In times of economic uncertainty, many investors turn to real estate to balance their portfolios. A diversified portfolio is a key to long-term, stable returns, and there’s no better way to diversify your portfolio than premium real estate assets.
But with so many markets to choose from, it can be difficult to know where you should begin.
Christina is your compass to point you in the right direction.
Regarding premium real estate assets, it’s hard to do better than one of the most renowned neighborhoods in the country: Los Angeles’ Beverly Hills, CA 90210.
Why Should You Invest In Beverly Hills Real Estate?
Real estate balances out your portfolio.
But why?
- Real estate is a hedge against inflation
- Real estate has a high cash flow
- Real estate has high appreciability
Our strategy toward real estate utilizes advantages like these to get better returns for our clients.
Let’s explore why real estate is a crucial component of a resilient portfolio and why premium properties like the ones found throughout Beverly Hills will help you thrive financially.
Beverly Hills Real Estate Is A Hedge Against Inflation
Inflation is running rampant in countries across the world.
The diminished dollar purchasing power caused by inflation can wreak havoc on your finances. For one, inflation causes prices to rise, putting more stress on your budget. As people feel the pinch on their finances, conventional investment options like stocks on the exchange take a dip—we’re entering a bear market due to the rising inflation.
Worst of all is the effect inflation has on our retirement savings. When the weakening dollar outpaces the interest generated on your retirement fund, then you start to lose money. Your savings wither away the worse inflation gets.
Real estate investments, especially high-value assets like the properties in Beverly Hills, give you a financial haven from the effects of inflation.
How Does Beverly Hills Real Estate Protect Against Inflation?
Income-generating real estate assets don’t just protect you against the effects of inflation; they can help you benefit from it.
Inflation causes prices to rise across sectors, including rent.
One of the most common ways real estate investors can generate an income from their assets is through renting their property. Rental income generates real estate investors an income stream that rises with inflation, netting them a return that performs better as the higher inflation gets.
Rent has risen as high as 30% in attractive locations. Rent has gone up 10% in Beverly Hills since last year. If you’re concerned about the performance of your investments during this inflationary period, invest in premium real estate in Beverly Hills—you can offset the effects of inflation.
Beverly Hills Real Estate Has A High Cash Flow
Cash flow describes the exchange of money that goes into and comes out of an investment.
The gross cash flow accounts for the total amount of transactions going in and out of an investment. Net cash flow refers to the final balance between cash coming in or out of the investment. Rental properties supply investors with a high net cash flow.
Why Does Real Estate Have High Cash Flow?
Rental properties are almost guaranteed to pay out with a high net cash flow. The rent determined in the rental agreement necessarily needs to exceed the expenses of property ownership to generate a profit.
Because rental property owners can set the income generated by their property, they can generally account for a steady return every month when rent is paid.
The average rent in Beverly Hills is around 2,700 dollars. Investors with rental properties in this highly valuable neighborhood can get a substantial return with that kind of cash flow coming out of their properties.
Beverly Hills Real Estate Appreciates In Value
When real estate isn’t generating income, it still increases in value.
With a few exceptions, the sales price of houses sold in the United States has gone up every year since 1965—within the past ten years, it’s almost doubled. Real estate makes for a great long-term investment because property values are reliably appreciating.
Why Does Real Estate Appreciate So Well?
A functioning economy usually sees a baseline inflation rate of around 2%. This slow rising in prices drives up the value of homes over time. As prices rise, real estate prices rise with it. Because property serves such a long-term function, investors can count on them to retain their value when they’re maintained.
It’s never been a better time to take advantage of appreciating property values. The market is hot. The year-over-year increase in home prices in Beverly Hills, California, is a whopping 22.6%.
Real estate is a great long-term investment because of its high appreciability. This is largely due to a set of economic characteristics unique to real estate.
What Makes Beverly Hills Real Estate So Good For Investment?
Real estate has some special characteristics that define it as an asset class and propel its performance. There are four in total:
- Scarcity
- Improvements
- Permanence of Investment
- Location
Want to learn more about the fundamentals of the real estate market? Check out our educational resources.
Scarcity
Because land is a limited resource, the property is inherently scarce.
For every new construction built on a property, there is less land to supply further development. As land becomes scarce, it increases in value due to the dwindling supply.
This fundamental characteristic of real estate means that investors can count on the property value to rise consistently—land cannot be reproduced.
Additionally, new construction is a drawn-out and expensive process. This contributes to the scarcity of new listings; because development takes so long to complete, it’s unlikely that new housing units will outpace demand for them.
