California has been home to many stable and profitable real estate markets over the years. The state’s real estate market is having another successful year thanks to high prices, a shortage in supply, no upcoming bubble, and fast purchases. The housing market in California is also expected to end 2018 on a strong note. This is particularly true for the Southern California real estate market, home to some of the best markets in the location such as Los Angeles, San Diego, Anaheim, Long Beach, and Santa Barbara. These cities are excellent choices for real estate investors interested in making money through both traditional and Airbnb investment properties. This blog will provide data from Mashvisor’s rental property calculator on the best cities in the Southern California real estate market and the best neighborhood in each city.
Los Angeles
-
City Level Data:
Median Property Price: $831,560
Traditional
Rental Income: $2,678
Cash on Cash Return / Cap Rate: 1.19%
Airbnb
Rental Income: $2,208
Cash on Cash Return / Cap Rate: 0.97%
It’s hard to imagine the success of the Southern California real estate market without the lively City of Angels. Whether you opt for Airbnb or traditional investment properties, there’s never a shortage of tenants to find in Los Angeles. This is true for any location in Los Angeles, but the neighborhood that stands out in the city is Mid City West.
What is starting to exist in LA, and in the Southern California real estate market, however, is a shortage of investment properties. Real estate investors, therefore, need effective tools, such as a heatmap of a rental property calculator, to scour for properties. Not too sure what we mean? Read this blog to learn more: “Finding Income Properties Using a Heatmap”!
-
Best Neighborhood – Mid City West:
Median Property Price: $1,926,809
Traditional
Rental Income: $4,445
Cash on Cash Return / Cap Rate: 0.34%
Airbnb
Rental Income: $3,971
Cash on Cash Return / Cap Rate: 0.18%
Occupancy Rate: 58%
San Diego
-
City Level Data:
Median Property Price: $831,560
Traditional
Rental Income: $2,678
Cash on Cash Return / Cap Rate: 1.19%
Airbnb
Rental Income: $2,208
Cash on Cash Return / Cap Rate: 0.97%
San Diego has not only been one of the best locations within the Southern California real estate market; it has been one of the best places to invest in real estate throughout the entire US. In truth, the same can be said for many of the cities on this list, including the aforementioned Los Angeles. Nonetheless, San Diego provides real estate investors ample opportunities at making money. The city’s best rental market, in the Gaslamp Quarter neighborhood, highlights this with its profitable return on investment and rental income.
-
Best Neighborhood – Gaslamp Quarter:
Median Property Price: $706,022
Traditional
Rental Income: $3,265
Cash on Cash Return / Cap Rate: 2.64%
Airbnb
Rental Income: $3,354
Cash on Cash Return / Cap Rate: 1.88%
Occupancy Rate: 62%
Anaheim
-
City Level Data:
Median Property Price: $588,186
Traditional
Rental Income: $2,650
Cash on Cash Return / Cap Rate: 1.68%
Airbnb
Rental Income: $3,503
Cash on Cash Return / Cap Rate: 3.46%
Anaheim, like the other areas in the Southern California real estate market, is a location full of profitable real estate investing opportunities. What sets the real estate market in Anaheim apart from its Southern California real estate market counterparts, however, is its affordability (want to know the most affordable cities in the US real estate market? Read this: “Top 7 Cheapest Cities for Buy-and-Hold Investment Properties”). The median investment property price in the city is around $580,000, which is a godsend in any housing market in California. While both Airbnb and traditional rental strategies work out fine on paper, Airbnb investments are prohibited in the city. Anaheim’s most profitable neighborhood is Southwest Anaheim.
-
Best Neighborhood – Southwest Anaheim:
Median Property Price: $586,058
Traditional
Rental Income: $2,535
Cash on Cash Return / Cap Rate: 1.85%
Airbnb
Rental Income: $5,612
Cash on Cash Return / Cap Rate: 6.27%
Long Beach
-
City Level Data:
Median Property Price: $827,550
Traditional
Rental Income: $3,052
Cash on Cash Return / Cap Rate: 1.12%
Airbnb
Rental Income: $2,360
Cash on Cash Return / Cap Rate: 0.96%
Long Beach is another one of the best places to invest in real estate in the Southern California real estate market. The city is similar to both Los Angeles and San Diego in virtually every aspect. All three markets have a median property price ranging in the $800ks and high Airbnb and traditional rental income medians. Long Beach’s best neighborhood, Alamitos Beach, avoids this standard by clearly favoring traditional investment properties.
-
Best Neighborhood – Alamitos Beach:
Median Property Price: $859,754
Traditional
Rental Income: $3,273
Cash on Cash Return / Cap Rate: 0.75%
Airbnb
Rental Income: $1,961
Cash on Cash Return / Cap Rate: 0.75%
Airbnb Occupancy Rate: 60%
Santa Barbara
-
City Level Data:
Median Property Price: $1,527,675
Traditional
Rental Income: $4,269
Cash on Cash Return / Cap Rate: 1.08%
Airbnb
Rental Income: $4,733
Cash on Cash Return / Cap Rate: 1.74%
Last, but definitely not least, of the best places to invest in the Southern California real estate market is Santa Barbara. Santa Barbara is by far the most expensive of the cities in the Southern California real estate market, but with an obvious justification; it is the rental market with the highest rental income. The real estate market in Santa Barbara’s best neighborhood, Hope, has below average median property prices for markets in the city, but still retains very high rental income.
-
Best Neighborhood – Hope:
Median Property Price: $1,116,643
Traditional
Rental Income: $3,999
Cash on Cash Return / Cap Rate: 2.51%
Airbnb
Rental Income: $4,125
Cash on Cash Return / Cap Rate: 2.77%
Airbnb Occupancy Rate: 47%
Conclusion
The Southern California real estate market is one of the best in the US. The markets are pricey compared to the average US housing market, but they generate above-average returns. Want to read more about California’s real estate market? Read this: “California Is Emerging as the Best Place to Invest in Real Estate in the Coming Years”! Want to begin looking for a Southern California real estate investment? Click here to start your search with Mashvisor!