Investing in rental properties in places like the San Gabriel Valley has the possibility of generating lucrative returns in an industry that is consistently growing. Unlike other investment options like stocks, it provides arguably a more secure return on investment, as well as endowing the investor with a tangible asset. However, negotiating this industry does take some forethought and planning, but if done right, there’s the opportunity not only to reap consistent rewards but also to quickly expand.
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Why multi-family properties?
Multi-family properties are essentially buildings or complexes designed to house more than one family under a single roof. You’ll find them in various forms, like apartment buildings, townhouses, condos, and duplexes.
When investing in rental properties, it often comes down to a choice between multi-family and single-family homes. Both options have their advantages, but investing in multi-family properties offers several benefits that make it an attractive choice for many savvy investors.
Multiple units provide security
The entire income from a single-family home depends on one tenant at a time. If they move out or are having difficulty paying, you’ll be out of pocket until you can rent out to another long-term tenant or the tenant can repay the arrears. With so much riding on your property being rented there can sometimes be some pressure to lower your rates as you look to secure a renter. You might even be tempted to accept tenants with whom you may not be entirely comfortable.
Multi-family real estate investments have multiple units, which means multiple tenants. This spread helps mitigate the impact of vacancies. Even if one unit is vacant, you’re still likely to generate rental income from the other units, which can be used to cover your mortgage and expenses.
Cost efficiency
Repair, maintenance, and even property management costs per unit tend to be lower when you have multiple units under one roof. For instance, servicing a single roof for a 20-unit apartment building is much more cost-effective than servicing 20 separate roofs on individual houses.
Incredible tax benefits
There’s an array of tax advantages that come with multi-family property investments. You can deduct a wide range of operating expenses from your taxable income. This includes property management fees, repairs, maintenance, insurance, property taxes, utilities, and more. If your property helps with affordable housing or meets a certain level of energy efficiency, you might qualify for tax credits as well.
To make the most of these benefits keep good records and consider consulting a tax professional. They can help you understand the different benefits and ensure that you can comply with the requirements.
House hacking potential
While it may sound suspicious, house hacking is a legitimate and innovative real estate investment strategy for those with multi-unit properties. This just means living in one of the units while renting out the others. By having your tenants cover part or all your housing expenses, you can live rent-free and even generate considerable income.
Apart from cost saving, house hacking offers other perks. For example, living on-site makes property management more convenient. You can quickly respond to tenant issues, oversee maintenance, and maintain better control over the property’s condition.
Why invest in the San Gabriel Valley?
The San Gabriel Valley is a picturesque region located in Southern California, just to the east of downtown Los Angeles. This valley, known for its diverse culture, rich history, and stunning natural beauty, occupies a significant part of Los Angeles County. It is bounded by the San Gabriel Mountains to the north and the San Rafael Hills to the south which makes a unique and captivating landscape.
This gorgeous region has become a prime location for multi-family investments thanks to its growing population and the rental demand that comes with it. It’s a desirable place to live in for both families and individuals due to a combination of factors.
Access to job opportunities
While the San Gabriel Valley might not be the economic epicenter of Los Angeles County, it is within proximity to various job hubs. With freeways and public transportation options, residents can access job opportunities in Los Angeles and other parts of Southern California without enduring long, stressful commutes.
Beautiful parks and outdoor attractions
The San Gabriel Valley is blessed with an abundance of parks, hiking trails, and recreational opportunities. Families can easily access outdoor spaces for weekend adventures and exercise. The San Gabriel Mountains, which border the northern edge of the valley, offer hiking, camping, and other outdoor activities that are perfect for family outings.
World-class shopping and dining
The region offers upscale shopping destinations and fine dining options that rival those in very affluent areas of Los Angeles. Cities like Pasadena and Arcadia have high-end shopping centers and Michelin-starred restaurants, providing residents with the chance to indulge in luxury experiences without traveling far from home.
Cultural diversity
With a significant population of Asian, Hispanic, and other ethnic communities, the region is a melting pot of cultures. This diversity is celebrated through various cultural festivals, restaurants, and markets, providing a unique and vibrant social experience. You can savor authentic Chinese dim sum, indulge in Mexican street tacos, and explore the culinary treasures of many other cultures, all within a short drive.
Excellent education
Families often prioritize their children’s education when choosing a place to live, and the San Gabriel Valley is known for its excellent public school districts. Many cities in the region boast top-rated schools, providing a quality education without the need for expensive private schooling.
There are also dozens of incredible colleges and universities spread across the region. Among them are prestigious institutions like the California Institute of Technology (Caltech) and the ArtCenter College of Design.
Where to invest in the San Gabriel Valley?
Encompassing about 200 square miles, the San Gabriel Valley is home to numerous cities and communities. All of them are desirable, but each one comes with its character and set of perks. So before venturing into multi-family investments, it’s best to take the time to learn about the unique opportunities different areas provide.
Here are some of the most prominent cities within the San Gabriel Valley:
Pasadena
Also called “Rose City,” Pasadena is perhaps the most famous city in the San Gabriel Valley. It’s renowned for its historic Old Town district, prestigious performance centers, and the Rose Bowl Parade, an internationally acclaimed New Year’s Day tradition. Popular attractions include the Pasadena Playhouse and the Norton Simon Museum.
Pasadena is one of the most connected and accessible places in the region. Even without your vehicle, getting in and around is easy thanks to its reliable public transport system. It’s served by the buses from the Pasadena transit system and the Metro Gold Line light rail system, which connects the city to downtown LA.
