Why Buying Luxury Apartments in LA Is a Great Investment

Why Buying Luxury Apartments in LA Is a Great Investment

Luxury apartments anywhere fetch a high rental price, but it’s especially lucrative in the Los Angeles area. Click to find out why.

  • Investments can sometimes be risky and daunting. It can be hard to predict the outcome, especially if you don’t have extensive background knowledge of the industry and market. So how do you determine where to invest?
  • Luxury real estate is a great choice for investing, because of its general stability and its potential for profit.
  • Luxury apartments buildings and homes in Los Angeles can provide excellent investment opportunities for those seeking to own real estate. Keep reading to find out why buying a luxury apartment in LA could be your next great investment.

Real Estate Prices are Rising

  • According to Forbes, real estate prices in Los Angeles have gone up 30% in just the last 3 years. The prices will likely continue to increase each year, especially with the area’s increasing popularity.
  • Why does this mean that luxury apartments would be a good investment? It means that your initial investment property will almost definitely increase its value over time. Because of the rising prices and value, it would mean that you would be able to either sell it at a profit or be able to increase rent over time.
  • Keep in mind that these real estate prices will increase no matter what you decide to do investment wise. If you’re going to invest in a luxury apartment, it would be better buy sooner rather than later to avoid paying more as the prices increase.

Most People Rent

  • The majority of luxury housing units in LA are actually occupied by renters, and not by the owners of the property. It might seem somewhat backwards to include the idea of renting in an article about buying luxury apartments in LA. But actually, the inclination in LA to rent over buy is a crucial part of why buying luxury apartments in LA is such a great investment.
  • A higher number of renters would mean that you would have a greater number of potential tenants you could rent your luxury apartment to, particularly in an always-growing city like Los Angeles. The presence of many potential renters means you would likely be able to make money off of your property right away.
  • And, as we said, prices are rising. This means that each year you would be able to increase the rental price as the value increases. Owning a luxury apartment would allow you to put a great price tag on your property as a rental property.

Certain Areas of LA are Booming

  • With the popularity and the population of Los Angeles consistently increasing over the years, it is no wonder that the demand for housing has increased. But this growth is not necessarily evenly spread out among the different areas of Los Angeles.
  • In terms of the increasing prices, West Hollywood seems to be at the top. This area of LA is right at the center of the city, making it a great central location. It is exceedingly popular for its welcoming and open attitude, as well as for its tourism.
  • Population wise, Forbes reports that San Bernardino and Riverside are growing the fastest. Both of these areas are more on the outer sides of the city, but still are popular, as evidenced by their population growth.

Give Areas an In-Depth Look Before Investing

  • But how can knowing certain areas of LA help you with a real estate investment? We’ve already mentioned how increasing prices as well as a large population can help you in terms of increasing the value of your investment.
  • Besides that, really knowing the area you’re thinking of investing in can be a key part in what makes your luxury apartment property an overall great investment. Look at the data within the last 5 to 10 years of an area you’re considering.
  • Look specifically at:
      • Sale prices
      • Rental prices
      • Population growth
      • The number of renters
      • The area’s orientation compared to schools or attractions
      • The number of new people moving into the area
  • We’ve only mentioned a few examples of areas within LA, so you really need to do your homework about location. If you can pinpoint some luxury apartments in good locations that look promising for the future with a good amount of renters, then you’ll definitely be making a great investment.
  • Try to find booming areas with all of these key qualities, or at least areas you believe will be booming in the future. This will set you up with a great investment property in LA.

Luxury Apartments in LA are a (Generally) Stable Investment

  • We mentioned earlier that buying luxury real estate is a great investment choice because of its stability. But why is it such a stable choice?
  • Let’s say you buy a luxury apartment when the price is extremely high, or in a neighborhood that turns out not to be super popular, or the prices aren’t increasing how you would like, or you’re just generally worried about making such a huge investment.
  • According to Thomas Veraguth, an economist, the great thing about luxury apartments and real estate in general is that there is a finite amount of great luxury apartments in great locations, which works to the investor’s advantage.
  • He thinks that your investment will likely recover over time, as the great locations of the world, like sunny LA, are few and unchanging. This will eventually bring people back to that area and the market should pick up again. Generally, the luxury real estate investment you make will recover even if you paid a steep price or got into the wrong area.
  • So even if the property you buy isn’t exactly what you wanted or if you’re worried that the market is too volatile, if you give it enough time, your investment will almost always become profitable.

Bottom Line

  • Investing can be a scary and daunting path. But buying luxury real estate in LA is an excellent choice for investors because of LA’s growth and popularity. This could give you a lucrative as well as stable investment in a beautiful area of the world.
  • Buying luxury apartments or homes in LA can be an excellent investment if you know what you’re getting into. If you have any questions or want more information, don’t hesitate to contact us.