Your Best Real Estate Investment


I am personally investing in these brand new duplexes in Los Angeles.  From 1986 through 2011 I invested in Orange County properties that I could drive by and show off to friends and family.  They were good buys for the area; but in December of 2011, I discovered a better Southern California real estate investment.   I met a developer buying tear-down lots, and building brand new duplexes in Los Angeles that provide a better return on investment.  I purchased my third one of these new duplexes in June of 2016 – and just purchased my fourth new LA duplex in October, 2016.  I feel these new duplexes are safer investments than the stock market, and offer better cash on cash return.  These duplexes are like a very safe stock that pays attractive and steady annual dividends.  With a 25% down payment; we are currently averaging around 8% cash on cash returns. 

 

I just closed escrow on my fourth duplex October 28, 2016.  Our management company started my tenants on November 15 at $5,400 per month. My next door neighbor purchased a duplex in 2015, and they receive $5,000 per month.  The most recent duplex closings for my clients in the second half of 2016 are renting quickly at $5,000 to $5,200 per month.  These brand new construction properties are averaging a 12.5 GRM.

            

If you would like to have real estate as part of your investment portfolio; I feel these new duplexes are the best combination of positive cash flow; potential for appreciation; and ease of ownership.  The current availability is near the bottom of this page – but changes quickly as the duplexes are selling before construction at the current listed prices.  The current prices for our new duplexes are $750,000 to $780,000.  I have attached Exterior and Interior Photos of the properties.  Feel free to call me at 800-944-2441 with any questions.

          

I do believe it is important to hold real estate in our investment portfolios.  I have found these duplexes to be the best real estate investment in Southern California – and I think in the long run; pretty much better than anywhere else in the country because of LA’s potential for appreciation.  I also love the full service management; which means I have none of the hassle of being a landlord and still enjoy 100% ownership, the full profits and control.

 

This is a link to the 2014 USC Lusk Center forecast for the Los Angeles rental market:  http://lusk.usc.edu/casden/multifamily/report

 

Obviously averaging 40 home sales every year for the past 30 years, I come across a lot of good real estate buys for myself.  I just haven’t found anything else that compares to these duplexes.  That’s why I purchased four of these new duplexes for myself.   I have also helped secure another 35 of these duplexes for my clients and friends.  We closed another escrow for a family that purchased last year and liked their returns so much that they wanted a second duplex.  We have also had duplex buyers from as far away as New Jersey referred to us.  They flew out and purchase two duplexes.  We also just had two other families each purchase their second duplex after purchasing new duplexes a year ago.  

 

Real estate is one of the strongest hedges against inflation you can own.  If you saved $1,000 in your cookie jar in 1960 – it would only buy $200 worth of goods and services 40 year later in 2000.  Over this time, inflation eroded 80% of the value of those dollars.  During the same period, Los Angeles real estate matched and beat inflation.  A home in Southern California that sold for $17,000 in 1960 was worth $220,000 in 2000 – a 12 times increase.  Plus the real estate generated additional rental profit over that time period making it an even better investment.  (By the way; the home that sold for $17,000 in 1960 is worth $550,000 today).

 

The best hedges against inflation are real estate and precious metals.  Real estate gives you the advantage of a monthly income in addition to rising in value with inflation.  You can’t rent precious metals.  They are not going to provide monthly income for your family.

 

You can purchase this brand new duplex with around $190,000 cash and a 30 fixed rate loan - and receive $580 positive cash flow each month.  The loan balance is reduced another $750 with each monthly payment.  You can save, spend - or apply the extra $580 cash each month to the loan balance and pay off your loan faster if you like.  The choice is always yours.  

 

Combining the monthly cash profit with the monthly principle pay-down, your total profit is $1,330 monthly – or $15,960 each year return on your initial investment of $190,000.  That’s over 8% cash on cash return – Every year – without even considering appreciation.  

 

These new duplexes are 2 to 4 miles south (about 5 to 10 minutes) of USC and Staples Center.  The builder personally owns over 300 of these units and has a full service management company that fully manages the property for only $130 per month for each unit. The rents average $2,350 per unit - or $4,700 per duplex each month.  As an owner, we don’t have to be involved with day to day; month to month; or even year to year issues.  I like that the builder owns so many of these same units in the surrounding area that they have a complete warehouse and full time crew to take care of any repairs that may arise.  Also, the duplexes they build and service all have the same features; windows, heating, electrical, plumbing systems, fixtures, and appliances.  They buy replacements in bulk at a discounted cost and store in their warehouse so any repair is very quick and affordable compared to any other investment property an investor can own.  This is like the Costco of property management.