Monterey Park
Monterey Park is a small city found in San Gabriel Valley’s western portion. Approximately 7 miles east of Downtown LA, it’s a gem that offers the best of both worlds: the serene, suburban lifestyle of the valley and the vibrant, urban experiences of the busy metro.
The city is known as the “Chinese Beverly Hills” due to its exceptional Chinese cuisine. Here residents can step out to enjoy the finest traditional dim sum and mouthwatering Szechuan dishes. Apart from its culinary delights, the city is dotted with several parks and open spaces for relaxation and recreation.
Alhambra
Around 8 miles east of LA is Alhambra, the gateway to the San Gabriel Valley. It’s mostly residential and not as flashy as its neighbors, but that’s precisely what appeals to many. The city is laid-back and removed from the fast-paced lifestyle the region is mostly known for. This intimate atmosphere is complemented by a revitalized downtown area that hosts new restaurants, bars, boutiques, and theaters.
Arcadia
Just like Monterey Park, Arcadia is ideal for those who want to be close to the downtown area but also want small-town tranquility. Sitting in the northern part of the valley, this city enjoys proximity to the San Gabriel Mountains. Residents are treated to breathtaking views and plenty of opportunities for outdoor adventure.
Arcadia is characterized by its well-maintained open spaces. A notable example is the Los Angeles County Arboretum and Botanic Garden. This sprawling botanical garden provides an oasis of natural beauty within the city. It’s a perfect place for leisurely walks and birdwatching.
El Monte
A short drive south of Arcadia will lead you to El Monte. Once a humble Spanish settlement, this historic place has evolved into a thriving city with a strong job market. It’s home to various Fortune 500 company headquarters, including Nestle USA, Hyundai Motor America, and Mattel. This place is particularly desirable for those renting with a mind to being close to their work.
Which property type should you pick?
As mentioned earlier, multi-family real estate investments encompass a diverse range of property types, from apartments and townhomes to condos and duplexes. Each one tends to attract different tenant demographics. Here’s what you need to know about them:
Apartment Buildings/Complexes
Apartment buildings are a popular choice for multi-family investments due to their scalability and potential for consistent rental income. They can range from small, walk-up buildings to high-rise complexes, allowing investors to choose a property that matches their budget and risk tolerance.
- Tenant demographic: These properties often attract a diverse range of tenants depending on the location and amenities. For example, if the apartment is in or near commercial areas, then expect to get more interest from young professionals.
Duplexes and Triplexes
Duplexes are smaller multi-family properties that can provide a more accessible entry point for investors. They’re essentially properties divided into two separate living units, each with its entrance, kitchen, bathroom, and bedrooms. In most cases, the two units share a common wall, and they can be arranged side by side or one above the other in a two-story structure.
- Tenant demographic: These properties typically attract smaller families or individuals looking for cost-effective housing options in residential communities.
Condos
Condos are low-maintenance, as the management and upkeep of common areas are usually the responsibility of the homeowners’ association (HOA). Bear in mind you’ll have to pay association dues. This can be an attractive option for passive investors who prefer not to deal with day-to-day property management tasks.
- Tenant demographic: Condos are a popular choice for young professionals or families who want the benefits of low-maintenance homeownership with some added shared amenities.
Student Housing
Student housing properties are strategically located near colleges and universities. They often generate above-average rental income due to the consistent demand for student accommodations. While you may think that vacancy may be an issue with students away for breaks, it is often the case that students will sign annual contracts.
- Tenant demographic: While it generally attracts students, student housing can also appeal to faculty and staff looking for convenient housing options near campus.
Townhouses
Townhouses or townhomes combine elements of single-family homes and condominiums. They’re multi-storied properties that have their private entrances, but they also have shared common areas similar to what you’d find in condos. This may include anything from a courtyard to swimming pools.
- Tenant demographic: Townhouses are popular among families and working professionals who require more space and privacy than traditional apartments but don’t want the responsibilities of single-family home ownership.
Why work with an investment property broker?
If you’ve bought a property before, then you already know how long and stressful the process can be. When it comes to investing in rental properties, the stakes and complexities often increase. Partnering with a professional who has experience in investment properties will almost certainly make the whole venture easier and more likely to succeed.
Having a reputable investment property broker by your side can provide numerous advantages including:
Better property options
Working with investment property brokers broadens your access to the best properties. Like Realtors, they often know about “pocket listings,” which are properties that homeowners want to sell but haven’t listed publicly. These listings are available only to real estate professionals and their clients, offering you a unique opportunity to discover hidden gems.
Access to a wide professional network
On a similar note, an investment property broker’s vast network of professionals can be a great asset. They can connect you with professionals and services you will probably need during and after the buying process. You won’t have to spend hours researching and vetting candidates as your broker can put you in touch with trusted professionals in the area. In some instances, they can also secure discounts or favorable terms, which is a massive bonus if you’re looking to establish yourself as a landlord.
Expert negotiation skills
They are skilled negotiators who’ll make sure that your interests are fully and vigorously represented throughout the transaction. Whether it’s securing the best purchase price, negotiating repairs, or securing tenant-ready properties, their expertise minimizes your financial risk and maximizes your return on investment.
Secure premium investment properties in the San Gabriel Valley
With careful planning, the right approach, and expert guidance, you can begin your journey in multi-family investments with confidence. However, before you start, partner with the seasoned property investment specialists at The Apartment Dealer.
Bank on 17 years of proven success. Schedule a consultation by calling 1.626.427.0786 or send us a message here and we’ll get right back to you. Together we can explore multi-family investments and set you on the path to success.