California has a ton of hot markets from top to bottom. There is plenty to choose from for any real estate investor looking to snatch up valuable properties to rent out for top dollar. Regardless of precisely what you’re looking for, the Golden State certainly offers plenty.
What real estate investors should be focusing on are markets with a common denominator: upward growth. Luckily, there are plenty of centers across the state that have been on this upward swing for a while now, and continue to be headed in the same direction. Getting in sooner rather than later can help investors reap the most rewards and solidify their return on investment.
Here are some solid markets to purchase rental property in California.
Located in Orange Country, Irvine is an affluent city that boasts a ton of colleges and universities where students are constantly and actively seeking out places to rent out. With so many educational facilities in and around the area, there is a constant influx of students who typically rent a place if they choose not to live on campus. This in and of itself presents a unique and prime opportunity for investors.
Irvine is a wonderful city with a low crime rate, and offers residents a number of attractions and amenities. The driving force of rental growth in the city is the price of homes, which are continuing to increase year over year. As such, the majority of residents in the city are actually renting, which makes Irvine an excellent choice for investors who plan on buying and renting out their properties. Right now, the median rent price in Irvine is $2,316 per month.
About 110 miles southeast of San Francisco lies Merced, a Central Valley California city that RealtyTrac boasts as one of the top markets in the entire country for investors to buy property to rent out. With a current median sale price for homes sitting at $189,000, it’s an affordable place to buy. The annual gross rental yield in Merced is a beefy 7.6%, which by any standards is considered quite high for investment purposes. Median rent checks collected currently stand at $1,201, which is quite impressive considering the rather affordable purchase price of the average home in the area.
Thanks to the incredibly high demand to reside in gorgeous Santa Clara, rent prices here are among the highest in all of California at $2,925 per month. It’s heavily populated, yet has a low crime rate in comparison. Santa Clara is conveniently positioned and located in Silicon Valley, and is not terribly far from the large urban center of San Francisco. Upward growth seems to be continuing, though it’s uncertain how much further this will continue. As such, investors may want to short-list Santa Clara as more of a short-term real estate investment compared to the other centers on this list.
Very close to San Francisco is the large urban center of Oakland, which is continuing to grow. Residents flock to this city because of its plentiful amenities and close proximity to San Fran without the same sky-high cost of living. That’s not to say that living in Oakland is cheap: median home prices are $619,800. Values have increased 12.5% over the past year, and are expected to increase another 3.3% within the next year.
Investors who snatch up properties while prices are on the uptrend can take advantage of this increase in value. In addition, they can also benefit from the handsome median rental price in the city of $2,760 per month. Rent prices in Oakland have realized the biggest increase in the area. That reason alone is enough for investors to buy into Oakland today.
Riverside is currently experiencing a growth in its economy and employment opportunities, and is considered an excellent location for college and university education. For these reasons, people want to live here, which has a positive effect on demand.
Currently, the median home price in Riverside is $385,000, and values have been on the upswing over the past year. In fact, home values in the city have jumped 8.3% over the past year, and are continuing to climb. The average rent that investors can expect to collect in Riverside is $1,800 a month. which is rather decent considering the modest home prices in the area.
Another great city in California to buy investment property in is Bakersfield. It has a large, growing population, as well as a healthy and diverse economy thanks in part to its successful oil production industry. While the $904 monthly median rent isn’t as expensive as some of the other cities on this list, it is growing year over year, and investors can still reap a sizeable ROI based on the median home price in the area of $212,000.
The Bottom Line
There are seemingly endless places throughout California to invest in rental properties. And with continued increases in home values and rents, landlords literally have their pick of the litter. The key is to team up with a seasoned real estate agent who is experienced in the investment niche of the housing market to guide you in the right direction.