Found myself talking about neighborhoods with a new agent of ours yesterday.
We were discussing why our deals (both the ones we do for ourselves and the ones we broker) tend to be grouped in a few main areas, none of which are the Westside, Hollywood, or Miracle Mile.
It’s not that we dislike working in those neighborhoods. In fact, from a purely selfish perspective, it would be great to do business there.
Why?
Because the amount of work it takes to help someone buy a very nicely-kept 4plex in Miracle Mile for $1.7MM is less than the amount of work it takes to help someone buy a beat-up 4plex in Boyle Heights for $550k. And, obviously, we would make a ton more money brokering the former.
So, if we can make more money for less work, why aren’t we doing the deals in the better neighborhoods?
It’s your fault, dear readers.
You see, the vast majority of our brokerage clients come through the blog. And people who read this blog tend to be smart and numerate. And smart, numerate people would laugh in our faces if we tried to advise them to pay 18x GRM, which is what people are paying for 4plexes in Miracle Mile, instead of 11-12x, which you can still find in Boyle Heights (for example).
Honestly, some days I bet our agents would prefer to rep dumb money. But we don’t, and so we’re going to keep grinding out good deals in emerging neighborhoods for smart clients. In the long-run, hopefully that results in a lot of happy, smart clients.