Goal Setting: How to Make the Right Moves in 2024
Jay Evan Schoenfeldt | December 15, 2023
It’s hard to believe, but the year is quickly coming to a close. I like to take these last few weeks to look back on the past 12 months: Did I make the most of 2023? Did I spend enough time with my family? Did I set my sights on the right goals? Did I accomplish what I set out to do?
It’s also the perfect time to start thinking about setting new goals for the year ahead, particularly goals that will make your life better.
Whatever your goals are for 2024, they will likely take commitment and sacrifice to achieve (funny how goals work that way). The good news is that having a strong enough reason behind your goals will keep you motivated. And, if your commitment starts to waver, just think about how good you’ll feel this time next year, when you reflect on what you’ve achieved.
With that positive mindset, let’s talk a little bit about real estate goals …
How do you achieve your real estate goals in today’s market?
I’ve read the same dire news you might have about the state of the housing market. Sellers are frustrated because they feel stuck. Buyers are frustrated because there’s very little inventory and what is available is too expensive. We’ve never seen housing gridlock so bad, the news tells us.
Blah, blah, blah.
It can be paralyzing, reinforcing a pessimistic outlook that will keep you from achieving your goals. In short, you might feel stuck on the sidelines, waiting for the market to change.
But rather than focus on why you can’t buy or shouldn’t sell in today’s market, I prefer to think about how you can, why you should.
Let’s consider some of the most common reasons people decide to sell or buy:
- Need more space to work remote or for a growing family
- Relocating for work
- Need a home closer to work or school
- Combining households
- Desire a specific school district
- Need to downsize due to age or declining household income
- Tired of throwing away money on rent
- Protecting yourself from escalating rent increases
- Want to build net worth
- Just want to. It’s time.
All of these reasons to sell or buy have one thing in common: Improving your day-to-day life in some way. Now, can you stick out your current living situation a bit longer? Probably, but the cons of delaying a home purchase go beyond having to share a bathroom or having a long commute. It can also delay passively increasing your net worth.
Between October 2013 and October 2023, the median price of a single-family home in Los Angeles rose from $447,130 to $893,650 (Califorinia Association of Realtors). That’s the median home price, not your specific home price, which is likely significantly more than the median. Put another way, owning a home in L.A. over the last decade has given homeowners a higher net worth and, therefore, more leverage.
Waiting for the perfect time to make a move could prevent you from enjoying other aspects of your life. Now's the time to think of the big picture and get creative.
Here are some creative ways you can add value to your real estate sale, acquisition or holding in 2024:
- Take long-term market appreciation into consideration when evaluating your numbers. I typically view appreciation as a bonus, but appreciation in Los Angeles has outperformed my expectations over the past two decades.
- Want a better mortgage rate? Negotiate financing costs and interest rate buy-downs.
- Not all Sellers need 100% of their proceeds right away. If you have a large down payment, sellers may be happy with a stream of income over a period of time.
- Make money on interest like a bank does. By offering qualified buyers financing slightly lower than institutional lenders, sellers in this market can earn 5.75% or more on their equity. By doing this, sellers can also defer a portion of their income tax from the sale. Use the buyer’s down payment to pay off the balance of your loan and receive passive income without the responsibility of being a rental property owner.
- Add value to your property by building an Accessory Dwelling Unit (ADU). The ADU can be rented if you like, but it is not a requirement. Adding an ADU may allow you to develop your parcel beyond the limitations of the city’s zoning code. The additional square footage will add value to your property and accelerate the appreciation over time.
- Multi-family property investors: The market is ripe for negotiation. Many long-time rental property owners have built equity and want to exchange the time spent managing properties for personal time.
- Multi-family investors: Add ADU’s to your rental properties. This increases the cash flow, adds to your investment’s value, and creates depreciation write-offs.
- SB9 allows single-family parcels under certain circumstances to be split in two, developed and sold separately.
If you’re looking to make a move in 2024 — or you’re just looking for market insights and advice — please let me know how I can assist you. I’d love to help you achieve your real estate goals.
Wishing you and your family a joy-filled holiday season and a happy, healthy, and prosperous year ahead!