If you haven’t been considering Los Angeles luxury real estate as your next investment, it’s time you do. Making a luxury real estate investment isn’t the easiest thing, but it’s definitely proven its value to investors in the past. In the US, a stable economy has helped boost luxury home sales. But what about the Los Angeles real estate market in particular?
Related: Now Is the Best Time to Enter the Luxury Real Estate Market
Should You Invest in Los Angeles Luxury Real Estate?
Real estate investing is a process made much easier when you’re equipped with the right tools. Doing a quick online market research is actually one of the best tools today’s investor can take advantage of. People who choose to invest in Los Angeles real estate do it for a reason- their research backs it up.
Anyone can figure out that Los Angeles is an expensive city and with it comes expensive real estate. So why invest in Los Angeles luxury homes when you can get the same-size property in a cheaper city? Three words- return on investment. Making money in real estate becomes a reality a lot faster with Los Angeles luxury real estate in your investment portfolio.
Related: What Is a Good Return on Real Estate Investment?
Real estate investing is a lot more than just searching for property and making deals with brokers. Smart investors know to think long-term performance. Median home values in the Los Angeles real estate market have gone up 6 percent over the last year and are predicted to rise at the same rate within the next year. And as the market is warming up, we say invest now to get the best deal you can.
So now you know that you should invest in Los Angeles luxury real estate if you can afford it. But, let’s tell you exactly why.
Reasons to Invest in Los Angeles Luxury Real Estate
Here’s why Los Angeles has proven to be a great luxury real estate market.
#1. Real Estate Prices Are Still on the Rise
2018 has seen some of the highest real estate prices for Los Angeles real estate. While experts are expecting a slowdown in prices for the new year, Los Angeles real estate prices will still definitely be increasing in price, just at a slower rate.
We can expect prices to increase 5 percent in the Los Angeles metro area (including Orange County). But why is an increase in real estate prices a good sign for Los Angeles luxury real estate?
We already know these increasing prices are being met by increasing home values. So this almost definitely means your initial investment will increase in value.
#2. Large Renter Pool
Many L.A. residents are more inclined towards renting rather than buying their apartments. This is exactly what investors are looking for when investing in luxury long term rentals. The majority of Los Angeles luxury homes are occupied by renters. More renters give you more potential tenants to rent your property to. With more people flocking towards the big and exciting city of Los Angeles, you can definitely find tenants in this ever-growing city.
#3. Los Angeles Luxury Real Estate Is Generally a Stable Investment
We all know that the housing market is always changing; one day it’s up, the next it’s down and the cycle continues. But luxury real estate values in the U.S. will always increase over time. Let us explain.
When the market is doing well, so is luxury real estate. When the market softens, luxury real estate still performs well. This is because high-end real estate can hold up better when traditional investments or stocks are dragging.
Luxury real estate investments rebound when markets are slow because of their position. Their value and unique features surpass the cost of replacement, making them always desirable to someone on the market.
When investing in hot markets like Los Angeles, you can definitely rest assured that you made a good investment. Although the city’s luxury inventory has decreased substantially since last year, demand remains high. Even with this, luxury inventory is calculated as the top 10 percent of listings in the Los Angeles real estate market.
How to Invest in Los Angeles Luxury Real Estate
You now know what’s attracting investors to Los Angeles. If you haven’t invested in luxury real estate before, there are a couple of things you need to keep in mind.
Expect Competition
You might be shocked to see competition from foreign investors, but that is the case with many luxury real estate investments. The luxury market is a global one, with international buyer demand. You need to have your investment property financing prepared before you enter the market. Because it appeals to a much larger audience than traditional rentals do, bidding wars are common over luxury real estate.
Know Your Market
When investing in a property that comes with a seven-figure price tag, it’s of vital importance to be sure that there is actual demand for what you plan on selling or renting out. Just knowing one piece of information, like which city has high cash on cash return, isn’t good enough. Real estate investors need to really study the location and market they’re buying in to be able to identify top-performing luxury homes for sale.
Use the Right Tools
Having a good set of real estate investment tools can really change the way you do business. As technology continues to develop in the real estate investing industry, investors are constantly finding better and faster ways to get work done- from finding the right city to invest in, to performing a thorough investment property analysis for a potential investment property.
Related: How to Do Investment Property Analysis
So someone reading this blog right now about Los Angeles luxury real estate can have the luxury of searching for property immediately, from the comfort of their own home.
With Mashvisor’s property finder, investors across the nation are able to find profitable properties in a matter of minutes. Do you want to find the best Los Angeles luxury real estate investments? Click here to start your search.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.