I'm looking to understand the demographics, economics (median incomes, job types / company sources), and growth trends of the various neighborhoods in Los Angeles. I would like to understand this in the context of multifamily real estate investing (6 - 25 unit buildings), and what the best neighborhoods to target are.
The top six gentrified neighborhoods showing great potential in the rental markets are: Silver Lake, West Adams, Glassell Park, Cypress Park, Inglewood and Wrigley. In the multifamily rental property market in Los Angeles County rent has increased 4.8% and new construction of multifamily units has increased by 18%. The average amount of rent paid in these areas ranges from $979 to $1,779 per month. The average median income ranges from $39,724 to $71,375.
LOS ANGELES COUNTY MARKET EXPLORATION
All of Los Angeles County is an excellent investor’s market as it is quite active with a slightly decreasing vacancy rate. Projections for 2016 showed rent increased 4.8%, with the average rent totaling $1,307 per month, and multifamily construction increased sharply 18%, according to 2015 figures. The average vacancy rate “went virtually unchanged”, but is expected to decrease in coming years. These figures show increased rent does not lead to increased vacancies, meaning the investor will likely acquire more revenue in coming years.
Within Los Angeles County, Silver Lake, West Adams, Glassell Park, Cypress Park, Inglewood and Wrigley show the most promise when compared to the top gentrifying neighborhoods in the area.
West Adams’s location and metro access has allowed investors to flip properties for double their original value. The average rent in West Adams is $1,039.00 per month and the median household income is $48,196.00. The top employers are Superior Grocers, Pet Smart, and Target.
Cypress Park is located on the northeast side of Los Angeles and includes three promising neighborhoods, Highland Park, Atwater Village and El Sereno, where investors are moving into the market. This area has commercial access, while still being immediately removed from the commercial area. The average rent in Cypress Park is the lowest of the six neighborhoods at $979.00 per month and the lowest median household income at $39,724.00. The top employers are Pizza Hut, Superior Grocers, and Pet Smart.
Inglewood is located on the west side of Los Angeles “near the 405 and 105 freeways as well as La Cienega and La Brea boulevards”. The improving metro system will make this area even more popular, making it an opportune investment. This neighborhood is in the beginning stages of gentrification and renovation, making homes cheaper to buy, but not to sell and peak prices yet. The average rent in Inglewood is $1,331.00 per month and the median household income is $42,044.00. The top employers are Centinela Medical Center, Home Depot, and Global Cardio Care.
Wrigley is located north of downtown Long Beach. The neighborhood has Spanish-style single family homes built in the 1920s, ’30s and ’40s that are experiencing a “revitalization”. Homes in Wrigley are priced in the low- to mid-$500,000 range. This neighborhood also does not have commercial areas yet, but they will likely develop as higher-income families buy homes. The average rent in Wrigley is the highest of the neighborhoods at $1,779.00 per month. The median household income, however, is not the highest at $40,143.00. The top employers are Molina Healthcare, California State University Long Beach, and Boeing.
Glassell Park is located in the northeast of Los Angeles. The “diverse area” is close to Silver Lake and Mount Washington. Over the past decade, the neighborhood has developed into a rustic commuter town. Many commute to Pasadena and Glendale. Gentrification is currently ongoing, so houses are reasonably priced. The average rent in Glassell Park is $1,103.00 per month and the median household income is $62,907.00. The top employers are Pizza Hut, Superior Grocers, and Jack in the Box.
Silver Lake has a growth rate of 30%. It is considered “the hippest neighborhood in the entire city”. Housing prices are still affordable for the time being, despite the growth rate. The median price for a 1-bedroom to rent is $1,950 per month and the median purchase price is $705,000. The average rent in Silver Lake is the second highest at $1,514.00 per month and the median household income is the highest at $71,375.00. The top employers are Dollar General, UPS, and Sierra Pacific Industries.
In conclusion, the multifamily rental property market in Los Angeles County shows great potential. Rent has increased 4.8% and new construction of multifamily units have increased by 18%. The neighborhood with the most potential are Silver Lake, West Adams, Glassell Park, Cypress Park, Inglewood and Wrigley. The average amount of rent paid in these areas ranges from $979 to $1,779 per month. The average median income ranges from $39,724 to $71,375.