Tag: Real Estate

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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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Steven Taylor’s Top 5 Most Expensive Neighborhoods in Los Angeles

As one of the world’s high-profile real estate brokers, Steven Taylor of LA, has been asked time and again where the world’s most expensive neighborhood is. While there are certainly a lot of rich neighborhoods all over the world, Steven Taylor only knows one place in the United States that has some of the richest neighborhoods in the world.  

And that place is Steven Taylor’s very own Los Angeles! 

Why is Los Angeles so Expensive? 

There are a lot of answers to this question, but to keep it simple, the reason why Los Angeles is so expensive is that the area is already well developed and it houses some of the biggest industries in the United States.  

The movie industry practically lives in Los Angeles and it is giving the city so much in taxes that Los Angeles is one of the wealthiest cities not just in the United States, but also in the world as well! In 2018 alone, Hollywood earned $69.9 billion. And it’s already 2021. 

Apart from the movie industry, there are also a lot of start-ups and technology companies that are also starting to move in and stay. Steven Taylor should know since most of his biggest clients are always involved in the technology sector. And in case we’ve forgotten, Silicon Valley is also close to Los Angeles.  

The success of Silicon Valley drove the price for real estate in Los Angeles because the CEOs and their staff started purchasing houses near Los Angeles, thus that event more than raises the standards of living in the area. 

The Top 5 Most Expensive Neighborhoods in Los Angeles 

So, without further ado, Steven Taylor introduces you to the 10 most expensive neighborhoods in Los Angeles. We’ll place useful information too, such as the exact price as of today, why it’s really expensive, and why it’s a neighborhood that one might want to live in someday if you ever hit the lottery! 

Beverly Park – $32.5 M 

A gated community in the Beverly Crest area of Los Angeles, Beverly Park is well-known for being the residential neighborhood for Hollywood’s biggest celebrities. Therefore, we can just imagine the exact amount of money that we need to have if we ever want to consider living in this neighborhood! 

Encinal Bluffs – $29.5 M 

A beachfront neighborhood in Western Malibu, just a little bit near the Ventura County line, Encinal Bluffs is one of the many secluded and tranquil claves that dart all over Los Angeles. And since the property itself is beachfront and is located in one of the wealthiest neighborhoods, it’s only natural that the price tag for Encinal Bluffs is at a cold and crisp $29.5 M.  

This is the ultimate neighborhood to live in if you’re looking to spend your past time enjoying summer late-night parties at the beach. 

Serra Retreat – $23.3 M 

Another gated community, Serra Retreat is located on the landslide of the Pacific Coast Highway, near Malibu Creek. Because of its location, Serra Retreat is a favorite among wealthy people who want to build their dream home near an area where there are trees, shrubs, and a wonderful view of the Pacific Ocean.  

With that hefty price tag, the Serra Retreat is one neighborhood that is set for people with a huge budget. But the natural scenery makes it worth the price. 

Holmby Hills – $27.2 M 

The neighborhood of Holmby Hills is just a few blocks east of UCLA and the Los Angeles Country Club. It is also one of the three areas that complete the Platinum Triangle, the other two being Beverly Hills and Bel Air.  

And because it is one of the Platinum Triangle, Holmby Hills sports massive estates that have 10,000+ square foot mansions. And these mansions are, of course, the stuff that we all love to dream about. We are talking about mansions like the Playboy Mansion, Carolwood Estate, and the Spelling Manor.  

Bel Air Estates – $18.5 M                                                                                                                                                        

Now, who wouldn’t recognize the classy neighborhood of Bel-Air? Made famous because of Will Smith’s comedy show, Bel Air Estates is the original Bel Air neighborhood just north of the UCLA campus. The Bel Air Estates has a nice entrance that is always guarded by patrols, day in and day out. The interior of the estate supposedly has backyard pools, terraced gardens, and tennis courts. 

A neighborhood comprised of mansions and large estates, it is truly a place where only royalty would want to live in. 

