Is Koreatown a Good Place to Invest in Real Estate?
By Michelle Clardie on 11/06/2024.
Reviewed by Josefin Gatsby
Koreatown is one of Los Angeles’ most vibrant and diverse neighborhoods. With many mixed-use buildings offering retail on the street level and residential units above, Koreatown is a highly walkable community. Residents are drawn to the urban vibes and comparatively affordable rents. Centrally located between Downtown LA and Hollywood, Koreatown offers convenient public transportation options for those looking to commute to nearby employment hubs.
But is Koreatown a good place to invest in real estate?
In this article, we’re exploring local market trends to see what Koreatown can offer real estate investors. The data will help you decide if Koreatown is a good place to invest in real estate.
Overview of Koreatown, Los Angeles
Bordered by other lively neighborhoods like Hollywood, East Hollywood, Westlake, Mid-Wilshire, and Hancock Park, Koreatown is centrally located with easy access to the rest of the city via freeways, surface streets, and even public transportation.
In recent years, Koreatown has seen a significant increase in real estate development, driven by high demand and growing interest in urban living.
This is a community of long-term renters, with only 7% of locals owning their homes. For investors, this can mean low turnover and minimal vacancy losses. But it also means there’s lots of room to increase ownership by adding desirable purchase options for would-be homeowners.
The population of Koreatown skews young with 65% of residents under 45 years old. Many of Koreatown’s residents are young professionals beginning their careers and small business owners running the local eateries and shops. The median household income is a comparatively low $52,427 (for comparison, the national average is $75,149), making affordable units in high demand.
Koreatown Real Estate Market Highlights
Here is what you can expect from the Koreatown housing market.
Lower-than-Average Property Values. The median home sales price is $727,500 (as of September 2024). This is substantially lower than Los Angeles’ median of $983,000.
Slight Rates of Appreciation. From September 2019 through September 2024, the median home price in Koreatown increased by 12.4%. This is an average appreciation rate of 2.47% per year.
Average Timeframes for Sales. The average home in Koreatown sells for a respectable 99% of the list price, typically in just one or two months.
High Demand for Two-Bedroom Rentals. Over the past year, median rental rates have dipped for most unit types in Koreatown. However, rental rates have increased by 9%, up to $3,120, for two-bedroom units.
Koreatown Amenities
With a rich cultural scene, authentic dining experiences, and lively nightlife, Koreatown is a unique neighborhood that appeals to those with a sense of adventure and a desire for community.
You’ll find a blend of tradition and modernity, with historic architecture alongside upscale residential developments, trendy coffee shops, and popular Korean BBQ spots. Koreatown is also home to iconic cultural landmarks, like The Wiltern Theatre, and calming green spaces, like the Koreatown Pavilion Garden.
Parking is a known issue in the area, but many locals find vehicles unnecessary since the neighborhood is so walkable and bikeable. Plus, with the red and purple lines stopping in Koreatown, the area has earned an “excellent” transit score. It’s easy to move around the neighborhood and access the rest of LA from Koreatown, even without a car. You can even take the metro or rapid bus to and from Santa Monica.
There are tons of options for things to see and do around Koreatown. The Staples Center and L.A. Live are just a 10-minute drive away, providing world-class sports events and concerts. To the west, you have the Los Angeles County Museum of Art (LACMA) and the La Brea Tar Pits. Hollywood, including the Hollywood Walk of Fame and the Dolby Theatre, is about a 15-minute drive to the north. For outdoor enthusiasts, the expansive Griffith Park, offering hiking trails, scenic views, the Griffith Observatory, and the Los Angeles Zoo, are all just a 20-minute car ride away.
Real Estate Investment Opportunities in Koreatown
Comparatively low long-term appreciation rates have some investors questioning Koreatown. But with the right investment strategies, investors can find lucrative opportunities here.
Here are two real estate investment strategies that are currently working well in Koreatown.
1. Value-Add Tenants-in-Common (TIC)
Tenants-in-common (TIC) is a form of real estate ownership in which multiple parties share legal rights to a single property. Each owner owns a percentage of the total property, but their ownership interest is undivided, meaning that it doesn’t correspond to certain parts of the property. This makes TICs different from condos, in which each owner holds a divided interest, owning just their own unit and sharing common areas.
With a value-add TIC, investors purchase an existing multi-family building, renovate the property, and sell it to the new homeowners as a group.
Koreatown is a good potential market for value-add TICs for a few reasons:
Affordability. Properties are available at favorable prices, which is good for investors. Plus, affordable homeownership opportunities are in high demand in lower-income areas like Koreatown, so it may be easier to find buyers.
Favorable Zoning. Koreatown is too dense a neighborhood to support many single-family homes. Multi-family buildings make much more sense here.
Community Development. Koreatown is seeing a lot of new development and refurbishment, breathing fresh life into the area.
2. Affordable Rentals
With 24% of the population making less than $25,000 per year, many locals qualify as low-income households. Investors can serve this sizeable community with affordable rentals.
Government-assisted programs like Section 8 housing subsidize tenants’ rent. This allows qualified low-income renters to pay just 30% of their housing and utility costs out-of-pocket, while investors receive the remaining 70% directly from the US government.
This provides several benefits for investors, including:
Model tenants. The program has a long wait list and a strict qualification process, incentivizing participants to carefully adhere to their lease agreement and make timely payments to remain in the program.
Quick lease-ups. These units typically are rented immediately upon completion/conversion.
Low turnover. Because the application process is so intense, many tenants stay in their units for the long term.
Summary: Is Koreatown a Good Place to Invest in Real Estate?
Based on the high demand from a diverse population, Koreatown is a good place to invest in real estate, particularly if you can fill the need for affordable housing.
Invest in Koreatown Real Estate with Gatsby Investment
Gatsby Investment is an LA-based real estate investment company that specializes in making unique deals available to investors.
We offer opportunities to investors through real estate syndication. This model allows you to passively invest in professionally managed real estate projects with high return potential.
We offer a wide range of real estate investment opportunities, including the value-add TICs and Affordable rentals that perform so well in Koreatown.
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