As part of our broader strategy of buying homes in cities experiencing a chronic housing shortage, we’ve purchased a 1,008 square foot single-family home in South LA for approximately $410,000.
Business plan
The home is in good condition, so we only anticipate spending about $5,000 to complete minor renovations. Following the completion of renovations, we aim to rent the home for seven to ten years before putting it on the market. The goal is to earn consistent cash flow from rent payments, while capturing what we believe will be continued strong appreciation in home values in LA’s emerging neighborhoods.
Why we invested
- Strong recent growth: Over the five-year period ending May 2018, the Zillow home value index in the 90011 ZIP code has increased from $221,000 to $379,000, a trend that we believe will continue as prospective homebuyers are priced out of more established areas.
- City-wide housing shortage: LA home prices have grown much faster than incomes in recent years, resulting in a major affordability crisis within the city. With large sections of the city simply out of reach for many renters and homebuyers, we believe that investments which create reasonably-priced new homes will deliver attractive long-term returns. See our LA market analysis
