units simply due to low demand or high rents, you’ll be out of luck. Always have money saved that can be used to pay the mortgage on your property during times without tenants. If this is a frequent issue, it may be time to consider lowering the rent.

4. Become a master at record-keeping.

Owning a rental property can be helpful when tax season comes around. But to enjoy the tax benefits that come with being a landlord, you will need to have detailed expense records in order to defend your write-offs. These records will benefit you in other arenas as well – when you know where your money is going, you can accurately assess how your business is doing. Keeping detailed records of the conditions of your property, including damages, alterations, and other changing wear and tear, will help you in the long run. The key is to create good record-keeping systems, whether you track expenses and notes on your own, or use and online tracking program.

5. As a First Time Landlord, get help when you need it.

If you are overwhelmed by the work required to be a landlord, you may want to consider hiring a property manager. A property manager can take many responsibilities off your plate. Many first time landlords hire a property manager as they grow their portfolio and begin renting multiple properties. You should consider the cut to your profits, but also consider the time and energy you will save. If you can afford a property manager, you may be able to focus your time on other streams of income or expanding. – Steven Taylor, Landlord in Los Angeles

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3 Uncertain Conditions that Impact a Landlord and Apartment Building Investments

Landlord Steven Taylor, Taylor Equities Apartment Photo
Landlord Steven Taylor, Taylor Equities Apartment Photo

Multi-family properties can be a great investment. But, if you’re considering being a landlord and investing in an apartment building, it is essential to first evaluate the local market. Some influences are fixed, but multi-family real estate is affected by many changing circumstances. These factors can evolve over time. Responsible investors need to be aware of the changing conditions that can impact their properties. Before buying an apartment building, build and understanding of the uncertain factors that can affect your investments.

Shifting Demographics

A changing population can significantly affect your investment. If you are a landlord, depending on income from renters, an increase or decrease in a population can easily influence your success. Age, income level, race, and gender can all be relevant factors to the profit of your investment. If an area is growing, the demand will grow as well and you are likely to see higher occupancy rates. If a circumstance or trend causes the population to migrate away from your building’s area, your property could sit vacantly. It is notably important to consider the factors that affect an area’s demographics before investing in a property.

Fluctuating Job Markets

The economic conditions of an area play a large role in decision making for multifamily investing. The health of the economy in an area will impact the demand for rental properties. If new jobs are created in a region, people will consequentially move to the area to fill those positions. Many new employees would often rather rent from a convenient and local multi-family property than buy their own home and commute to work.

A downturn in the economy can also affect a landlord’s apartment housing investment. When unemployment rises, homeowners often look for more affordable places to live, and many switch to renting an apartment. When the job market fluctuates, your investment could as well.

Landlord Changes in Access

It may seem obvious, but it is essential to pay close attention to the geographic location of your investment. In an era of climate change, our world is ever-changing, and the physical location is playing a more significant role than ever in housing choices. Renters want to live in a location with good weather, safe conditions, and access to the things they need. Before becoming a landlord and investing, look at the history of properties in the area. Have they been affected by any natural disasters? Do they experience an influx of population during certain seasons? Is the area becoming more or less convenient? Locations all have their strengths and weaknesses that will affect your real estate investment. Don’t skimp on the research. When purchasing a multi-family building, consider all the factors to make sure you are in the right place.

Steven Taylor, Taylor Equities properties

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