Originally published at https://steventaylorlandlord.com on October 19, 2021.

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Expert Steven Taylor of LA on How to Market Yourself as a Real Estate Agent

Expert Steven Taylor of LA on How to Market Yourself as a Real Estate Agent

In all my years as a real estate agent, probably the most important skill that you need to pick up is the ability to sell yourself as a real estate agent.  

It’s what separates the men from the boys, so to speak. You are ever only recognized as a professional real estate agent if people know you as someone who sells properties. As if selling real estate properties is easy in the first place! 

How to Market Yourself 

Marketing yourself to other people may sound intimidating, but I swear, it’s not as nerve-wracking as it once was. 

Back in the day, real estate marketers had to work on several different skills in order to get people to take notice of them. You have communication skills, negotiation skills, building contracts, and the works. You also need to know several people, such as contractors and the property owner who is commissioning you to sell their property. Today, most of those individuals are still important in building up your reputation, but thanks to technology, the ability to contact these people is now easier. 

I’m talking about social media and mobile phone technology. Nowadays, it’s easier to talk to people when you need to; all you need is their mobile number and you can make a call and get in touch with them. For social media, people have Facebook and Twitter accounts. The same can also be said with contractors and property owners, so if you’re unsure about a fact or information about a property you’re selling, you can easily get in touch with them. 

The Unique Ways to Market your Skills 

Marketing yourself can be easy if you know exactly what you are and where you’re good at. 

So for example, if you’re very good at presenting the property while in the property site itself, then you should take that advantage to use. People have different skillsets and your first job in order to market yourself properly is to determine what those skills are. 

Once you’re able to determine your skill set, then it’s time to get to work: 

  • Create unusual partnerships with local businesses – Local partnerships can actually do wonders for your real estate business. This type of partnership is perfect for getting prospective clients and for marketing your skills out in the open. While building local partnerships is one thing, getting partnerships with businesses that are not always approached by real estate agents could be a huge advantage for you. Why not take the time to approach these companies and ask them for a partnership? 
  • Holding a Contest – One of the best and easy ways to get people to know you is to hold or sponsor a contest. I know I did with the community in Los Angeles. After a contest or two, everyone in the community already knows my name. And the same can happen to you too if you take advantage of it. And it doesn’t have to be a big event; it can be anything, from a simple bingo night in the community or a local dinner in your community’s favorite restaurant. The possibilities are endless! 
  • Becoming a Storyteller – It may seem like a boring subject, but telling your story to an endless audience online is also something that you can consider in selling off your skills as a real estate agent. Simply create a blog post online and you can start writing about the things you did and the things that you’re going to achieve. Sure, you and your blog may not gain as much attention at first, but with a little perseverance and some luck, people should recognize you and your story! 

Continue on Improving Yourself 

The road to success is long and full of sacrifices and surprises. But don’t give up! Keep on dreaming and improving until you’ve reached your goals. If you need to improve as a real estate agent first, then you can join seminars and meetings. If you want to learn more on how to market yourself, then take your time and learn from the best.  

I surely didn’t become a successful real estate agent in just one night. I also had to work hard for whatever success I am enjoying right now. My advice for all aspiring real estate agents out there is to treat your successes and failures with respect. Learn from your mistakes and celebrate your victories, one at a time. But most importantly, be confident when talking about yourself and the property that you’re trying to sell. Only then will your buyer treat you with the same amount of respect that you are giving him. Steven Taylor, LA 

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Steven Taylor, LA investor, on Easy and Effective Real Estate Marketing Ideas

Steven Taylor LA Kobe Bryant Mural
Steven Taylor LA Kobe Bryant Mural
Steven Taylor LA Kobe Bryant Mural

Introduction

Steven Taylor is a LA area real estate professional and community leader who has completed over $500 million in transactions in the Southern California real estate market. Today, we are going to talk about how to market your real estate online.

