Even if you’re not a gambler or not at all interested in the point spread between two NFL teams, what would you think the odds of success in car-crazy LA would be for a new parking garage? A cinch, sure.
And what would the odds be of your financial success for owning a parking garage as compared to a rental apartment in a long-standing car-culture city?
Would you not bet on the parking lot? This is, after all, the uncrowned king of the auto (as anyone who has had the misfortune to drive there can tell you).
The unexpected news from LA is that some parking lots (apparently without a lot of cars in them) are being sold to build a couple thousand apartments.
This is not directly applicable to small investors who are unlikely to have the funds to build multi-apartment deals (or perhaps parking lots, either). But it is an interesting development worth taking another look at.
Why is this happening in this car-crazy city?
Suburbanites are apparently and unexpectedly willing to trade in their cars to be closer to what they have as an excuse for a downtown (LA’s not the best and the brightest version of a downtown).
What this means for small investors are some signs or signals.
In LA, reports are that many locals think the Staples Center arena that is home to the Lakers and other teams helped prompt a new interest in downtown more than a decade ago. But that also helped spur new restaurants and entertainment options.
Even pricy and particular Whole Foods deigned to come downtown. For health-conscious residents, this was like the Biblical manna from Heaven.
With more people attracted to downtown, the vacancy rate for apartments declined to less than three percent. Rents rose (as healthy a development for landlords as the arrival of Whole Foods for health-conscious but free-spending dieters).
This new surge of apartment building comes despite indications in some markets that oversupply is becoming the norm as vacancy rates are pushed up and rents are declining.
But there are two impressions for would-be small investors here:
- All markets are local, of course. So how is yours doing? In my home town of Orlando, the downtown area is obviously reviving. It used to be dominated, rent-wise, by run-downs but that has changed in recent years. Whatever the case, it’s worth taking another look. Your own market might be the same.
- Creativity counts. Books, magazine articles, even those old and quick-yellowing newspaper stories hammer the message home. At a time when the big buyers are crowding the moms and pops that have long been the backbone of single-family rentals, this is a time in American life when creativity in real estate investments perhaps reached a peak intensity. So it sometimes pays to take a new look with open eyes at what’s news these days. You might be surprised.