 

The design is excellent and well thought out.  The builder has improved the model over the past 10 years of building over 700 duplexes in the area – and has perfected the floor plans.  These units are 5 bedrooms and 3 baths, each with a main floor bed/bath.  These homes appeal to families that want long term rental homes in this area.  In fact, another great feature of these properties is they average 96% occupancy rate.  This means fewer turnovers, less vacancy, and more net profit for the owner every year.

 

The construction amenities are outstanding.  Of course everything is new and built to the latest strict Los Angeles County codes.  These homes all have dual pane windows, ceiling fans, beautiful kitchen and bath fixtures and cabinets including granite counter tops.  The landscaping and exteriors are very attractive.  Each duplex includes a 2 or 3 car garage and ample off street parking.  Checkout the photos I have attached.

 

I personally exchanged a Los Alamitos duplex I owned for 30 years and purchased my first two of these duplexes.  I closed escrow on December 30, 2011.  The cash flow is much better with these new duplexes, and I like the long term outlook for property appreciation in this area.  I am applying the positive cash flow to the principal balance and paying my loans off in less than 10 years.  When paid off; each duplex will return over $3,000 per month net profit.  Of course the monthly profit will be higher if the economy experiences inflation.  That’s the beauty of having real estate in your investment portfolio.  Real estate is the investment that matches inflation.  These duplexes are like a cork on top of the ocean.  If the tide rises, the cork rises with it and stays on top.

 

If I ever need money in the future, I can always sell a duplex – or even half a duplex to a partner for the cash.  Selling or holding in the future will be 100% my decision because I own 100% of the property.  It is real property.  Even in 10 years; these duplexes will still only be 10 years old - which is very new compared to any other investment property I can purchase that comes close to these numbers.  I also love the full service management; which means I have none of the hassle of owning rental property and still enjoy 100% ownership profits and control.

 

Here are links to information about changes coming up in this area of Los Angeles.

 

http://la.curbed.com/maps/south-park-development-map

   

http://news.usc.edu/#!/article/44892/usc-village-approved-by-la-city-council/

 

http://scanph.org/files/Housing%20Need%20LA%20FINAL.pdf?utm_source=New+Report%3A+LA+County+Short+Nearly+500%2C000+Affordable+Homes+For+Low+Income+F&utm_campaign=CHPC&utm_medium=email

 

http://www.latimes.com/business/la-fi-inglewood-real-estate-20160120-story.html

 

 

Here are some financing examples:

 

Expense/Profit 25% Down 30 Year Fixed:

Purchase price:          $760,000

 

25% down Pmt:          $190,000

Closing costs:              $   5,000

Loan balance:             $570,000

 

Monthly expenses:

Mortgage Pmt:            $2,973 (30 year fixed 4.75% Int.)

Prop. Taxes:                 $    792

Management:              $    270

Utilities:                       $    250

Insurance:                    $     80

Gardening:                   $     65  

Repairs/Maint:            $    100

Est. Vacancy:               $      80

Total Mo Exp:                $4,610

 

Estimated monthly gross income:  $5,000

Monthly positive cash flow:   $390

(Plus $717 of the loan payment is applied toward your loan balance raising your return on investment to $1,107 per month – or $13,284 per year.  This is a 6.8% cash on cash annual return on your initial down payment and closing costs of $195,000.  And this is before adding potential appreciation - or your depreciation write-off tax savings.  These are estimates and your costs and returns can be a little higher or lower. The new duplexes are averaging $5,000 to $5,200 income per month.  At $5,200 per month rent; you annual cash on cash return is around 8% annually.

 

Some investors are purchasing all cash and enjoying a $40,000 NET return on their investment each year for their $760,000 purchase.   This cash purchase provides an annual cash on cash return of 5.25%.  Cash investors recognize owning this new duplex is better than the 1% return they are earning in the bank, bonds, or US notes - and safer than a volatile stock market.  This consistent 5% ROI is before receiving the extra benefits of tax deductions and potential rise in value with inflation.

 

With investment property in your retirement plan, you no longer have to fear outliving your money.

The wonderful thing about real estate is rental income tends to rise with inflation.   If inflation doubles - the duplex’s value and rental income can also double and match inflation.  Real estate is the hedge against inflation that we all know and understand - in addition to its valuable function as shelter. 

 

Cash in the bank today will generate some interest; but as an asset it provides zero appreciation.  In fact inflation causes the value of your cash in the bank to depreciate each year.  Our duplexes offer the added benefit that property tends to increase in value with inflation – the exact opposite of depreciating cash.  This improves the already great return on investment of these duplexes even more. 

 

Feel free to call me direct at: 1-800-944-2441 with any questions or if you would like to view these investment properties.

 

Wishing the best of success,

 

Cary Hairabedian
Broker-Associate
Re/Max College Park Realty
(800) 944-2441
Cary@socal.rr.com
www.Cary4Homes.com
DRE: 00876519

 

Cary Hairabedian
Cary Hairabedian
Associate