Income Property Los Angeles

Category: Real Estate Blog

All things real estate.

  • Why buy?

    In most good income property deals these days, you can expect to make between 5-8% on your money, if you can afford a conventional loan. If you put down $100,000 cash (20% of purchase price), you’ll get between $5,000 and $8,000 cash back every year. That’s pretty nice on its own.

    The exceptional thing about buying leveraged property is that your rents are also covering your mortgage, so in addition to the cash in your hand, you’re earning equity in your building. That means in 30 years, you’ll have earned an additional $400,000 bonus in your building.  And that’s not counting appreciation.

    {Next post: What’s the least cash I can use to buy an apartment building?}

  • Sweet 2-4 Units

    You might be thinking “why limit myself?” And you certainly don’t have to. If you have a lot of cash and you plan to flip your property, buying bigger buildings is a great way to invest.

    However, the reason I recommend buying a 2-4 unit apartment building is because of the financing options.  Right now, with a 2-4 unit building, you can get a 30-year fixed mortgage with around 3.5% interest rate, depending on your credit and when you read this blog.  If you have 5 or more units your building is considered commercial property and you’ll likely be stuck with a 7-year adjustable rate, and who knows where interest rates will be in 2020.

    If you’re on the cusp, remember that the same rule applies for your future buyer, who will be looking for his/her own financing options to buy your property. The more options, the more available buyers, the higher the price. If you don’t care about the resale value, you can pay off your loan fast, and you plan to collect rents into your grandchildren’s retirement, then 5-10 units may be more interesting to you. If you have any questions, contact me or click the “read more” button to leave a comment.

  • Kagan’s Blog

    Kagan’s Blog

    If you really want to know about the income property business, take a look at Kagan’s Blog. Moses Kagan taught me almost everything I know about real estate, and the Essential Reading section of his blog is worth its weight in gold, if digital words could be weighed.

    While Moses focuses his time on buying and renovating apartment buildings for his fund, I work with him at Adaptive Realty to help people like you buy your own income property. What’s the difference between the properties he buys and the ones you will likely own? He buys rundown pieces of junk, spends tons of money renovating them and sells the updated property (like the beauty in the picture here) for a large margin. That takes a lot of risk, time, gumption, and cash. What most people like to do (and what I encourage) is to buy a property with decent leverage, one that needs little rehab, and then collect rents and watch it appreciate into your retirement.

    We know how to do all kinds of deals depending on the kind of buyer you are, but 2-4 unit residential income properties are our sweet spot. Follow my blog to read about the kinds of deals that we do at Adaptive Realty, and what you can do with us.