Real Estate Investing

Conventional wisdom says you make your money on an investment when you buy it (i.e., that the purchase price and timing primarily determine the performance of an investment), but experienced real estate investors will tell you both the purchase and sale timing are key to earning strong investment returns in real estate due to the cyclicality of the business. We believe this current down housing market cycle is presenting and will continue to present some of the best real estate investment opportunities we have seen in years, and helping clients make smart real estate investments is and will continue to be a big focus for us at HausAngeles. Single and multi-family residential sector We currently focus on helping our clients buy and sell investment real estate in the residential single and multi-family sectors (i.e., homes and apartment buildings). We believe the single family market has been the first to come down in price and represents the best buying opportunities, followed by the multi-family sector where prices are coming down to levels that are once again attractive from an earning-capacity (cap rate) standpoint. As we sit here in Q2 2009, we think it is likely prices in both single and multi-family real estate will come down further in Los Angeles…although this may change depending on what happens with the credit markets and the government’s foreclosure prevention initiatives during 2009.   As has been the case historically we believe commercial real estate prices will likely “lag” the softening in the real economy so the best buying opportunities in commercial real estate are a couple of years away. Between now and then, we will be expanding into and getting active in the Commercial sector also (where members of our team already have significant experience).   Thoughts on timing the market: We think timing a market perfectly is impossible and believe history has proven that trying to time the market approximately right is a more realistic and superior investment strategy than trying to time the market perfectly. We believe it is approximately the right time to start looking seriously at real estate investment opportunities. Investment time horizon and returns We generally recommend clients invest with a long term (i.e., 7-10 year) investment time horizon, as we believe a long term view is the appropriate view for those investing in the real estate market given the generally longer duration of real estate cycles relative to cycles in the stock market. This does not mean there are no returns in the near term: since real estate is an income generating asset, investors can achieve significant cash on cash returns if they don’t use too much leverage (i.e., debt) to purchase the investment real estate.