In spite of the financial challenges of owning a California rental property, why do investors continue to buy or retain their properties?
Dynamic economy. California is home to a number of Fortune 500 companies, such as Apple, Disney, Google, Intel, and Oracle. The increasing demand for their products and services suggests that growth is certain for these major corporations. This means added job opportunities will come from the company’s expansion.
Moreover, a low jobless rate indicates that landlords and rental property owners have better security because tenants have the means to easily make their rent payments.
Very strong tourism. It should not be a shocker to anyone that California attracts millions of visitors every year. Entertainment venues, famous places to visit, amusement parks, beaches filled with tourists and locals, perfect weather, awesome people, numerous activities to choose from, which translates to significant tourist revenue for local and state government. This makes the strategy of purchasing a short-term rental property increasingly attractive to investors within and outside of California.
High property demand. With job seekers moving into the state by the thousands for higher paying job options, prices for rental properties remain high. However, investors have noticed more people than normal have moved to inland to rural areas due to remote work opportunities. So, now there are additional choices and premium rents may be charged for highly paid remote workers in adjacent Riverside county.
Property Value Appreciation. Normally, buying a home is a solid investment since land will more often than not rise in value through time. Although, a smart investor realizes where to search for investment property will enjoy higher returns. Considering the variety of factors that have an impact on California real estate, the rate of appreciation is much higher in comparison to other states.
Some of the negatives for residents are: homelessness, poor public schools, high property taxes, constant drought, and wildfires.
Best Areas for Short-term Rentals
In many cases, short-term rentals have become among the better alternatives to hotel or motel rooms. Sometimes the savings are significant for visitors and vacationers, and investors have noticed the strong demand for vacation rental properties.
However, investors should understand that each city within Orange County has their own regulations for short-term rentals. Some cities allow it, some allow with a permit, some don’t address it at all, and some prohibit it altogether. Aliso Viejo, Irvine, Yorba Linda don’t allow it.
However, Huntington Beach, Newport Beach, Laguna Beach, Dana Point. It’s a good idea for rental property owners to stay up to date on the rules prior to purchasing an investment property in Orange County, CA.
That being said, here are some of the best places to invest in real estate in California for those who are considering getting into the vacation rentals game:
- Anaheim, Orange
Average Home Price: $820,400
Average Price per Square Foot: $509
Days on Market: 30
Airbnb Occupancy Rate: 81%
Airbnb Rental Income: $4,937
Airbnb Daily Rate: $298
Walk Score: 50.75
Anaheim is displayed first due to its very robust market for vacationers and visitors. In fact, it is where Disneyland is. Let’s not forget the other nearby attractions of Knotts Berry Farm and Huntington Beach. Real estate investors will not have a difficult time getting their initial investments repaid from this Southern California city.
- Huntington Beach, Orange
Median Property Price: $1,200,000
Average Price per Square Foot: $687
Days on Market: 41
Airbnb Occupancy Rate: 56%
Airbnb Rental Income: $4,241
Airbnb Daily Rate: $207
Huntington Beach is well known as one of the California’s top holiday destinations which probably explains why it attracts roughly 4.5 million visitors annually. More than just enjoying the best surfing spots in town, vacationers make the most of the area’s ideal temperature throughout the year to participate in its various outdoor recreation for both young and old.