In this day and age, gone were the days when you need to bring in a huge amount of capital just to market your property. Nowadays, you have Facebook, Twitter, Pinterest, and several other real estate websites that can assist newbie real estate brokers in marketing their real estate.

The only challenge here is that so many people are also doing it. How do you make your marketing campaign fresh and unique from the others?

Social Media Marketing

While the real estate market is still as huge as it ever was, with social media marketing, real estate brokers also need to develop their own style of marketing to get in new clients daily. Research from the National Association of Realtors shows that about 92% of buyers use the Internet to get information about real estate. Their research may include the property that they want to buy, the owner of the said property, and the asking price.

So if you don’t do your own marketing strategy, then you’d already lost your source of income even before you can start selling your property. Your potential buyers can just simply search for property and buy it themselves!

Setting Yourself on Social

As an experienced real estate professional, Steven Taylor, LA investor, makes sure that he has a strong social media presence not just with his potential clients, but also with people who are inquiring about the property he is selling. That should be your queue, right there.

Setting yourself up on social media should be very easy. Start with Facebook, Twitter, Pinterest, Instagram, and even Linkedin. Create your own profile, make sure you fill in all the necessary information, and don’t forget to put in a nice profile picture too.

If your profile is up, it’s time to fluff up your social media account. What Steven Taylor does is that he puts up pictures of the property that he is about to sell or is currently selling.

In your case, take some photos of the property that you’re selling and post them on Facebook or Instagram. If you’ve managed to gain a lot of followers and friends, they’ll immediately get notified. And with that in mind, you can start selling to your followers and page fans.  

But it doesn’t always have to be business. You can also pick some random shots of houses or just share amazing photos of mansions and four-story properties that you would like to market in the future. That way, you’ll gain more friends and followers for your social media page.

Social Sharing on Property Pages

Steven Taylor also makes sure to share his social media profiles to property pages that he visits on the Internet. What this does is that visitors on those property pages will click those social media buttons that were installed.

But they will only do that if they like how you sell the property.  Remember, we haven’t gotten to the part where you are actually selling your property, so just chill and relax.

For now, establish your social media presence first.

Creating a Killer Business Card

Even in this age of free information and data sharing, the need for an impressive business card is still a requirement for professional real estate brokers. If you want to save money, you can just find a really nice format for a business card online and then have yours printed out.

However, you can also invest money in it by seeking the services of a professional business card maker. Steven Taylor does this and he also updates his business cards when needed.

Make Yourself Easy to Contact

You may have the best business cards and you’ve already shared your social media profile and social sharing buttons on every property site you know, but if people can’t reach you when they do need your services, then all your marketing efforts have been in vain.

Make sure to do the following before you attempt to start marketing your services:

  • Update your mobile phone and office phone numbers on your business cards.
  • Keep your Facebook and Twitter profiles active
  • Always check your social media profiles for any inquiries coming from visitors
  • Always entertain questions, especially when it has something to do with the property that you’re selling.
  • When scheduling online calls, make sure that you’re ready for the call at least 5 minutes before the agreed hours.
  • Learn to plan ahead with your schedules.

Summary

Finally, don’t treat your customers differently. There are times when a real estate broker will prefer to talk to a richer client compared to someone who has a moderate budget only because he/she will get a bigger commission with the former.

Treat every customer with respect and they’ll also do the same for you. It’s how Steven Taylor does it and it’s how you should do it if you really want to become the best real estate agent!

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COVID-19 Impact on Los Angeles Real Estate

Steven Taylor Los Angeles Skyline at night
Steven Taylor Los Angeles Skyline at night

Los Angeles, known as the land of opportunities, is a paradise for real estate investors. As it is the second-largest city in the country that takes pride in its warm weather, diverse culture, and dynamic economy, it comes as no surprise that a number of people have included it in their list of best cities to move into. It remains eye-catching for prospective tenants who are searching for practicality in the so-called land of the rich and famous. With all of these in mind, the competition for real estate investments is certainly high—having a strategy that is aligned with the current pandemic situation is the key to making the right investment that can generate a great long-term return.

