The Most Important Factors in Real Estate Investment

The best way to turn a profit through real estate is with investment property. Flippers certainly wouldn’t do what they do without some return on investment, but the return is much greater if you’re keeping the property and renting it out. Of course, not everyone can afford to make that type of investment, but if you can, these tips will help ensure you do it right.

It should be obvious that your bottom line is important, so make sure to take a look at average rent values in the area where you’re buying. If it’s not enough to cover whatever your costs would be, look elsewhere. Also keep in mind vacancy rates; investment property won’t bring in any money if the properties are all being left unoccupied. The second factor is location. You can change a lot about a home through renovating or even demolishing it and rebuilding, but what you can’t change is where the plot of land is. The properties with the highest rental values tend to be in areas near good schools, recreation, and public transport, that are quiet and have a low crime rate. The final thing to look for depend on current trends, so be sure your information is up to date. Short of demolishing the home, it’s quite difficult to change a property’s overall floor plan. By contrast, peoples’ floor plan preferences do change over time. A home with a modern floor plan is most likely to be well received by tenants.

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How to Spot Neighborhoods on the Rise

If you’re looking for a place that is affordable yet in a nice neighborhood, look no further than neighborhoods that are up and coming. The process of gentrification significantly increases an area’s desirability, but unfortunately also significantly raises prices. Areas that have just begun this process, though, are probably still inexpensive.

There are a few things you can look at to determine which neighborhoods are in this category. Two of them involve correlations with hard data that you can access from professionals. The city’s municipal office can provide information about building and renovation permits. A high degree of activity in either of these, but especially renovation permits, implies that the neighborhood is about to become more expensive — but isn’t yet. The other statistic to look for is days on market. Slowly dwindling days on market is a precursor to a highly desirable neighborhood. If this is information you’re interested in, just call or email us, since as your real estate agents, we can help you track it so you can grab the best deals before it’s too late.

The third way to find blossoming neighborhoods may take a wider social network, since it’s not easy to just find the data. This way is to figure out where the young, creative types are going. Young adults and all types of artists generally have lower income and will be looking in cheaper areas, but also seek out trends and will want to know what areas are becoming more popular. In addition, creativity gives neighborhoods a type of personality that strongly attracts multiple kinds of buyers.

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Don’t Skimp on Listing Photography

The first thing anyone is going to see when looking at a listing is the photos. People aren’t going to be interested if there are no photos. But that doesn’t mean you can just take snaps with your phone’s camera and toss them up there, even with some editing. The fact of the matter is that no one is going to come see your property if it looks terrible in the photos. In addition, while there are plenty of photography tricks to improve the appearance, no one is going to buy your property if it looks significantly different from the photos.

That’s where professional photography comes in. Professional photographers know how to manipulate not the photographs themselves, but the camera settings and lenses, angles, lighting, and even which aspects of your home to highlight. None of these are making false promises. Rather a professional will find the best way to make the truth of what your home is stand out to buyers. Good panoramic shots require a specific type of lens. The colors of your home influence what time of day and which flash settings will provide the best lighting. Pros will seek out intricate details and unique features that make your home stand out from the competition.

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Planning Your Investment Purchase

It’s pretty obvious that when you’re looking for a home for yourself, you’ll want to do plenty of research and scrutinize all the details. But when people are making investment purchases, their bottom line is often the only thing they look at. That’s not a good practice — there is definitely research to be done before deciding how to invest.

First you’ll want to decide whether or not this actually is just an investment property, or there’s a possibility you’ll want to live there in the future. If you have long-term plans, you’ll certainly want to consider much more about the property than your bottom line. Multi-family residences are generally higher income, assuming all or most units are rented out, but most people would prefer to live in a single-family residence.

Even monetary considerations don’t stop at the buying and subsequent renting of the property. Make sure that any necessary repairs are within your budget. Whether your plans are short or long term is also important here; it may be okay to take a loss early if the rental income over time is going to make up for it in the future, but you don’t want to buy a fixer if you want to see an immediate return on investment. The bottom line also doesn’t tell you whether you are going to get an income at all. If no one wants to rent in the area where you’re buying, it’s going to remain vacant. Look at crime rates and school ratings for the area. Crime rates are especially important, since even if you manage to get a tenant in a high crime area, you don’t want to suffer the losses even if you aren’t the one living there.

