In recent years, there has been a boom in the popularity of the so-called “gateway apartment.”
These luxury units are available in many cities, and typically start at about $500,000.
But if you want to buy one of these luxury units, you’ll need to shell out hundreds of thousands of dollars, making it harder to afford.
A new study by real estate research firm Zillow shows that the average price for a new home built in the Los Angeles area in 2017 was $1.1 million, and the median price for single-family homes in the area was $3.7 million.
The average price per square foot in the county was $6,000, which is more than double the national average.
The median household income in Los Angles in 2017, according to Zillows data, was $65,912.
“The majority of the buyers of gateway units are single people and families, who have little money to spare, or can’t afford to put down a deposit,” said Zillower’s Kevin Janssens.
These units have been popular in Los Angels since the mid-1990s, when developers began building them on land formerly occupied by the city’s Chinatown.
According to Zilow, the number of people living in these buildings quadrupled between 2004 and 2013, with many people buying the units out of desperation and not knowing if they could afford them.
According to Janssen, a typical gateway apartment has a basement, three bedrooms, a full bathroom, and a deck, which can house about 40 square feet of living space.
“The average owner will spend at least $3,000 a month in rent,” Jansssens said.
“If the apartment is priced at a fair market value, it could cost as much as $5,000 per month.”
For example, a $1 million gateway apartment could cost a buyer about $1,400 a month, with utilities and property taxes to cover.
In 2017, the average mortgage payment for a Gateway apartment was about $2,600.
Some buyers, like Daniel, have chosen to move out and sell their units.
He’s been in the market for more than 10 years, and has spent about $6 million on the apartment.
“I’m a real estate professional, so I know the market and how to work with it,” Daniel said.
He says he’s a big fan of living in LA, and said that when he first bought his home in LA in 1999, it was “worthless.”
“When I was young, I didn’t realize how expensive the real estate market was,” Daniel explained.
“But now I know it’s not that expensive.
It’s more than I thought.”
For a low monthly payment, Daniel said he hopes to buy a “gateways,” a new two-bedroom apartment for less than $1MM, to give his wife and three kids a place to stay.
But he knows it’s still going to be expensive.
“If I can get my mortgage paid off and get a place for my family to stay, that will be my goal,” he said.
What are the benefits of owning a Gateway?
The main benefit of owning an affordable gateway apartment is the ability to save money and maintain your home, according ZillOW.
The most common reasons for not owning a gateway are the fact that you can’t pay down your mortgage or property taxes.
If you’re in a high-cost area like LA, you may need to rent an apartment to save for your down payment.
If you can afford it, the second-largest reason for not buying a Gateway is the fact you may not have enough money to afford the upfront costs of building and maintaining your home.
According ZillOWS analysis, a Gateway will cost about $3 million to $4 million, which includes the purchase price and the property taxes for the entire apartment, if you can find a place that offers them.
But the biggest drawback of owning your own Gateway, according Jansson, is the potential for someone to rip you off.
If you want a Gateway to stay in the same neighborhood as your current home, you need to get a pre-approval from the local building code.
“It’s really not an option if you’re a single person and live in a very poor area,” Jonssens said, adding that if you don’t have the funds to pay down the mortgage, you will probably lose your home and will likely be evicted from your current apartment.
The other major downside of owning Gateway is that it may take years to build, and developers may be reluctant to build them if they’re in high-demand areas.
If your home is affordable, but you still want to own a Gateway, the next best option is to find an apartment that is closer to your current location.
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