• While it is difficult to make a case that any product type is ideal or “best in class”, Southern California multifamily has historically been one of the most consistent and lucrative investment vehicles.
  • A lack of housing supply combined with the local economy continues to make this one of the few “can’t miss” investment opportunities in the U.S.
  • Southern California, like New York, has cultural and economic advantages that are unmatched
  • The product class can offer both stability and upside appreciation potential to any investor portfolio
  • The Southern California market is less volatile than many emerging markets, some of which are now seeing oversupply and negative rent growth
  • The key to investing in this market is to identify those submarkets where net deliveries of new units are near zero (like the beach areas) and targeting properties where the rents are under market. This is value add investing, where putting capital into the building will allow for rent increases of 30-50% when the units are leased to new tenants.
  • Because Southern California apartments are always in demand, a value add strategy is less risky in this area.
  • The challenge is that “everyone” seems to know this, as demonstrated by the high valuations of California Real Estate. Capturing value add deals at favorable price points typically requires the evaluation of 100’s of properties.
  • With recent economic uncertainly and higher interest rates, finding good value add deals may become easier, leading to some great opportunities!