Time to start getting to some of the questions sent in by readers. I’ve lightly edited these, but they are from an actual reader (hey K A-M!):
1. Do you like LA particularly because of any demographic reasons (ie. local universities, business push, etc. ) or is its just important that you live in close proximity to your properties so you can be a physical presence?
Here’s why I love LA as a place to invest in apartment buildings:
- Diverse mix of industries, so employment isn’t super vulnerable to a downturn in one
- Growing population
- CA Prop 13 keeps property taxes low
- LA rent control creates arbitrage opportunities, where you can buy at prices based on artificially-low, rent-controlled rents
- Clear path of progress (gentrification has proceeded down through Silver Lake and Echo Park and into the older suburbs north of Downtown)
2. Who, in general, should consider buying apartment buildings? I’ve thought of doing something like this before but I didn’t think I have any value add that would make me a better property manager than the next guy and thus able to wring every penny out of the asset.
3. So how do you get blown up? How does this all go pear shaped [in a “black swan” kind of way]?