Real estate investors looking to grow their portfolio should consider searching for their next investment properties only in the best locations. These locations have a number of things in common: 1) a high rental demand, 2) a strong economy, and 3) multiple real estate investment opportunities. All three of those can be found in the Oakland real estate market, which is why we recommend it for buying an investment property. Keep reading as we break down each factor and how it affects Oakland real estate investors.
Related: How to Identify the Best Places to Invest in Real Estate
Oakland Real Estate Market Trends
#1 Increasing Population
Living in the California Bay Area is a dream for many due to its incredible weather and beautiful coastline. Even though the first city that comes to mind when mentioning the Bay is San Francisco, its neighbor – Oakland – is the real winner. The city is perfectly located just across the Bay and a short drive away from downtown San Francisco. Considering the insanely high home prices in San Francisco (which exceed a million dollars), people are moving to Oakland as the more affordable option, even though it’s not exactly cheap.
House prices in the area have been rising steadily over the last few years. Accordingly, this increased the rental demand in the Oakland real estate market, as people choose to rent a house over buying one. As a real estate investor, this is a good sign that you should start your search for an Oakland investment property before prices get too high! To find the best properties in the city, use Mashvisor’s property finder tool. This tool adds value to your real estate investing career as it helps you locate the properties that have the highest potential return on investment.
Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes!
#2 Growing Economy and Job Market
Besides its proximity to San Francisco, Oakland real estate offers many benefits of its own thanks to its strong economy. As a matter of fact, the city has ranked among the top cities for business in the past decade by Forbes and other publications. Moreover, with a Gross Regional Product exceeding $200 billion, Oakland is a strong and diverse business environment. As a result, major companies are relocating to the city to enjoy its affordability.
This strong economy is obviously accompanied by an equally strong job market. Huge companies like Pixar, Pandora, and Oakland’s leading industry sectors of healthcare, transportation, food processing, tech, arts, culture, and entertainment provide new jobs year after year. Not to mention, over the last year, Oakland has seen a growth in the job market by 2.6% and is expected to have the strongest market for the next several years.
What does this mean to you as an Oakland real estate investor? Not only a high rental demand but increasing rental rates as well. With an economy this strong, you are guaranteed a good return on investment in the Oakland real estate market 2018.
#3 Airbnb is Also an Option
The city’s location not only makes it a perfect destination for long-term rentals, but also for short-term rentals like Airbnb. Often referred to as “Brooklyn by the Bay”, Oakland’s tourism is thriving and has an abundance to offer its visitors in terms of food, creative energy, and natural beauty. In fact, the city’s tourism is witnessing an increase for the 4th consecutive year. Thus, investing in Oakland real estate for Airbnb seems to be a good investment decision.
However, before you start renting out for the short-term as a real estate investor, you must understand Airbnb laws and regulation in the area. When it comes to the Oakland real estate market, the city regulates Airbnb in certain neighborhoods, has a complicated rent control program, and requires new residential rental properties to register or Airbnb hosts to obtain a business permit. There are other laws that may or may not apply to your situation. Thus, you should carefully review Oakland real estate market’s rules and regulations and consult with a local lawyer before making any investment decisions.
Related: What You Need to Know Before Buying an Airbnb Investment Property
A Quick Summary of Oakland Real Estate Statistics
Before you decide to start investing in Oakland real estate, you should perform a real market analysis. With Mashvisor’s rental property calculator, we make this process a whole lot easier by giving you the necessary data and analytics to start your search. So, here are the figures regarding an average Oakland investment property:
- Median Property Price: $858,692
- Traditional Rental Income: $3,391
- Airbnb Rental Income: $3,205
- Traditional Cash on Cash Return: 1.35%
- Airbnb Cash on Cash Return: 1.45%
- Traditional Cap Rate: 1.35%
- Airbnb Cap Rate: 1.45%
- Airbnb Occupancy Rate: 60.38%
Related: How to Use Mashvisor’s Rental Property Calculator
The Best Neighborhoods in Oakland for an Investment Property
If you’re a real estate investor looking for traditional rental properties to rent out for the long-term in the Oakland real estate market, these are the neighborhoods you should consider according to Mashvisor’s rental property calculator:
#1 Shafter
- Median Property Price: $244,345
- Traditional Rental Income: $3,680
- Cash on Cash Return: 9.61%
- Cap Rate: 9.61%
#2 Millsmont
- Median Property Price: $490,963
- Traditional Rental Income: $2,571
- Cash on Cash Return: 2.68%
- Cap Rate: 2.68%
However, if you prefer renting out Airbnb rental properties to short-term tenants, these neighborhoods will give you a better return on investment:
#1 Shafter
- Median Property Price: $244,345
- Airbnb Rental Income: $4,307
- Cash on Cash Return: 9.74%
- Cap Rate: 9.74%
- Airbnb Occupancy Rate: 72.04%
#2 Arroyo Viejo
- Median Property Price: $442,933
- Airbnb Rental Income: $3,355
- Cash on Cash Return: 3.4%
- Cap Rate: 3.4%
- Airbnb Occupancy Rate: 66.05%
#3 Eastmont Hills
- Median Property Price: $827,000
- Airbnb Rental Income: $3,636
- Cash on Cash Return: 2.17%
- Cap Rate: 2.17%
- Airbnb Occupancy Rate: 67.52%
#4 Millsmont
- Median Property Price: $490,963
- Airbnb Rental Income: $3,322
- Cash on Cash Return: 2.08%
- Cap Rate: 2.08%
- Airbnb Occupancy Rate: 66.24%
To start searching for and analyzing investment properties in any neighborhood in the Oakland real estate market, click here!
The Bottom Line
To answer the main question of this article, we say YES for investing in the Oakland real estate market in 2018! Our research showed that the city is a more affordable option than the neighboring markets and it offers good returns for both traditional and Airbnb investments.
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