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Understanding the Commercial Real Estate Market in Los Angeles

If you do not have any experience or little experience in investing in Commercial Real Estate in Los Angeles, then you will want to read this article.  There is quite a bit of learning to do on the financial side of the commercial real estate and you will want to make sure you get a commercial real estate broker that has a strong understanding of what to do and more importantly what not to do.

The residential real estate is what most people gravitate towards but after a few deals, people want to look at commercial real estate because the deals are bigger and so is the profit!  But you must look past what you could make on a transaction and recognize the risks and evaluate what the potential losses could be.  They also require much more capital than the traditional residential deal, so you will want to make sure that your finances are not going to crumble if a deal goes south.  With commercial real estate, your turnover for renters is much less but the downside to that is that vacancies stay vacant much longer.

When you start looking at getting into the Los Angeles commercial real estate market you will want to know what you are doing but more importantly, you will need to have confidence in what you are doing.  You will also need a commercial real estate agent in Los Angeles that knows what he is doing, and we recommend Eon Lew with District Realty Group in Los Angeles.  He understands the market, knows what to look for and he will be able to walk you down this road with confidence!

Commercial real estate in Los Angeles can give you an opportunity to achieve a great yield unlike you have seen with residential and because of that I am sure therefore you are looking into that opportunity!  Before you start the process of looking for a property you will need to ask Eon some questions before you hire him to work with you.  If you don’t know what those questions are we have put together some questions for you to ask.

The first question you should ask is about demand and is it sustained.  Having a demand for a commercial property is one thing, however, is the demand the result of a boom or is it sustainable?  You want to pay close attention because as a Miami resident looking for commercial property in Los Angeles you don’t have the luxury of knowing one area vs. another area so pay close attention.  When you decide to jump into the commercial real estate business, you will want to look at the demographics of the tenants that are in the building and you will need to pay attention to the residential community as well.  If it is retail space is there enough people that live close to the property where it makes it a little easier for a tenant to be successful?  If it is an office building, is it easily accessed in an area that people are willing to commute to?

These are important things to know about a sustainable demand and if the answers are yes to these questions then you are off to a good start!  You want commercial properties in Los Angeles to pass that test, if it doesn’t then we would suggest looking elsewhere.  Remember, this is your investment, your money to lose but hopefully grow so you can recognize a fantastic return on your investment!  You really want your money to be working for you for several years, and if you can hold onto the property for a good amount of time you have a great chance at achieving that goal!

You will also want to do some research on the location, it doesn’t need to be said but just in case, you will want to research the exact locations of the commercial properties in Los Angeles.  This can be a challenge if you are not in LA, so you will need to use the internet to dig deeper and you will want to communicate with Eon what exactly you re looking for.  Location, location, location isn’t just for residential, it should also be a significant factor when looking for commercial property as well.

Ideally, you will want to have a commercial property that is surrounded by a thriving community and you can also tell how the community is by just doing a little bit of research.  We suggest that you look at homes for sale in the specific zip code where the commercial property is and the reason is that you happen to come across a community where house values are higher than the average house values in Los Angeles, then chances are the commercial property will be in a good area.  On the flip side of the coin, you do some research and the residential community looks depressed that should raise a red flag.  We understand that it is a blunt statement, however, it is your money, your investment and it will serve you well to keep this tip in mind!

One last thing to keep in mind before we close this article up, which by the way we will have another article posted this time next week, look at the risks of the property.  Successful commercial property investors will always look at what the mitigating risks are, and the reason is that just like the profits can be huge for you so can the losses, so make sure you come in with your eyes wide open!  The commercial real estate in Los Angeles is a great investment opportunity but do your homework since you are in Miami but definitely call Eon and he will be happy to answer any questions you may have!
To talk with Eon you can go to www.DistrictRealtyGroup.com or call him directly at 213-769-6262.