Real estate investing comes with some risks when it gets to choosing the best investing locations in the country. As a real estate investor, it is absolutely normal to be confused and hesitant about making the final decision on where to invest. In the end, what all investors want is the ability to make the most profit in the quickest time possible. This is why choosing the right state to invest in is such a big decision. One of the best places to invest in at the moment is the California real estate market.
The Golden State has been the successful real estate investing hub for the last 40 years, and it has shown no signs of slowing down going into the year 2017. When it comes to California real estate investing, it actually has an abundance of choices. There are too many cities that have shown incredible real estate returns for real estate investors throughout the years. California real estate for a while has been all about a seller’s market, and it will continue to be that way. The high demand for properties, whether it is for rent or for sale, is giving the sellers all the power in the California real estate market.
So, what makes California one of the best places to own an investment property in? Well, there are many reasons to answer that question accurately:
California Real Estate: Why to Invest?
- Property taxes in the State of California are considered to be quite reasonable for an income property investment. This means that your potential expenses won’t be as high as you might expect.
- The growth of the business environment in most major cities around California like San Francisco, Los Angeles, and San Diego means that there is a considerable workforce. The growing workforce results in more tenants and more money to be gained by homeowners.
- A high millennial population living in California means that a bigger tenant pool and a high demand for rentals are there for property investors to exploit.
- Real estate faces considerably reasonable regulation procedures in California. In California, platforms like Airbnb and HomeStay are a legal way for investors and landlords to increase rental income.
- An ever-increasing tourist population means that the California real estate market will keep booming in the form of short-term as well as traditional rentals.
- In most desirable metropolitan areas of the State, very little land is available for development within a reasonable distance from the main employment centers. For example, in San Diego, only a few big parcels are left within an hour drive of the city, and they are all under development.
California Real Estate: Where to Invest?
San Francisco
The city of San Francisco is one of the main reasons why the California real estate market is still on the rise. The scarcity of land in San Francisco coupled with its increasing population has caused property prices to hike up significantly in the last 10 years. Purchasing an investment property in San Francisco might be expensive, but the return on the investment is worth the money. The rise of Airbnb and the increased rental prices in San Francisco make investment property owners richer than ever before.
The San Francisco housing market features pretty much the highest median property price for single property homes in the US real estate market; the rental income is also very high. Furthermore, the real estate appreciation is expected to go higher in the near future as more and more people migrate there. With the scarcity of land, there is no doubt that the real estate property valuations in San Francisco will give investors a very profitable investment in the future.
Los Angeles
Los Angeles is the second largest city in the US and one of the most thriving ones. The business, tech industry, healthcare, finance, and banking sectors are all doing extremely well. That is a fact that is driving more people to move into LA, pushing the property demand up. This can be seen as an opportunity to invest in traditional rental properties in the city. It is also important to mention LA’s touristic significance, which makes it a great Airbnb investment opportunity with an average Airbnb rental income of $3,200 per month.
The rise of the California real estate market is largely dependent on the Los Angeles housing market. The high prices of houses force the majority of people to rent, and rents are high compared to incomes. This makes apartment buildings a good investment and encourages real estate investors to cut single family homes into multiple rental units.
San Diego
The San Diego real estate market specifically and the California real estate market generally are both witnessing a scarcity of land when it comes to housing. However, 2016 has seen a rise in the construction of properties. There is also an emphasis on the construction of single family homes as opposed to last year’s focus on multi family homes. This will give you the chance to achieve higher cash flows. This expansion is a great opportunity for real estate investor, and it is proof that San Diego real estate is well positioned and is growing.
The rise in property value gives investors the opportunity to receive high rental income and high positive cash flow. The average rental income for traditional rental properties in San Diego is $2,520 per month. Of course, figures differ from one neighborhood to the next, but the numbers are very promising.
San Diego has been long known for short-term rentals, even long before Airbnb surfaced the scene. After all, San Diego is a top travel destination in the US, which hosts nearly 34 million visitors annually. Airbnb San Diego is the fastest growing short-term rental market in the nation. In 2015 alone, Airbnb welcomed 185,000 guests into over 8,000 listings.
Conclusion
Investing in the California real estate market can be seen as an expensive investment for any person starting out his/her housing investment projects. But there is no denying that California possesses the highest rental and appreciation returns in the United States if not the world. The scarcity of land, the overpopulation, and its new reputation as a business and tech hub are all helping drive prices up and push supply down. The best piece of advice to give is that if you have the capital to invest in California real estate, don’t hesitate, it is definitely worth it. In your search of the best investment property in the California real estate market, make sure to use Mashvisor and its rental property calculator.