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Rent Control Is Actually Harmful to Tenants

Rent control exists in many cities in California, and was designed to keep rent prices low so that more tenants can afford to rent there. And it does keep prices low — as long as no one is looking to rent there. The problem is that rent control is only in effect during the tenant’s residency; as soon as the tenant leaves, the landlord can increase the price to reflect current market values. This means that even if a new prospective renter is looking in a rent controlled neighborhood, they’re still looking at current market rates.

There’s also another reason it doesn’t help renters much, and may actually harm them. And it’s merely the fact that landlords are aware of the above aspect of rent control and readily use it to their advantage. While rent control laws often do also include some form of eviction protection, they don’t outright prevent evictions, and in many cases renters aren’t able to afford to sue their landlords if they were wrongly evicted. This means that in many cases landlords can simply choose to evict their current tenant if they want to increase the rent price, or if they can’t find believable cause to evict, just stop maintaining the property until the tenant doesn’t find the situation livable anymore. Without rent control, prices steadily go up, but landlords don’t resort as frequently to devious methods to raise the price.

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When Should Retirees Pay Off Their Mortgage?

When people retire, there’s a temptation for them to want to pay off their mortgage as soon as possible. After all, it’s a repeating cost that people simply don’t want to have to deal with. However, that’s not necessarily the best financial choice. Depending where the money is coming from, it may actually be less expensive to keep making payments. That said, there’s definitely something to be said for reducing the stress that comes with overhead payments, even if you sacrifice some income.

Sometimes the decision is relatively simple. If you have excess money lying around not being invested, such as in a checking account, you probably want to pay off your mortgage. This is because checking accounts typically don’t earn much interest if any at all, so the interest rate on a mortgage is guaranteed to be higher — the longer you wait, the more you lose. This also applies to any other funds that are being invested at a lower interest rate than the mortgage. Of course, this assumes you don’t need large sums of cash in the near future for some other reason.

Checking account withdrawals also aren’t taxable, unlike funds from certain retirement accounts. The interest rate comparison may not work out for retirement accounts. Even if it does work out, the withdrawal tax may make it less economically viable, especially if it pushes you into a higher tax bracket.

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Should I Move or Refinance?

If you’re looking to take advantage of interest rates while they are still low, you have two options. You can either buy a new house, or refinance to get a lower rate. Both options can have pros and cons, and which will benefit you more will depend on a few factors.

Refinancing can be a good option under either of two conditions. The first is high equity. If you have a lot of equity in your home, refinancing allows you to access it for a temporary boost in available funds. The second is shortening the length of a loan. If you can get a shorter term loan at a lower interest rate than you currently have, that’s usually an incredible deal. Of course, whether you’re actually saving money or not in the long term depends how much you’ve already put into your current loan.

Moving is a good option if you have something in mind for the type of home you want. Low interest rates enable you to purchase a more expensive home without necessarily increasing your mortgage payment by much, if at all, and it could even be lower. This is especially the case if you are actually looking to downsize — your mortgage payment would almost certainly drop. If you were already planning to buy, it’s still a good time, even with mortgage rates starting to climb back up.

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Keep Space in Mind When Downsizing

Recent economic hardships are causing some people to downsize, especially if they’re also moving into urban areas, where living space is at a premium. Most of the time, people who are moving out simply put all their furniture and belongings in a moving van, and figure out where to put it later. People living in a house that’s appropriately sized for them generally don’t use the entirety of their home’s space, but that doesn’t necessarily mean they’ll have enough space to bring everything when downsizing.

Some of your furniture may have to go. If your new condo or apartment doesn’t have a dedicated living room, you probably don’t need both your couches. Going down one bedroom because your kid has moved out? Get rid of the extra bed. You don’t need to just leave them there, though — you can donate them, give them to a friend, sell them, or even just hold them in a storage unit.

