1930s hacienda-style home in the foothills of Beverly Hills, once owned by Katharine Hepburn and then by Boris Karloff.

It will become more expensive to buy your little piece of heaven this year, as lower-than-ever inventory in the City of the Angels continues to be the big story at the beginning of 2016. And with the lack of inventory in Los Angeles comes the inevitable rise in prices. All-cash offers and bidding wars are still the rule in every sought-after neighborhood and price range, especially if properties are correctly priced.

But according to the highly respected UCLA Anderson School Real Estate Forecast, our market is not in a bubble.

“L.A.’s housing market, despite becoming more expensive and unaffordable, is not in a bubble,” UCLA economist William Yu wrote. “The current rise in home prices seems to be driven by rising effective demand and limited supply, not by speculation. Therefore, the housing bubble burst we experienced several years ago is unlikely to haunt us this year or next, and the smart money will continue to invest here.”

Moreover, the forecast states that Los Angeles is in the middle of its rebound and can be expected to experience price increases for at least another four years, with values increasing 35%. Obviously the global economy and the current uncertainty about the U.S. elections could play havoc with the predictions, but on the whole, relative to other parts of the country and world, L.A. looks like a pretty darn good investment. Take a closer look at our Los Angeles market in the Agency’s Q4-15 Report.

Award winners!

The entertainment industry’s award season brings added interest to homes of past winners. One of my own listings sold in the fall, and garnered a great deal of attention: the former home of Katharine Hepburn, subsequently owned by Boris Karloff. The Great Kate still holds the record for the most Oscars ever won (four for best actress).

The remarkably authentic 1930′s hacienda (just under 5,000 square feet) stands on approximately one usable acre in the foothills above the city of Beverly Hills.

Bar reportedly built by Boris Karloff.

The property is hedged for privacy and features thick masonry walls, the ubiquitous movie star swimming pool and a rose garden purportedly planted by Karloff, who enjoyed floriculture. I was fortunate enough to meet his daughter, Sara Karloff at the house once. She had very fond memories of spending part of her youth in such a romantic and beautiful place. Her father built the bar in the house.

Legend has it that several actor friends of Karloff (who created the onscreen Frankenstein monster) asked to be buried in the garden, where they had spent many happy times. To my knowledge none ever were. And of course, had I known that I would have been required to disclose it to the new owners which, in retrospect, might have increased the value. The property sold in multiple offers for slightly more than the asking price of $7,395,000.

Charlton Heston’s former home in the Coldwater Canyon area of Los Angeles.

The home of the late Charlton Heston, Oscar-winning best actor of 1959, sold in mid-January close to the asking price of $12,249,000. The buyer is reported to be Luc Besson, the prolific writer/director of the classic “La Femme Nikita” and more recently “Lucy,” starring Scarlett Johansson. The 2.9-acre estate in Coldwater Canyon/Beverly Hills has spectacular mountain and canyon views and a great midcentury 5,100-square-feet residence (total square footage of all structures is 9,667 square feet) designed in 1958 by noted architect William S. Beckett.

The glass-walled home, beautifully sited for the views, is fitted out with terrazzo floors, a two-story library and a gigantic master suite, befitting the star who embodied Moses, Ben-Hur and other larger-than-life characters. The estate also features a tennis court with a viewing pavilion and a three-story art studio/guest house.

The Hollywood neighborhood itself has made a comeback of epic proportions, starting with the opening of the Hollywood and Highland shopping center in 2001. Luxury condominiums abound in the area, including the Residences at the W Hotel, and the Broadway Hollywood lofts on Vine Street near Hollywood Boulevard.

Other developments include the enormous and controversial Millennium Hollywood mixed-use development, the Palladium Residences, adjacent to the world famous concert and event venue, and smaller projects like Fountain+Gower, built by Metro Investments in conjunction with P. Joseph Development. All are within an easy stroll (over stars commemorating Hepburn and Heston on the Hollywood Walk of Fame) of the Dolby Theater, where the Academy Awards take place again this year.

So purchasers of luxury condos can walk where legends have and (hopefully) always will. So let’s give a cheer to the winners, and plan a shopping trip for a new home in the starriest part of Los Angeles, and, in fact, the world!

Pays a Fair Cash-on-Cash Return

When you buy property you are taking money out of your liquid financial assets – stocks, bonds, CDs – and investing it into a very illiquid asset – real estate. You were earning a rate of return on your financial assets, such as 4 percent or 6 percent, and you should strive to earn a fair cash-on-cash rate of return on your real estate. To do this, you need to pro forma your deals and buy cash flow-positive properties that earn you decent returns – not those prize properties that are negative, negative, negative. For more guidance on this, see Smart Investing – A Tale of Two Townhomes.

Isn’t Too Risky an Investment

All real estate is extremely high risk. Development of real estate, land, Tenant-In-Common (TIC) investments, private real estate funds, fixer uppers, etc., all have much higher risk profiles than just simply buying a nice established cash flow investment property. In many of those investments, you will never see a dime of your money again because there are just so many things that can go wrong! So if you want to own real estate, consider simply taking fee simple title in your own name – or an entity you wholly own – to the properties you purchase. In addition, you must do the proper due diligence, analyze, test, review reports, etc., to make a lower risk real estate decision.

Doesn’t Require a Lot of Time or Managing

Some properties just require way too much time and management to make them smart investments. Examples include vacation rentals, low quality properties in bad areas, college rentals, etc. Nice boring properties rented for as long as possible to decent credit profile tenants seem to take the least time to manage. In addition, treating your tenants fairly and with respect goes a long way towards keeping good relations with them; and reducing your hassles when there is an issue you need to address. And believe me — there will be issues!

It’s the nice, boring, wholly owned, in good shape, cash flow-positive properties that are the best investments. They are out there for your picking, but it’s not as simple as finding a property on the MLS and buying it.

You need to do some hard work, research, read up, and make smart, educated decisions to acquire the best real estate investments!

A hard money loan differs from a mortgage in that the loan amount is based on the anticipated sales price of the home after improvement costs. Terms are short (typically just 12 months), interest rates are much higher and the loan is backed only by the hard asset, the residential property. Terms are short (typically just 12 months), interest rates are much higher and the loan is backed only by the hard asset, the residential property.

Once associated with the financial crisis, these loans are shedding their negative reputation and are now attracting wealthy investors.