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I want to spend about 1-2 million for buying a commercial property or multifamily.

is it a better investment to buy a large one in low prices areas like South LA (due to the Downtown Revitalization) or a smaller one in better areas like Downtown ???
  • June 17 2013 - Downtown
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Answers (9)

Profile picture for missskiba
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  • February 22 2014
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Have you secured financing  yet?  [Promotion and hotlink removed by Zillow moderator. Please see our Good Neighbor Policy.]
  • July 26 2013
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I work in areas near Downtown LA, having said that I come across more buyers trying to get closer to Downtown LA than not...

Therefore if your concern is about profit margin as it relates to demand (tenants, business services) you'd most likely do better by being in/near Downtown. Sure, you'd probably spend less on the purchase price and associated costs, but you'd stand to take loss not only from what you'd collect monthly in rents but also in time delays in procuring tenants.
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  • July 18 2013
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A lot would depend on your goals with your investment and your level of acceptable risk. The higher risk properties may give you a better return but there are always downsides, like being more management intensive. Sometimes the better return can be offset by the amount of expenses you will incur in a higher risk area. You would need to do a thorough analysis of each prospective property to determine it's viability as an investment.
If you need help you can contact me.
  • July 03 2013
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Not knowing how much you have invested so far, I would suggest diversifying.  Residential homes are a good investment because people always need a place to live.  Location is important.  How are you as a landlord, are you currently a landlord?  Not knowing the Los Angeles market, I would suggest contacting a local real estate expert to discuss the pros and cons.  If you are willing to go outside of CA, come on over to AZ.  We have great bargains.  You will get so much more for you dollar, both in commercial and residential.  Contact me!  I'll show you what you can buy in Sunny AZ.

  • June 24 2013
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Profile picture for user7477199
I don't know about LA regions but one factor to consider when choosing between multifamily vs commercial is eviction. Every state is a bit different, and generally hard to evict a family unless you're in Texas. Commercial is easier to evict but the rental income is higher and the losses per month can be felt. From experience we lost about 20k to evict a single commercial tenant due to non-payments and lawyer fees. Also it can be difficult to find new commercial tenants. For residential you can always find someone.
  • June 20 2013
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In Austin Texas rentals are very good investment, There is good cash flow for most of the rental homes; if you decided to buy a multifamily home in Austin let me know I will sent you available properties for you to consider.

  • June 19 2013
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I think it has to do with your comfort level as an investor, who will be managing your properties, etc...

If you focus on a larger property, you will be less affected by tenants moving, or if they have difficulties in paying rent.  

On the other hand smaller buildings are less costly to manage and tend to have more secure tenants. 
  • June 18 2013
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Tough call - like any investment (especially of that magnitude) you'll want to do a lot of homework and consult professionals.  Commercial is completely different that residential, and rarely will one Broker or REALTOR do both well.  A lawyer is highly recommended for such a large transaction as well.  

You will want to look at current rental values in those areas.  While anticipation of growth is good, it may take many years (if ever) for that development to materialize.  

Your question is likely a more personal one for you to answer - like picking a 401(k) plan... do you want the "agressive" or "low risk" approach?  Stable current rental values (or even stable current tenants) might appeal greatly to some (a more "low risk" option), while the idea of buying a distressed property in an area ripe for revitalization may be a higher risk, capable of a much higher reward.  

There's no crystal ball here - but research, homework, professional assistance and your own vision should help guide you. 

Good luck! 
  • June 17 2013
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