Long View Investing
A firework display is an apt symbol for successful long view investing. The 6th Street Bridge, connecting Boyle Heights to the Arts District Downtown, celebrated its long life this weekend, and its imminent demise. In its place, a $420,000,000 world-class bridge will be constructed to attract tourists and locals alike, bringing a new symbolic and physical connection between one of the city’s fastest developing locations and its poorest.
What does this mean for investment properties in Boyle Heights, especially near the bridge? First of all, it means one of the most immediate means of transportation to Downtown will be out of commission for the next four years. However, once the new bridge is completed, those investors who bought in early will see a brand new light shining on a once ignored neighborhood.
Read MoreEarthquake Retrofitting for “Soft-Story” Apartment Buildings
On Friday, the Los Angeles City Council unanimously passed mandatory new earthquake retrofitting requirements for over 15,000 buildings whose second floors are built over carports. This includes the “dingbat” in which I currently reside. The good news is: this will save dozens of lives in the next major earthquake. I’m sure you can also guess the bad news: landlords have to pay for it.
The city is discussing some ways to help landlords, like a small increase in rent, which may cover the capital outlay in twenty years. But the retrofitting needs to be completed within 7 years of being noticed, according to the law. The LA Times reports that the retrofitting for wood structures can cost between $60,000 to over $130,000. You can read the LA Times article here.
What does this mean for you? If you don’t have $100,000 cash to retrofit, you may be forced to sell your property if the city doesn’t come up with a better solution. If you do have the cash, that’s a big blow to your savings.
If you think you may need to sell your property, the best move would be not to wait. Sell your building to a buyer with the capital to make the necessary safety improvements now, or else a much worse disaster could be on our hands. Not to mention incredibly low interest rates mean the highest prices paid for income property in a long time.
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