Everyone can see how Silver Lake has changed over the last ten years, and now behind the scenes, developers are buying up every apartment building they can find. The neighborhood that was once the next big thing in Los Angeles real estate is now the world's main attraction.

I'm in a unique position because I work for a developer, but I came to the business trying to buy my first home and got locked out. Like many people I meet, income property is the only affordable way to own one's first home in Los Angeles. Buying four units, living in one, and letting the other three pay for the majority of your mortgage sounds like a deal made in heaven. And it is. But now, there's so much cash pouring into east side real estate that those of us with FHA loans or who are simply trying to find an affordable deal are stuck in buyer's purgatory, outbid within three days of a listing's start date.

The developer I work for is a neighborhood guy who renovates rundown buildings and rents them out to newcomers. Because he's buying decaying carcasses, he's not the Average Joe's competition. Average Joe is looking for a property with minimal upkeep that offers a modest return. But wealthy buyers who want the same thing are pouring cash into a loose money market, raising prices, and spending more than they would have three years ago if they had had more foresight. I understand wanting a safe investment, and now Silver Lake is surely that, but the way to make real money in real estate is, as cliché as it sounds, by investing in the next big thing. I have some ideas about that on my income property blog, and I invite you to read more there.

What does this new cash mean for the Silver Lake real estate market? Because so many of these cash buyers just want a safe investment, it won't mean much other than some wooden gates and paved driveways. Single family homes are certainly more expensive than they were five years ago, so that means more money in neighborhood shops, and hopefully schools. But really, real estate is only following the progress that Silver Lake has created on its own. It hasn't been forced to shift the way Downtown did because big development slapped a new face on it. Silver Lake still has its integrity for now; it's just that its integrity costs more to enjoy.