Monday, March 21, 2016

San Pedro Income Property - The Last Deal on the Coast?

Cabrillo Beach
Cabrillo Beach, at the harbor in San Pedro CA.
From Malibu to Redondo Beach, income property values have had a very healthy jump up in the last five years. While the Beach Cities and coastal location are still our most requested income property search, investors are finding the rental rates don't generate the returns they expect. On smaller buildings, such as a duplex or triplex, the interest level from builders looking for a quick demo/rebuild on the larger lots causes a bidding war these days.

The last "coastal" area in Los Angeles that hasn't skyrocketed is San Pedro. The harbor area of San Pedro has had the highest number of available income units for the last few years. It is often 3 to 4 times more units on the market compared to all the Beach Cities combined.

Advantages to San Pedro income units:
  • High number of units on the market allows for actual negotiations during the purchase. In Santa Monica or the Beach Cities, it is often a "pay full price or move on" response from the seller.
  • Los Angeles has committed another million dollars towards improvements to the public harbor waterfront. Plus the Port itself has close to a billion dollars in improvements planned over 5 years. While much of the Port's work will be safety and structural improvements, they area also working on beautification and public spaces.
  • Newer construction buildings (1980+) are exempt from the rent control system.
Challenges with San Pedro income units:
  • The LA City rent control laws apply to most buildings built before 1979. There have been some newer units built, however we often see 90 to 95% of the available buildings are older and rent control will apply. This makes buying vacant units very popular though, as you can start the rents out at market rates.
  • San Pedro is part of the LA school system. While they have some higher rated elementary schools, the high school is still on the lower side for ratings.
  • There are some neighborhoods/areas we'd recommend against.
If you would like more information on San Pedro income units, please give me a call.

 - Josh Toering, REALTOR at Charlemagne Intl Properties
310-525-9440 or email us

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