I live in Santa Monica, California. Real estate isn’t exactly cheap in my area. This makes it extremely difficult to find good investments. Almost impossible, actually. Most properties are already fully recovered from the recent housing crisis. Many properties are even above their levels during the bubble, when prices were substantially high.
A lot of people ask me how they’re supposed to invest in real estate when they live in an expensive area. They say that they can’t find any good deals. Most of them don’t know any other markets, either, so they are afraid to invest in properties that aren’t local.
What they don’t realize is that they have more options than they think. They just have to look at real estate from different angles.
If you live in an expensive area, you need to get creative. You won’t be able to find single family homes that you can buy and hold. The good news is that there are so many other ways to invest in real estate. Many investors in the Los Angeles area are finding profits through flipping luxury homes. Others are working on new developments and building properties from scratch.
You can also try looking into other asset classes. If single family homes are too expensive, why not invest in other sectors such as multi-family, commercial, or self-storage? These are all great alternatives that can provide strong returns.
Another option would be to invest somewhere else. If you find investing out of state too risky, look at the areas within 2 hours from you. That way you can still get to your properties quickly if you’re managing them yourself. There are always cheaper areas nearby where you can find better deals.
You might also consider investing in syndications or crowdfunding projects, which I’ve discussed in more detail in this article.
The Usual Response
“I don’t know anything about these other ways to invest in real estate. Where would I even start?” This is one of the most common responses I receive. To be honest, I find this question to be a sign of laziness. The answer is simple. Go research and learn about these other methods. Talk to others who have experience. Join a local real estate group that invests in these asset classes. Figure out what you need in order to be successful.
When you live in an expensive area, you can’t be a one-trick pony. You need to be creative and be able to adapt to your environment. You don’t want to be sitting on the sidelines for years waiting for your next opportunity. If you need ideas, here are 8 ways to find real estate deals.
Now, I’m not recommending to invest in things you don’t know. Knowledge is power. The more you know, the more opportunities you’ll have. If you can, find someone with more experience that you can invest with and learn from. This will reduce your learning curve dramatically and increase your chances of success.