Why invest in California? It’s a question many potential real estate investors ask themselves as the industry continues its recovery from the initial uncertainty associated with COVID-19. While it does have a reputation for overpriced properties, California continues to offer a broad array of potentially rewarding investment opportunities for individuals who are looking to get into the single family residential real estate scene. With breathtaking beaches, year-round recreational offerings, bustling urban centers, a vibrant and distinct culture, and an exponentially growing population, the Golden State is regarded as the land of opportunity for a countless number of people. Its diverse, healthy economy is stabilized by established technology, entertainment, innovation and corporate services, all collectively garnering a consistent demand for housing by renters and home buyers alike looking to take advantage of all the state has to offer. Just to put things into perspective, California has the eight-biggest economy in the entire world, accounting for more than $2.2 trillion. That means if California were its own country, it would come in above Russia in terms of GDP.
For investors who want to capitalize on the steadily-rising home values, California has a strong pull. With the median home-price rising year-after-year, it’s easy to see why investors are flocking like crazy to the state. Not to mention, houses certainly do not linger on the market—with the median time on market coming in at a mere 15 days. That is particularly eye-grabbing for aspiring fix and flippers, who aim to resell their projects quickly to maximize their rate of return so they can move on to the next rehab undertaking.
Here are a few additional considerations that just might sway you into making your next real estate investment move in California:
- Healthy Job Market: There are 54 of the Fortune 500 companies that call California home—to include Google, Apple, Disney, Oracle and Intel. Along with this strong corporate presence comes a projected steady increase in job growth. These elevated employment rates attract rents and buyers and, from an investment perspective, enhances the chances of consistent cash flow from either prospective tenants or home buyers
- Ideal Property Taxes: While definitely not the lowest across the nation, California has what is generally considered favorable property taxes that will assist in keeping investors’ costs under control and boosting revenue
- High Demand for Rentals: With tenants coming to California for a wide array of reasons—climate, employment, etc.—there is a spike in the overall demand for flexible housing options that rental properties offer
- Rising Home Values: The mixture of job growth and a world-renowned culture boosts the median home value to well above the national average. This means that resale values for fix and flips can offer a healthy payoff
When it comes to choosing a specific local market within the state, keep in mind that California offers a broad range of real estate investment opportunities. Of particular note is Boyle Heights, which is located between Downtown and East Los Angeles. It is among the more affordable areas of the city and has a youthful and vibrant population with easy access to downtown and the Arts District—making it an ideal spot for Airbnb offerings and similar rental properties. The median home price is $420,000 and the average rental income for traditional properties is $1,504 and $2,396 for Airbnb spaces. Alamo Square is also another often-overlooked residential neighborhood that is located within the Western Addition of San Francisco. It is most known for Alamo Square Park, its numerous restaurants and breathtaking view of downtown San Francisco. With affordable prices, it is the ideal traditional investment location, with the average home price sitting at just under $700,000 and traditional rental properties garnering an eyebrow-raising $4,802 per month.
Long story short, there are an overwhelming number of investment opportunities in the Golden State. Do your research and don’t be overwhelmed—California has something for everyone…including investors! If you’re interested in expanding into the California real estate market, Alpha Funding Partners would love to partner with you!