Real estate is one of the best investments you can make. There are generally four markets for Los Angeles, the entry level (let’s say under $500,000 for homes), mid-tier (say $501,000 to $1,999,999 for homes depending on the neighborhood), the mid luxury market ($2,000,000-$5,000,000 depending on the area), and the ultra-luxury ($5,000,000 plus). For this article, we are going to focus on the mid-luxury market, because this market has been getting popular over the last couple of years.
The mid luxury market makes up a large percentage of sales here in Los Angeles in some of the most popular areas such as by The Grove, West Hollywood, and Miracle Mile. And if you are interested in buying in this market, here are three tips to take into consideration:
- They generally fair well during the ups and downs of the real estate market: Even during the Great Recession, when home values were cut in half in many areas, the luxury market remained more stable, only taking a hit of 20%-25% in most areas. While many parts of the country are still lagging behind in home values from 2007/2008, many neighborhoods of Los Angeles have either bounced back, or exceed the peak prices. In my condominium complex, we hit, and now exceeded, 2007 prices this year.
- There are a lot of buyers: People think there is a small pool in this price range, but actually there are plenty of buyers to go around. Assuming you put 30% down, your mortgage, taxes, and insurance would be in the range of $9,000/month. With dual income at $108,000/year each, that’s not unrealistic to achieve. With Silicon Beach, entertainment, finance, and more high income earning industries, this can be a real possibility to earn this kind of income. And if you make more than that and don’t have the 30%, there are programs where you can put down as little as 10% for purchase prices up to $2,500,000.
- If you are going to remodel a home in this price range, don’t go cheap: This is not the time to put in laminate floors or the cheapest appliances. Spend some money, because buyers have higher expectations. Put in the nice tile, hardwood floors, and choose trendy or neutral (not brown neutral) colors. You will be happy you did when it comes time to sell.
There are some great homes in this range, and it can be a great investment, you just need to be prepared for it. Make sure you have all of your ducks in a row, and you can hit the ground running.
One response
[…] is a lot going on in the Mid-Luxury price range, as mentioned in my previous article, What you need to know about the Mid-Luxury Market. There are many of these homes on the market in Los Angeles, and there is a strategy for each […]