Ades: Hi, I’m Brian Ades with primetime and I’m here today with Alan Long, the executive vice president for Sotheby\’s International Realty. Alan, how’s the real-estate market in Los Angeles?
Long: It’s really good Brian, a lot depends on what segment of the market you’re talking about but overall its very robust.
Ades: There are a lot of baby boomers who bought their homes in the 70’s and they’re sitting on a ton of equity today. What are some of the recommendations we should be making or thinking about for baby boomers who have purchased their homes in the 70’s and they have an enormous amount of equity in their home.
Long: Well I think it’s good for them to sit down with somebody that can help them plan out their estate to determine the best course of action to leave that equity sitting in the house or is it better to tap into it and reinvest some of that equity.
Ades: It’s interesting you say reassign some of the equity. Purchasing an income property could be a good way to create passive income.
Long: Possibly an excellent way, correct.
Ades: Have you seen the purchase of income property both being condos and single family’s and units there so much different types of property and it’s such a renters town that is seems like there’s a lot of potential in the marketplace for that opportunity.
Long: Correct, a lot would depend on their comfort level. Do they want to be a land lord? Do they want to get an outside management firm? Is it something they would like to do to fill some of their time or perhaps they just buy a condominium and then just deal with one tenant. What the condominium you have the homeowners association who can do a lot of the work for them . So again a lot is going to depend on their comfort level and how much they want to actively be involved with managing their real estate portfolio.
Ades: Are you seeing any patterns in the overall business in terms of what products they’re looking for? Are they buying newer homes, are they buying full service buildings, are they second homes for people?
Long: You know it really depends on their individual needs. Certainly in full service buildings if they’re not going to be here full time that really helps being a second home. They’re attracted to the water, they’re attracted to views, they’re attracted to country clubs. So there’s a lot of different elements of why they’re coming to California.
Ades: What do you think are some of the best kept secrets for full service buildings in Los Angeles?
Long: I think that any of the full service buildings that are attached to a big name hotel are great investments. Not only does it give the resident full service but I think the appreciation is going to be there because as the years go on were going to demand a consistent quality level of service.
Ades: There are a lot of parents and the baby boomers pretty decent section of it when talking real-estate is relatively affluent and they’re tying to distribute their wealth by buying homes for their children. Is there any advice that you can give parents?
Long: Well I’ve always advised my clients through the years that when they’re buying a second home like that buy it so that it’s a 2 hour drive from your primary residence. It’ll give you a certain form of comfort if you want to drive by the property. It’ll allow you to be close to your loved ones if they’re going to ultimately end up occupying it, but more importantly if you do rent it out you’ll be able to manage it yourself at that point. If you can’t drive to it within 2 hours I usually say that it’s a geographically undesirable purchase.