The biggest challenge that real estate investors face when buying an investment property is finding affordable locations. With the growing demand for buying an investment property in 2018 in the US housing market, it becomes harder than ever to find affordable investment properties to buy in locations such as California. As California becomes the 6th largest economy in the US, California’s housing market is booming. Therefore, home prices increase, giving little hope for renters, millennial buyers, real estate investors and taxpayers. However, these qualities make California a more attractive location for real estate investors to buy investment properties and expand or start their real estate business.
There is a talk amongst real estate investors regarding the death of general affordability in the California housing market; however, do not be discouraged with this common notion in regard to the expenses of buying an investment property in California as there will always be affordable locations for buying an investment property and all you need is to be familiar with these locations. Let us first take a look at the California housing market in 2018.
California Housing Market in 2018
According to the 2018 California Housing Market Forecast released by the California Association of Realtors (CAR), housing demand in California is expected to remain strong in 2018 thanks to the continued growth of the economy. However, a shortage of available homes for sales and the issue of lack of affordability will be an obstacle. Moreover, CAR expects a rise in existing sales of single-family homes of 1.0% to reach 426,200 units compared to sales of 421,900 units in 2017.
CAR President Geoff Mclntosh said that “solid job growth and favorable interest rates will drive a strong demand for housing next year.” “However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market” he added.
California’s unemployment rate will drop to 4.6% in 2018 compared with 4.8% in 2017 and 5.5% in 2016 as a result of California’s non-farm job growth at 1.2%.
Are you interested to learn more about buying an investment property in California’s housing market in 2018? Read “California Housing Market 2018 Forecast – What’s the Deal?“
However, there will always be locations that are affordable compared to other places in California. Let us take a look at the most affordable locations, cities in particular, for buying an investment property in the California real estate market in 2018 according to Niche.com:
Visalia
With its diverse population, various restaurants, and great schools, Visalia is considered as one of the most affordable locations for buying an investment property in California. This city has a population of 128,738, with a median home value of $190,500 and a median rent of $939. According to Niche.com, 41% of the population rent houses while 59% of them are homeowners, making it one of the best places to invest in real estate in California in 2018.
Bakersfield
With a population of 367,555, Bakersfield has a median home value of $214,600 and a median rent of $1,005. 57% of its population are property owners while 43% are renters.
Roseville
With its nice weather and landscape, Roseville is another affordable location for buying an investment property in the highly expensive California real estate market. It has a population of 128,276, with a median home value of $355,900 and a median rent of $1,359. 35% of the people are renting a property while 65% of them are owning one.
Roseville is ranked number 37 out of 228 as the healthiest place to live in the US. This plays a role in increasing the demand for buying properties in this location.
Temecula
This city is number 108 out of 228 best cities to live in the US. It has a population of 108,965 with its suburban area feel. Temecula’s median home value is $360,500 and the city has a median rent of $1,629. 64% of Temecula’s population own a property while 36% of them rent a property. Moreover, it has a median household income of $83,840 comparing to a national household income of $55,322.
Note: These locations are based on indicators including housing costs, home values, property taxes and homeownership rates.
Are you wondering about what makes a place a good location for buying an investment property? Read “What Is Location in Real Estate Investing?“
Buying an Investment Property – Use Mashvisor
Buying an investment property in California is not a quick and easy process but it can be absolutely rewarding. There are certain indicators that you need to take into consideration before deciding on buying an investment property including accurate analysis of prices, cash flow and return on investment. Mashvisor is an online platform that can do all this for you. It provides property investors with real estate investment data analysis such as prices analysis, cap rate, occupancy rate and other essential calculations that real estate investors need for buying an investment property.
Read “Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors“ to gain insight into Mashvisor’s rental property calculator.
So How Can You Take Advantage of Mashvisor?
The first thing you need to do is to sign up to Mashvisor in order to be able to use a number of real estate investing tools including Mashvisor’s investment property calculator, Mashmeter and rental property analytics and comps finder among many other tools and services that help you grow and succeed as a real estate investor and also make informed decisions before buying an investment property.
Bottom Line
Location is one of the most important elements that every real estate investor should take into consideration when buying an investment property. Whether you are planning to buy an investment property in California or elsewhere, understanding and keeping up with the US housing market as well as sellers’ and buyers’ behaviors is key to finding affordable locations and making successful real estate investments.