Speaking of storage, a smaller home absolutely is not going to have as much storage space. You need room for items such as towels, bedsheets, clothing, and dishes. In your old home, these may have all gone in your closet and dresser. But maybe your new closet is smaller, and perhaps your old dresser doesn’t actually fit in the new space. Think about investing in compact storage containers and utilizing space efficiently, such as by storing containers under your bed.

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Beware of Editing Tricks When Buying Sight Unseen

Buying sight unseen has increased in popularity recently, as walkthrough technology has improved and the pandemic has forced fewer in-person interactions. But take care — improved technology means online walkthroughs don’t necessarily reflect reality. If you must buy sight unseen, it’s best to make sure you trust whoever is creating the images or videos for you.

Most everyone is aware of image editing software, even if it’s only Photoshop. A bad Photoshop job can be obvious, but professional photographers know how to use their camera’s inherent features to even better effect. These can include lighting modes, image enhancement, recoloring, and even splicing multiple images. Savvy buyers may instead look for video walkthroughs, which provide a better view how the various spaces interrelate. Don’t be fooled, though. Videos are almost as easy to edit as images.

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How to Paint Your House to Sell

Sellers will frequently repaint their home before selling, since it can give a good first impression to buyers. As important as it is, if done wrong, it could actually actually make a worse impression. In addition, it could be a waste of money if you’re planning to sell to a developer, who isn’t going to care what the house looks like.

The first thing to remember is that neutral colors are most likely to sell. Even if the buyer is going to repaint anyway, keeping it neutral helps buyers to envision their options. Neutral doesn’t necessarily mean only whites and browns, either. It could include blues or yellows. Another thing to watch for is the Pantone colors of the year. These are based on existing or expected trends, and will be popular. It’s important to note that for trending colors, a little can go a long way. An extra benefit of choosing neutral colors for most of your home is that it allows you to use most any accent colors, regardless of what they may be.

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What to Look for in a Family Home

If you have a large family, or are expecting your family to grow, chances are you’re thinking you need a lot of space. That’s not necessarily the case. A little can go a long way if you have the right kind of space. Here’s what you should be looking for.

Your primary focus should not be living space, but rather storage space. A person doesn’t take up a lot of room. But for each person in your family, there’s going to be some space that needs to be dedicated to their belongings. This means you’ll need closet space and cabinets, or maybe an attic, not expansive bedrooms or large living rooms. The total size of your house isn’t as important as what functions it can serve.

Speaking of functions, the right functions for your family may be different than those of another family. Some families like to all sit down together for dinner, and want a dining room that can accommodate a large dinner table. Other families would benefit more from a game room for Friday game nights. Also keep in mind that if a space is flexible enough, it could serve the purpose you want even if it wasn’t designed that way. However, it’s important to note the space’s floor plan. Maybe the office is too far away from the bathrooms to benefit from converting it into a bedroom. Perhaps that space that’s the right size for your living room is next to the kitchen and may be better suited as a dining room. Also ask yourself where you want your kids’ rooms to be in relation to each other and yours.

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Manufactured vs Prefab Homes: What’s the Difference?

There are many terms thrown around when talking about factory-built housing — manufactured home, mobile home, prefab, modular housing — and many of them are used interchangeably. These are all factory-built, but in some cases, there are important differences you should be aware of.

Two terms that actually do mean the same thing are manufactured home and mobile home. This refers to a home that was fully built in a factory and transported to the site whole, without any customization possible. The law varies by state, but in California, a mobile home must be registered with the DMV because it is a vehicle, not a house. There are legal provisions to consider it real estate if it is affixed to a foundation. In any case, being vehicles, mobile homes actually depreciate over time rather than appreciate. They also are not necessarily well-built to begin with, since the regulations that govern their construction are different and more lenient than the regulations for prefab housing.

