A great neighborhood to invest in 2015
By all accounts, the Pico-Union area of Los Angeles is one of the least desirable pockets of the City. Whether you’re a tenant looking to rent an apartment or a multi-family investor looking to buy apartment buildings, you’re probably not looking in Pico-Union.
Well, I think that’s a mistake because I don’t believe this area will be seen this way in the next few years. The area is changing quickly, and I think it’s actually one of the most desirable areas of LA right now, either as a renter or property owner.
Pico-Union is located in walking distance to some of Downtown LA’s renaissance attractions (the Staples Center, LA Live, LA Convention Center, etc.). Jump in a car and you’re at the heart of Southern California’s hub of major freeways connections for the state (the 10-freeway, 110-freeway, 101-freeway, etc.). And if you don’t want to walk or drive, then you can bike ride a few minutes and catch the major Metro rail connectors in DTLA (Red Line, Purple Line and Blue Line).
But is that all enough to lure new tenants into the neighborhood? No it’s not. But geographically, Pico-Union is poised for its own little renaissance because it’s sandwiched in-between Downtown LA and Koreatown, and both those areas’ populations and rent amounts continue to increase rapidly, and values have been following dutifully. If you look at a map, Pico-Union is clearly in the path of progress.
The current tenants you’ll inherent in the building are typically Spanish speaking, lower income and many times have Section 8 help. But other tenants are coming in and making the area their home, and fortunately you don’t have to wait to test out that theory. Property owners are already getting higher income tenants applying and moving into the area, and this is a new development. We provide property management in the area, and we’re already seeing this change happening.
The percolating of higher paying tenants into Pico-Union apartment buildings is the side effect of higher income tenants getting priced out the real neighborhoods they want to live in. They’re actively looking for affordable alternatives to the surrounding areas with higher rents. These higher income tenants are now vying for property owner’s vacancies because they are looking for alternatives to Silver Lake, Echo Park, Downtown LA and to a lesser extent Koreatown. The new tenants are willing to pay substantially higher rents than the current tenant population.
This in turn means property values will follow (actually they already area following and increasing), and because of this chain event there’s no way this submarket of LA will stay in its current state forever. The area will be significantly more desirable and valuable in just a few years.
To summarize, Pico-Union is geographically great, rents rates are attractively lower, and the architecture is classic Eastside 1920s. So as a property owner looking for places to invest, then Pico-Union should be the play. Many owners want to buy in Boyle Heights, and I think to that area is changing. But Pico-Union is still west of LA River and Downtown LA, so it’s smack dab in the path of progress.
The economics of the area provide for investment opportunities with serious upside, and aesthetically the area has a charm similar to other desirable parts of the Eastside, like Silver Lake and Echo Park.
So Pico-Union is now reclassified as the least desirable to the most desirable. Big jump! Contact me to let me know if you agree or disagree, and if you need help investing in the area.
OWNERS: Let us know what you think and for more information about how we can help you.