Like many other sectors that the COVID-19 pandemic has made an impact on, the real estate market in Los Angeles has also encountered various challenges that continue to exist today. Despite the continuous progress and developments in the business conditions for commercial real estate in Los Angeles over the years, it was not exempted from the domino effect of the pandemic. Delays and shortages in terms of project developments in the sales operation, costs estimates, and values and rates of return of existing real estate were those that had the greatest impact.

The recent survey conducted by NAIOP found that 86.6% of developers faced delays or shortages in construction supplies while some types of deal activities have doubled for office and retail properties over the last year. A decline in the leasing for existing development projects has already dropped by more than half while shortages of both construction supplies and workers were more severe than last year. Considering that the country is slowly adjusting to the post-pandemic era, they reported that all of these have remained unchanged since June 2020.

On the other hand, the recent real estate forecast in Los Angeles has shown signs that it is ready to bounce back in the market. Mastroeni (2021) reported that rental vacancies have increased by 2.5% which meant that rental rates are also down—but only by 0.4%. This may come as good news for real estate investors given the awareness that it may likely be a short-term impact. Given the remote working environment, rental vacancies were expected to rise but as L.A continues to be one of the fastest-growing cities, investors know that this will eventually decrease post-pandemic.

The Los Angeles metro area also stated that they are running on 2.2 months worth of housing inventory but it is important to point out that this is higher than the national average of 1.6 months. This simply means that despite the delays and declines in project developments, L.A can still thrive on its existing value chain while catching up on further investments. On top of that, the increase in the number of both single and multi-family housing permits can also reduce the inventory shortage in the future.

As unemployment rates are still high in Los Angeles—9.9% as of February 2021 and higher than the national average of 6.2%, investors should consider how this affects the longer rental vacancies in the area. However, it should still be noted that L.A always has its reopening plan one way or another which means that more jobs will eventually become available. It would be ideal for investors to have a strategy on how they would approach this as of the moment and in the near future.

Investors should also be aware that unemployment is still relatively high in Los Angeles, which could lead to longer vacancies. As of February 2021, the unemployment rate is 9.9%, a figure that is up 5.6% since the same time last year and is significantly higher than the national average of just 6.2%. Still, as LA prepares to enter the next phase of its reopening plan, odds are that many more jobs will become available and the rate should begin to drop.

With that in mind and the fact that L.A real estate market is not the most affordable in the country, investors should concentrate on the fact that there’s still an abundance of investment opportunities for those who can afford the median price of over 700K. It is also worth noting that some neighborhoods in L.A are much cheaper and completion between buyers is lesser. Flipping houses may come to a halt but this should not prevent real estate investors from focusing their investments on rental properties instead. – Steven Taylor

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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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What Makes Rental Properties a Good Investment

Rental Properties are good investments for landlords

If you’re looking at investment opportunities, you have a lot of options. You’re probably looking for an investment that will provide you with return as well as security. Real estate is one of the oldest and most popular classes of assets. Most people know that real estate can create passive income and be a great long-term investment when the value increases. But there are many other less commonly considered factors that make rental properties a solid investment.

1. You can shop around for a great deal.

If you’re similar to me, and love a good deal, you will likely enjoy property investing. As a buyer, you can shop around, you can haggle, and you can wait for the right moment to purchase below market value. Not only does finding a property that you can attain below value set you up for a good investment, it is also exciting. Getting a great deal can mean building wealth and building it quickly.

2.  You can purchase rental properties with leverage.

One bonus to buying a rental property is that you can borrow from the bank, or someone else, for the purchase. You therefore increase your potential for return. This principle is often referred to as leverage. Basically, even if you don’t have the entire purchase price for the property at your disposal, you may still be able to buy it. In comparison to stocks or other investments, you can purchase a larger investment for much less cash up front.