Improvements
Real estate assets allow investors to take action on their value. Whereas stocks and bonds increase in value due to forces outside an investor’s control, real property like real estate can be improved.
Improvements can refer to a wide range of actions made on a property. Everything from building a new driveway to new light fixtures can increase the value of a property.
Beverly Hills real estate is already a high-value asset for investors. When investors have the opportunity to improve the value of their properties further, they can get even more value out of their assets.
Permanence of Investment
Investments made into real estate are generally fixed, meaning that improvements to a property retain virtual permeance.
It would be counterproductive to undo repairs made to a roof. The capital spent on repairing that roof becomes fixed in the house’s value, ensuring that the investment made into your real estate asset stays strong.
Furthermore, more intensive alterations to a real estate asset are so fundamental they are necessarily permanent. Hooking up a home to the electrical grid or building a septic system for a building are necessities and are effectively guaranteed to remain a part of the property indefinitely.
Location
Location’s role in a real estate asset’s value cannot be overstated. Whether it’s a business looking for an ideal commercial space or a prospective homeowner looking for a good house in a competitive school district, the location of a property can be the single most definitive driver of its value.
The high-value properties in Beverly Hills perfectly demonstrate the location’s effects on the real estate market. Single-family homes in popular California neighborhoods like Beverly Hills or Studio City will cost far more than the same single-family home in upstate New York.
Let’s explore what makes Beverly Hills such a prime location and how the unique economic characteristics of real estate affect its value.
Where Is Beverly Hills Located?
Beverly Hills is in the Westside region of Los Angeles. Bisected by Santa Monica Blvd, this neighborhood is one of the most desirable locations in the entire city.
West Hollywood is right around the corner, and the coast is a mere 15 miles away. It’s surrounded by some of the most high-value areas in the city: Bel Air, Westwood, Holmby Hills, Crestview, and Melrose, to name a few.
With plenty of parks in the immediate area, and Franklin Canyon Park on its doorstep, Beverly Hills has a little bit of everything for its residents.
Beverly Hills Is Prime Location
The proximity of Beverly Hills to L.A’s most attractive features and its own is a foundational reason why this iconic neighborhood is so sought after.
Its ideal location means that property values in Beverly Hills can be consistently relied upon, making Beverly Hills real estate an equally ideal investment.
What Are The Population Statistics Of Beverly Hills?
Over 33,000 people call Beverly Hills their home. The median age is 46, on the older side compared to other Los Angeles neighborhoods.
White-collar jobs make up most of the workforce living in Beverly Hills at 95.24. The remaining 4.76% of residents do blue-collar work. 33.4% of this work population are considered entrepreneurs, 55% work for private companies, and 6% work for the government.
The median income for Beverly Hills residents is an impressive 101,241, while the average annual income is 192,591, making it one of the most affluent neighborhoods in Los Angeles.
Beverly Hills is well-educated. More than a third of residents have a bachelor’s degree, while another quarter has a graduate degree.
Beverly Hills Is A High Capital Neighborhood
The amount of capital circulating in Beverly Hills helps drive up property value. With such high-income earners in the neighborhood, the property becomes increasingly competitive, resulting in more valuable land by square footage.
What Is The Housing Status In Beverly Hills?
Beverly Hills contains about 17,269 housing units—that could describe everything from a townhouse to condos. About 14,500 units are currently occupied.
More than half of these occupied units are leased by renters; owners occupy the remaining 43%. 1956 is the median year in which these housing units were built, but most were built between 1960 and 1969.
Development of additional housing units in Beverly Hills has been slow as the average number of housing units built each year has steadily declined since the 60s—only 256 were made in the last decade.
Supply Is Low, and Demand Is High In Beverly Hills
Fewer and fewer housing units are being built in Beverly Hills, meaning the supply is relatively low. Since more than half of the neighborhood’s residents are renting, this limited supply means that new investments into rental properties could meet the growing demand for housing.
Break Into This Lucrative Neighborhood
Now is prime time to invest in this rock-solid Los Angeles neighborhood. But getting in on your own can be tough—the median price per sq/ft of Beverly Hills homes is almost 1,500 dollars.
To break into this competitive market, you need an investment firm with the know-how and the liquid capital to navigate these high-value properties.
Get started with Christina today and invest in Beverly Hills tomorrow.
Sources:
It’s not just home prices. Rents rise sharply across the U.S. | NPR
Beverly Hills, CA Rent Prices | Zumper
Average Sales Price of Homes Sold For United States | Economic Research