1. Know your budget and what returns you’re looking for. Long Beach is unique in the fact that you can find studio condos for around $100K to $1M+. You can also find single family homes from the high $200K to multiple millions of dollars.
2. Know whether you want a condo, single family home, or multi-family investment. Deciding what type of real estate investment you want is dependent upon a few factors such as budget, experience, and investment goals.
3. Know the area you’re investing in. The City of Long Beach has almost 100 different neighborhoods around the city that each come with their unique upsides and downsides. In general, the City of Long Beach has been going through a great revitalization that is bringing in great people, great companies and making for a wonderful community to invest in. Nevertheless, you have to know where you’re buying your single family or multi-family real estate investment considering that the different areas come with different benefits and risks. For example, areas closer to the beach such as Belmont Shore, Naples and Downtown are going to have higher rents and more rental demand but also come at a much higher price tag and a likely lower return due to the marginally lower investment risk. On the contrary, areas such as Rose Park, Central, Zaferia and Wrigley are areas of potentially higher investment return but also more volatile nature of the submarket.
4. Know the laws of where you’re investing. Long Beach has some of the strictest tenant/ landlord laws in the country. You need to make sure that you know the laws or hire someone who does in order to know what you can and cannot do so that you don’t get yourself into trouble. Knowing local laws and ordinances will have a huge impact on your investment and management decision and it’s important you are aware of these laws before you purchase and/or manage your property. Not doing so can cost you major legal headaches and financial penalties.
5. Know what you’re buying. Always pull building permits from the city’s building permit office. Long Beach has many great and historic homes that date back to the early 1900’s but along with that comes some potential building disasters. After a potential 100yrs in existence it is difficult to know exactly what is going on behind (inside) those walls. Consequently, it is crucial you pull the permits for the home at the city office to make sure you know what you’re buying and to make sure what you’re buying is permitted by the city. The last thing you want to do is to buy your new Long Beach real estate investment and realize that the home’s current structure is not permitted by the city of Long Beach or that the home unsafe to live in due to poor and unsafe building practices.
6. Know the financial projections of your real estate investment. Real estate investing is all in the numbers. In order to know if you’re going to have a profitable investment or a cash black hole you’re going to need to do a financial analysis of the investment and come up with projections to determine what your returns will be and when they will happen. You can look up real estate investment financial models online or hire an experienced property manager or financial expert to help you come up with these projections to ensure the property you’re looking to invest in is truly a good investment.
7. Know the condition of the home. Getting a home inspection before buying a home is a common and expected step in the escrow process but beware that not all home inspections are alike. When investing in Long Beach real estate you’ll likely be buying an older property with many potential issues. Make sure that the home inspector you pick uses the newest technology to inspect the home. For example, inspection technology such as thermal scanning of the home can show you cracks in the walls and roof by exposing the air escaping out of the home. A thermal scan can potentially also show you water leaks in the home since damp areas are often a different color than the surrounding areas. Other technologies such as fiber optic cameras look through the plumbing system to ensure you’re not buying into a broken mainline or other such issues. A great home inspection will save you thousands in the long run so don’t just go for the cheapest option. Do your homework!
8. Know your potential tenants. When investing in real estate you always want to know what kind of renters are in the area, what they look for, and how to reach them. Knowing whether you’re going after a lower income tenant for a small apartment or trying to attract a high income tenant for a multi-million waterfront beach home is important. The marketing and offerings for the different type of Long Beach tenants will make all the difference. For example, a lower income tenant might be content with cell phone photos on a craigslist ad and will want to see things such as utilities being included and low security deposits. A high income tenant looking at multi-million dollar homes will want to see professional photos and videos of the home and be much more interested in the upgrades and amenities than the utilities and security deposits.
9. Know your competition. Knowing the rental competition or “comps” is much more than doing a google search for what the renting value is for other homes in the area. Although sites like Google, Zillow, Trulia, etc are very helpful in getting a rough idea of what the rental market is like, they do not give you the full story as to the landscape of the rental market or the important details that each rental offers. For example, you’re looking to purchase Duplex #1 and are using Duplex #2 that is three blocks away and also has two 2bed 1 bath units that are also 900sqft each. Duplex #2 rents each unit for $XXXX/mo. It may be safe to assume that duplex #1 should rent out for the same however you never checked to see if duplex #2 offers such amenities as onsite laundry, garage parking, utilities included all of which add a great deal of value. Other factors such as bedroom size and layout or even the condition of the neighborhood all play a huge factor in the rental value and attractiveness of the home as those are the factors that tenants look and pay for. In general, you need to go visit the comps you’re using to compare your future real estate investment or you maybe undervaluing/overvaluing the rents and attractiveness of the home. If you need help in doing this analysis, a good property manager or knowledgeable focused real estate agent can help you analyze the investment landscape and determine the real compatibles.
10. Know how to market and list the rental. Marking your rental is what makes the difference between having your Long Beach property sit on the market for a few days or weeks vs. sitting on the market for a few months. It is important that you list and market the home on all the major rental listings sites and know the information to provide to entice potential tenants to call and schedule showings to view and lease the home. Sites such as Zillow, Trulia, Craigslist, and the MLS are all great resources to get the home exposure and leased. Also, making sure that your listings and market look professional is very important as it sets the stage for what potential tenants expect from the home and the landlord in Long Beach.
11. Know how to manage your property. The property management of your Long Beach real estate investment is what is going to make or break the investment. Great property management from a great property manager will make your life easy and increase the performance and returns of a rental property. Property management is not an easy or simple task. There are countless laws you must know, forms you must use and techniques you must be familiar with in order to properly manage your Long Beach real estate investment. Moreover, knowing the Long Beach rental market will help ensure that you’re pricing the property correctly and managing it to achieve the highest returns possible. Lastly, you’ll want to make sure that you limit your risk and liability as a landlord. A good long beach property manager will know how to ensure that your liability is limited and that you are protected against bogus claims that can arise. Having the proper form and disclosures, having the correct insurances and coverages can all protect you as a landlord and are imperative if you are a Long Beach real estate owner or investor.
At Optum Real Estate Management, we’re obsessed with managing and maximizing our client’s ROI. Experience the Optum difference today. Call us at (949) 478-4695 or email firstname.lastname@example.org to schedule a consultation.