There is no doubt that a vibrant city like Los Angeles attracts many real estate investors to invest in the Los Angeles housing market through purchasing and renting out real estate properties. Let us take a look at the Los Angeles housing market to figure out if you should invest this year or not.
Los Angeles Housing Market
It is a no-brainer that the California real estate market is a hot one due to its fast-growing employment opportunities and tech industry, touristic sites that attract foreigners and reasonable regulations related to real estate investments. Los Angeles is definitely one of the best places to invest in real estate in the state of California.
An analysis published by Zillow states that the number of homes in the Los Angeles housing market with price cuts is somewhat up in comparison with the beginning of the year. Other reports show that homes sold in the Los Angeles metro area in July stayed around three days longer on the Los Angeles housing market than in June of the same year. That happened despite a slight uptick in the number of homes put for sale in the market. This, however, may eventually decrease the home prices that are put for sale which gives real estate investors better chances to purchase real estate properties in the area. In a place like Hollywood in Los Angeles for example, the median house price reaches up to $1,185,348; its traditional rental income is $2,955 while the Airbnb rental income is $1,604 according to Mashvisor’s investment property calculator. Although home prices are high in general in the Los Angeles housing market, the rental rate for both traditional rentals and Airbnb is high and the occupancy rate is 52.47%.
Mashvisor’s investment property calculator has the following data for the Los Angeles housing market:
- Median house price: $831,560
- Airbnb rental income: $2,208
- Traditional rental income: $2,678
- Airbnb cash on cash return: 0.97%
- Traditional cash on cash return: 1.19%
Should You Invest in Rental Properties in the Los Angeles Housing Market?
With its lovely weather all year long, Hollywood sign, the Walt Disney Concert Hall and countless other touristic attractions and museums, Los Angeles has become one of the most traveled-to destinations nationwide. Does this mean that the Los Angeles housing market is a great opportunity for investing in Airbnb rentals? Well, according to AIRDNA, Los Angeles has an occupancy rate of 83% and the city keeps generating higher profits with the continuous developments in the city. With its high occupancy rate and cash on cash return, Los Angeles real estate makes a lucrative investment for Airbnb rentals.
However, as a real estate investor, you should be aware of the regulations imposed on renting out Airbnb listings in the Los Angeles housing market. On the other hand, the Los Angeles housing market also makes a good investment for long-term or traditional investments as the job opportunities are growing fast and people need to rent for the long-term. That is why traditional rental investment properties in the Los Angeles housing market are successful and profitable.
Where to Invest in the Los Angeles Housing Market
When thinking about investing in Los Angeles real estate properties, the first thing that comes to mind is its fancy houses over the beaches that are surrounded with palm trees, but guess what? That is not all the Los Angeles housing market is willing to offer as there are many up and coming neighborhoods that can be great locations for real estate investors to purchase real estate properties in.
City Terrace
If you are looking to purchase a property that is close and has easy access to downtown, then City Terrace is your option. City Terrace has a quick commute to commercial areas such as Alhambra, South Pasadena, El Sereno and it is only ten minutes away from downtown. This makes it a lucrative place to invest in long-term rentals and Airbnb as well. Prices of homes with two or three-bedrooms range between $300,000 and $400,000.
Inglewood
If you are looking for a good deal, then Inglewood is the right place to find a property. It has a great location and is also conveniently distanced from the west side of Los Angeles via the main thoroughfares of La Brea and La Cienega. Inglewood is close to the airport as well. Single-family homes in this area reach up to about $450,000 which is lower than the city average of $831,560.
Cypress Park
Cypress Park has more reasonable options compared to Highland Park, El Sereno and Atwater Village for example. Millennials, young aspiring professionals, and home buyers are flocking to homes in Cypress Park that are located at the foot of Mount Washington. Thus, if you are looking to buy or invest in single-family homes, expect to pay around $550,000.
Bottom Line
The Los Angeles housing market offers great and different types of real estate investment options for real estate investors if they are well aware of the real estate market, have a financial plan to cover the costs of purchasing or investing in real estate properties and also are clear about their vision in regard to real estate investing in general. Mashvisor does not only allow you to find properties and analyze their values at both neighborhood and property levels but also can be your all-time real estate investment professional guide that is available at your fingertips.
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