Los Angeles is a wonderful place to buy and hold real investment properties: We’ve got lots of demand from tenants, severe limitations on the creation of new supply, and one of the best property tax regimes in the entire United States.
But LA isn’t really one city. It’s a bunch of little cities and towns knit together into one huge megalopolis. Want proof? Ask you friend in Venice to come have dinner with you in Hollywood on a Wednesday night and see what they say.
With so many different neighborhoods, it’s inevitable some are going to be better targets for real estate investment than others at any given time. In general, as an investor, you want to focus on the ones that have improved so much that there’s no going back, but where you can still find bargains, if you look carefully enough.
The Best Areas to Invest in Property in LA
Right now, as we write this in 2024, some interesting areas to consider are:
Highland Park
We’ve never seen a neighborhood change faster than Highland Park did between 2010 and 2020.
When we bought our first building off of Figueroa around 2014, there were very few establishments targeting more affluent people… I can remember being so excited when The Greyhound, an upscale sports bar, opened and basically praying that it would survive.
Now, the neighborhood is overflowing with things to do. From higher-end bars and restaurants to coffee shops and boutique fitness studios. Most of which are walkable to the apartment buildings that line the side streets off Figueroa and York (the other main commercial drag).
And residential rents are up a ton, reflecting the increase in demand to live in a cool, walkable neighborhood plus the fact that it is incredibly difficult to build new buildings in Highland Park, owing to the fact that most of the neighborhood is covered by a Historic Preservation Overlay Zone.
We own and manage a ton of buildings in HLP and, frankly, wish we owned and managed even more: Vacant units always fill up fast there.
Silver Lake / Echo Park
The stretch of Sunset Blvd. running from Sunset Junction, where Sunset meets Santa Monica Blvd., all the way to the 110, has been cool for 15 years or more. And it’s getting even more desirable, as investors flood into build new apartment buildings and build / refurbish older retail.
Silver Lake (which includes the stretch of Sunset between the Junction and roughly Coronado St.) rents and home prices tend to be a little higher than Echo Park (from Coronado, east). But both are highly, highly desirable.
We have owned and managed a lot of apartments in both neighborhoods for a long time. We assure you that, if you can find a deal in either one with a yield you find acceptable today, you’ll be very happy five or ten years from now.
West Adams
West Adams has experienced an incredible amount of change over the past ~10 years owing to two factors: (i) it’s designation as an Opportunity Zone in 2018, which created serious tax incentives for developing there, and (ii) the decision by CIM Group, a major real estate private equity firm, to invest what must now be at least hundreds of millions of dollars in adding supply in advance of demonstrated tenant demand.
The resulting transformation has been incredible: Lots of new apartments, new retail, new smaller office spaces, etc. We particularly love Mizlala and Vicky’s All Day.
We were late to recognize the potential in West Adams (to my everlasting regret), so we own less there than I would have liked. But we do manage a bunch of properties owned by investors who saw the opportunity more clearly than we did.
Mar Vista
Situated between Culver City and Venice Beach, Mar Vista benefits from its proximity to major tech employment centers in Silicon Beach and Santa Monica, making it highly desirable for affluent residents.
Mar Vista used to be kind of sleepy. But, as neighboring Venice got cooler and residential and commercial rents exploded, more interesting food and beverage options have opened in Mar Vista to keep those affluent residents entertained, including Alibi Room (which some people think is the best bar in LA), Lost & Found Cocktails, and Rustic Kitchen.
We own and manage one large, newer building in the neighborhood, which has performed very well over the past few years and would welcome the opportunity to manage more.
Bottom Line
As a reminder: Founded in 2012 (well, really in 2011, but we didn’t start operating until 2012), Adaptive Realty currently manages roughly 1,100 apartments in 135 buildings in Los Angeles and the surrounding cities.
We work exclusively with owners who intend to own their properties long-term, to take care of their properties, and to achieve market-leading rents from high-quality tenants.
If that sounds like you and you are considering purchasing investment property in Los Angeles, CA, don't hesitate to reach out!
