Investment Lifecycle
Our recommended investment strategy consists of several core elements:
- Invest in high-quality neighborhoods in Los Angeles. Our goal is to avoid loss of principal and close-in, established neighborhoods experience relatively lower price volatility.
- Follow a simple formula. Start with single-family properties (1-4 units), remodel and re-lease to add value and trade up through a 1031 exchange to defer capital gains taxes. Typically a property is sold after 2-5 years to trade up to a larger, higher value one. For example, a duplex is sold to buy an eight unit apartment building. Sometimes this process will take longer if tenants are slow to turn over or if a suitable trade up opportunity doesn’t present itself quickly.
- Repeat cycle, all the while building progressively larger equity in the property. Ultimately some investors will prefer to trade into strip malls or small office buildings rather than progressively larger multifamily properties.
- Build real estate wealth through a long-term planned investment program (12 - 15 years minimum). The time frame will depend on:
• Size of initial capital investment and property size entry point
• Returns realized on individual property investments
• Long-term income and capital return objectives
