If you are among those who hope to capitalize on the potentially lucrative venture of apartment investment, you have many choices to make. Each corner of Los Angeles has its unique opportunities, and depending on your goals, you could have risks to consider before taking the plunge.
You may not feel ready to invest in the many luxury apartments developers are building in the downtown area, so if your focus is on other areas, you may find the potential for success encouraging. This is particularly true for value-added apartments.
What are value-added properties?
More investors are shifting their attention from luxury high-rises to class-B properties outside the city. Class-B properties are those that are still well located but are a little older. Nevertheless, you may find a gold mine in one of these properties if you are a value-added investor.
Value-adding does not have to include major renovations, although that is certainly an option. Upgrading units with high-end finishes can give your apartments a luxury feel and certainly allow you to bump your rents. If you can add square footage to a unit, you increase the value of that unit. However, you risk losing tenants if they have to relocate during the renovations.
Easy ways to add value
Increasing the value of your investment does not have to involve a gutting and renovation that interrupts your income flow. It is important to keep in mind that adding value may also include reducing your expenses. Some simple ways to achieve this with your apartment building include the following:
- Sub-meter utilities so each tenant is responsible for his or her own usage.
- Add washers and dryers to your units since this is the amenity potential tenants seek most.
- Provide garage parking for your tenants or offer reserved parking spaces for an extra fee.
- Provide storage rental options for your tenants since apartment dwellers often have more belongings than they can store in closets.
- Switch to LED lighting in common areas.
- Arrange for the installation of vending machines that offer snacks, drinks or household items like laundry detergent.
For many who invest in residential buildings, increasing cash flow means merely raising rent. With these and other steps, you can raise the value of your investment, which will be to your advantage when the time comes to sell your property. Whether you are ready to purchase, sell or undertake renovations, you will be dealing with legal issues unique to real estate. Having an attorney on your side who is familiar with California laws and statutes may benefit you.