How to Increase or Improve Your Investment in Long Beach Real Estate?

Investing in real estate in Long Beach can feel overwhelming, especially if you're new to real estate. In order to have success you will find that patience is a key component as it takes time to grow your portfolio and reduce your loan balance. With patience as a cornerstone of investing you will discover that you can develop a portfolio of units that have high occupancy and are in good condition.

The world of real estate demands constant adjustments to maintain a high level of renter satisfaction and to ensure your assets are giving you the yield you desire. Though the concept is simple, it’s important to analyze what kind of units to expand to and any financial benefits you can utilize.

Read on to discover 3 ways to grow or improve your Long Beach real estate portfolio.

Adding Different Types of Real Estate Assets

Choosing the type of asset to expand into is an important choice to make. Throughout Long Beach, there are several types of units such as single family homes, condos, townhomes, duplexes, triplexes, 4-units and even apartment buildings.

Single Family Homes

They are the easiest to get started with. Maintenance on single family homes tends to be easier because there are no shared walls or utilities. Keeping the unit rented is much easier because the single family homes tend to be rented by families who establish connections in the community. The downsides of single family homes are the strict limitations to any possible expansion based on zoning laws, and depending on the year it’s built, a single family home could require new plumbing to be installed as the old ones become corroded.

Townhomes and Condos

They tend to be part of larger complexes but they are also a viable way to expand your portfolio since the initial purchase price tends to be lower. Maintenance is also reduced when compared to traditional homes because most tend to have an HOA that takes care of any large challenges with maintenance items. The caveat here is shared walls as well as any restrictions the HOA may incur on your unit. You may not be able to rent out to anyone you’d like or if you have an affordable maintenance person, the HOA may require you to use their more expensive person.

Duplexes, Triplexes, and 4-units

These types of properties are among the most typical units for investors that are starting out. The size of 2-4 units provides enough flexibility in both purchase price, maintenance costs, and tenant availability. Prices for these units are slightly higher than a townhome or a condo but there are no monthly HOA fees or guidelines to abide by. This means you can utilize your own maintenance person. More importantly, tenants tend to gravitate towards these smaller units because they often have a shared yard, not many neighbors, and provide a better home feeling than apartment buildings.

Small Apartment Buildings (5-15 units)

These are usually the best alternative to grow your portfolio. Managing small apartment buildings can be a challenge if you’re coming from a single family home, but the maintenance is incremental and most tenants are comfortable in a small unit that has shared outdoor space. The largest barrier to entry is the initial cost to purchase one. However there are ways to finance these units.

Expand Your Existing Rental

You can improve your investment by expanding rental properties you already own. Adding a second bathroom can be an appealing feature to single family homes. Second bathrooms are an attractive commodity with tenants with families and with so many people working from a home office having a second bathroom can be a useful asset when adjusting rent prices.

Bedrooms are some of the first things that get advertised when a rental unit goes into the market. Having more bedrooms allows a property to rent for higher prices. Many tenants are looking for extra work space meaning an additional room can increase the market value of your rental.

Accessory dwelling units (ADUs) have the highest upfront cost however, the costs for scaling up an ADU is not exponential. Meaning you can have more value for larger units. Granted the overall size is limited by the amount of space you have available.

1031 Exchange

If you feel like it is time to sell your investment property for something bigger, consider a 1031 exchange. Like the saying goes, it's like hitting two birds with one stone.

A 1031 exchange is when in real estate, you sell one investment property like a single family home and reinvest the proceeds from the sale in another property of equal or greater value like a duplex or 4 unit, and allow capital gains taxes to be deferred.

When choosing a replacement property there are some rules. The property must be held for investment, and not for personal use or resale. Usually this suggests ownership of at least two years. You have to identify a replacement property for the sold assets within 45 days and complete the exchange within 6 months. 

If you need any help increasing or improving your Long Beach real estate or have questions about a 1031 exchange feel free to call us at (562) 888-0247 or feel free to fill out our free rental analysis to see what your rental could yield today.