3. You can manage your rental property investment personally.

If you like to be in control and have a hands-on approach with your investments, you’ll enjoy running a rental property. As a property owner, you can be directly responsible for the success of your investment. If you are dedicated, and do your research properly, you can personally analyze before buying, ensure good renting conditions, and keep the place running efficiently. There will always be some risk, but unlike other investment types, you can manage everything hands on with less external conflicts and outside opinions. Unless you want those opinions – again, it’s your call.

4. It’s a business that isn’t going anywhere.

While the real estate market in general has its ups and downs, rental properties will always be in demand. People will always need to live somewhere, and there will always be individuals and families that choose to rent instead of own. As the economy changes and mortgages become increasingly difficult to qualify for, the demand for rentals will only increase., so being a landlord is something that will always be needed.

5. Knowledge is power.

In many industries “insider trading” or using secret information to know when to make a deal, is looked down upon or downright illegal. But when you invest in rental properties, you can leverage any insider information to your advantage, and not only is it legal, it’s considered strategy. Do your research, always pay attention to what’s happening in your region, and listen closely to the market. Is better transportation improving in an area? Is there a new school opening up? Businesses shutting down? In the rental property industry, you can take matters into your own hands. Not only can you buy at a good time, you can choose to exit in the face of a market decline – if you know early enough.

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4 Factors to Keep in Mind When Investing in Apartment Complexes

Apartment Steven Taylor Taylor Equities
Apartment Steven Taylor Taylor Equities

When considering investing in anything, according to Steven Taylor of Taylor Equities , the question you should always ask is: Why is this a good deal? A good deal isn’t just about numbers – a good deal has a compelling story and makes sense. Is the property mismanaged? Stressed? Under foreclosure? The facts should tell a story that explains why the property has value. Developing the instinct to recognize a good deal takes time, but with research, study, and experience you can learn to find the right investments.

Here are four factors to keep in mind when investing in apartment complexes.

1. Cash Flow

The probability of cash flow is a crucial factor to consider. It is important to evaluate how the property will generate cash flow in comparison to other potential properties. To start, ask yourself these questions:

  • What is the strength of the rental market in the area?
  • What type of market you are buying into (For example, C class buildings often have higher rates of tenant turnover. They can also call for more maintenance and repairs.)
  • Financing (How much money are you putting down? What is the interest rate? What type of loan?)

2. Equity

The next thing to consider is if the apartment complex you are purchasing holds equity. If the property doesn’t have equity, can you create it?  Equity in a property can take many forms. A few to look for are:

  • Discounted listing price
  • Foreclosure
  • Upside potential (Fixer-upper)
  • Poor management
  • Opportunity for rezoning

While there are ways to create equity, you are better off buying into it. Be on the lookout for motivated sellers who want out of their property – they are often willing to give up the building’s equity for less.

3. Appreciation

Purchasing in the right location and during the right time will result in profit and appreciation. But, evaluating timing can be tricky. The real estate cycle is often very uncertain. Therefore, if you purchase an apartment complex without the certainty of cash flow or equity, with the goal of short-term appreciation, you will be taking on a risky investment.

Often, aiming for moderate or long-term appreciation will be a safer bet. Study neighborhood and city trends over the long term to choose areas that hold their value and grow at a steady rate.

4. Risk

Those investing in apartment complexes often neglect to consider risk. Regardless of the amount of research you do, risk will always be a factor. Even if you have considered all the factors, you presumptions can be incorrect.

Have a backup plan for risk. If you are buying a building for appreciation, and the apartment complex does not appreciate, can you instead gain positive cash flow through renting units? If you have vacancies in some of your units, will you be able to balance the negative cash flow?  When investing in apartment complexes, you should expect a positive outcome, but always be prepared for your plan to take a turn. Real estate investment in a risky business, and if you want to play the game, you have to be ready to pivot when things go wrong. But, when things go right, investing in apartment complexes can be an exciting and rewarding endeavor. Steven Taylor Taylor Equities