Speaking of prefab housing, this is actually a category of types and not a single type. All prefabs have components that are built in a factory, then shipped to the site to be composed on-site. Modular housing is just one type of prefab, with the other being panel built housing. The modules of modular housing are large sections which can be quickly combined for more efficient construction, but they are less customizable than panel built homes, which are constructed one single panel at a time from the bottom up. Some prefabs combine both modules and panels to get the best of both worlds. Prefab houses are actually houses and are subject to the same rigors of quality as traditional stick-built houses, and may even be higher quality since they are factory-tested before being sold.

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Should You Buy a Townhouse or SFR?

If you’re looking to buy, but aren’t quite sure what you want to buy, this article may help you. There are a few factors you want to consider when deciding between a townhouse and a single-family residence (SFR). The factors we look at here are cost, maintenance, space, and proximity to neighbors.

If price or maintenance are big concerns of yours, you probably want to look at townhouses. Townhouses are generally less expensive than SFRs, both in up-front cost and future costs. Many of your maintenance costs will be handled by the community association. This also goes for the maintenance tasks themselves, so you don’t need to spend as much money or time on maintenance. In addition, the smaller size of townhouses means there will be less maintenance to do in the first place.

Speaking of size, if you want a lot of it, SFRs are the better bet. SFRs are frequently larger and have more flexible space, allowing for the increasingly popular home office. You can also rearrange and redecorate as you please, or add or renovate rooms. Another type of space you’ll have more of is the space between you and your neighbor. SFRs are more private and often quieter with no shared walls.

Remember that there’s no right or wrong answer; it depends entirely on your budget and preferences. If you need help making a decision, though, don’t hesitate to call or email us.

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Stop Water Damage Before It Happens

As we’re approaching the winter months, we’re likely to see an increase in precipitation. Most areas of California don’t get snow, but rain could be an issue if it’s able to cause water damage. Fortunately, there are several things you can do to prevent water damage from the rain. Preventative maintenance does cost money, but it’s usually a worthwhile investment, since repairing damage after the fact can often cost even more.

One thing you can do yourself if you don’t want an extra expense is to clear gutters and drains of debris that could prevent the rainwater from draining, though you can also hire a professional to do this for you. The same is true of tree trimming in wind-prone areas. You can hire a contractor to inspect your windows, doors, skylight, and roof to ensure tight seals and detect any potential issues. Something you’ll definitely want a trained professional for is inspecting the foundation, retaining walls, and concrete sloping for defects.

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How to protect yourself from extreme heat

California is seeing a rise in heat waves. It’s important to know how to keep safe in extreme weather conditions. Here are some suggested precautions from Senator Steven Bradford.

  1. Avoid the sun– stay indoors from 10 a.m. to 3 p.m. when the burning rays are strongest.
  2. Drink plenty of fluids– 2 to 4 glasses of water every hour during times of extreme heat.
  3. Replace salt and minerals– sweating removes salt and minerals from your body, so replenish these nutrients with low sugar fruit juices or sports drinks during exercise or when working outside.
  4. Avoid alcohol.
  5. Pace yourself– reduce physical activity and avoid exercising outdoors during peak heat hours.
  6. Wear appropriate clothing– wear a wide-brimmed hat and light-colored lightweight, loose-fitting clothes when you are outdoors.
  7. Stay cool indoors during peak hours – set your air conditioner between 75° to 80°. If you don’t have air conditioning, take a cool shower twice a day and/or visit a County Emergency Cooling Center. Find a local emergency cooling center at
  8. Monitor those at high risk– check on elderly neighbors, family members and friends who do not have air conditioning. Infants and children up to 4 years old, people who overexert during work (e.g. construction workers) and people 65 years and older are at the highest risk of heat-related illnesses.
  9. Use sunscreen – with a sun protection factor (SPF) of at least 15 if you need to be in the sun.
  10. Keep pets indoors– heat also affects your pets, so please keep them indoors. If they will be outside, make sure they have plenty of water and a shaded area to help them keep cool.

It is also recommended to reduce electricity usage to avoid shortages and service interruptions. If you are experiencing difficulties from extreme heat, Los Angeles County has designated Cooling Centers with air conditioning. A list of the Cooling Centers can be found in the full article.

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