Many real estate investors strive to buy home in California. Of course, there is a reason for that. The state is a desired destination due to its warm climate throughout the whole year as well as its nature. The California vacation spots attract numerous tourists yearly due to the weather, but also the various leisure activities that are offered. Additionally, all the tourists’ destinations along with the business side of California make it a great place for short term rentals. Nevertheless, traditional rentals are also a great investment opportunity in the state as many people want to live there long term.
However, since the real estate market is quite big, we will try to narrow it down by presenting you the best neighborhoods in California for real estate investing. Before exploring the best neighborhoods in California, however, we will discuss the California housing market 2018. In addition, we will give you some tips in not only finding the best neighborhoods in California but also the best investment properties. Hint: comparative market analysis (real estate market analysis) is a great helper in finding the best place to invest in real estate. Are you interested? Keep on reading to find more!
#1 The California Housing Market 2018
Before exploring the best neighborhoods in California for investing in real estate, it is important to quickly review the current housing market. The California housing market 2018 is an interesting phenomenon to observe. There are a couple of reforms pending on the current housing market in California. They are mainly in regards to the tax bill. If the reform passes, it might have a significant effect on the market. This is due to the fact that taxes in the state are already quite high, and increasing them further might force buyers to leave. Additionally, the timeframe, during which you should have lived in a property before selling it and getting tax reductions, will increase. This will possibly lead to fewer homes on the market.
On this note, we can quickly review the state of the current housing market in California. Is it a buyer’s market or a seller’s market? It seems like it is a seller’s market and it will not change to a buyer’s market anytime soon. This is due to the shortage of supply and constantly increasing property prices. A seller’s market implies that the market favors the sellers as the demand for buying properties is higher than the supply, thus, the prices increase.
Last but not least, it is worth mentioning something about suburban areas in the state of California. Millennials are looking for and buying houses in the urban suburbs. Such people research the market in depth before choosing to buy home in California. They are influencing the real estate market with their high demand but also financial assets used to buy home in California. Do you want to learn more? Make sure to read “California Housing Market 2018 Forecast- What’s the Deal?”.
After reviewing the real estate market, the time has come for exploring the best places in California for real estate investing (the best neighborhoods in California to be precise). In order to provide you with the most accurate and detailed information regarding the best place to invest in real estate, we will divide the best neighborhoods in California into two categories. The first one would be the California vacation spots, or so to speak the best neighborhoods for Airbnb rentals. The second will present the best places in California for traditional rentals.
#2 The Best Neighborhood in California for Airbnb Rentals
It is a common thought that the Bay Area in California holds the most profitable rentals and that the best place to buy house in the Bay Area is San Francisco. Here is one of the best neighborhoods in California for short-term rentals:
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South of Market, San Francisco
Median Property Price: $795,000
Airbnb Rental Income: $7,220
Airbnb Cash on Cash Return: 6.78%
Airbnb Cap Rate: 6.78%
Airbnb Occupancy Rate: 64.91%
You can also learn more by reading “The 5 Best Places to Buy a Vacation Home in California 2017”.
#3 The Best Neighborhoods in California for Traditional Rentals
Sure enough, traditional rentals can also be successful in the California housing market. That is why we selected the top three best neighborhoods in California for long-term rentals. This might help you in deciding where to buy your next investment. Here they are, the top three places in California for traditional investment properties:
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North San Jose, San Jose
Median Property Price: $592,500
Traditional Rental Income: $3,319
Traditional Cash on Cash Return: 6.72%
Traditional Cap Rate: 6.72%
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Platinum Triangle, Anaheim
Median Property Price: $139,500
Traditional Rental Income: $2,257
Traditional Cash on Cash Return: 12.25%
Traditional Cap Rate: 12.25%
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South of Market, San Francisco
Median Property Price: $795,000
Traditional Rental Income: $5,061
Traditional Cash on Cash Return: 4.17%
Traditional Cap Rate: 4.17%
#4 Our Advice for Finding the Best Places in California for Investment Properties
It does not really matter if you are trying to find the best place to buy house in the Bay Area, the best California vacation spots or the best place to invest in real estate in general. There is one important thing and it is doing your research. Conducting comparative market analysis (real estate market analysis) and analysis on the investment properties of your interest is crucial. Such analysis can provide you with very useful information and guide you through the process of real estate investing.
Of course, conducting comparative market analysis and real estate market analysis is hard. However, there are different real estate tools which can help you. For example, the data regarding the best neighborhoods in California has been obtained through Mashvisor’s investment property calculator. This tool calculates various real estate metrics. It also shows you detailed information about the property and its surrounding areas. Additionally, it presents you with the optimal rental strategy for the chosen investment property. Needless to say, this may come very handy for every investor, who wants to succeed in real estate. Also, do not forget to check out “Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier”.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.