What Are the Best Places to Invest in the California Real Estate Market?

With the economy of California expected to continue to grow, demand for housing is also expected to increase. The affordability gap will, moreover, widen for many real estate investors given the current shortage of homes for sale, increasing demand for housing, and rising home prices.

Should you still be investing in the California real estate market then? Certainly. Do not let the shortage of home supply and rising prices discourage you from finding an ideal investment property. We, at Mashvisor, ensure that you find the best real estate investments and rental properties at affordable prices, leaving you making money. A lot of it, if planned right.

Below we provide a glimpse of where the California real estate market stands today and go on to provide a list of the best places to invest in.

What’s Going on in California Real Estate Market?

  • The California median home price is forecast to reach $561,000 in 2018, an increase of about 4.2 percent from last year. Such rising prices can be attributed to the tight inventory of homes that has caused a fierce competition across potential home buyers, thus leading to lower affordability and weaker sales growth. While home prices demonstrate an upward growth trend, we advise real estate investors to buy residential property or real estate investments soon before prices become too expensive.
  • Real estate market analysis warns real estate investors from investing in areas such as LA and Bay Areas. While researching investment properties in these areas, one can conclude that average home prices are much higher than they are in other areas such as Sacramento.
  • Going into spring, listing prices have already begun to rise quickly reclaiming historical highs. The median listing price in the California real estate market has reached $275,000 this month, which was last summer’s peak. This indicates that listing prices will witness an even higher peak with the coming of spring and summer, the prime seasons for selling and buying homes. We encourage you, therefore, to expedite your plans if you are keen on real estate investing and further diversifying your investment portfolio in the California real estate market.

Related: The 4 Hottest Cities for Investing in California in 2018

What Are the Best Places to Invest in California Real Estate Market? And What Areas Will Have High Cash on Cash Return and Highest Rental Income Yield?

When looking for the best places to invest in, many investors resort to traditional real estate investing. In fact, purchasing rental property using the traditional strategy remains a predilection for many real estate investors. Traditional real estate investing is when real estate investors purchase the real estate property from Multiple Listing Service (MLS). Traditional investing could also be in the form of financing through bank loans or your own money. Many real estate investors, moreover, resort to real estate agents and brokers to find rental property for them, this also being a means of traditional real estate investing.

Related: The Best Neighborhoods in California for Real Estate Investing

When researching investment properties, many real estate investors continue to resort to the traditional means. This is because in traditional real estate investing, you can buy several investment properties at the same time and even hire a third party property management service to manage them.

Keen on traditional real estate investing? Why not try it with traditional long term rentals? Below, we offer you a list of the best places to invest in today in the California real estate market.

Edwards

Median Property Price: $79,900

Traditional Rental Income: $1,550

Traditional Cash on Cash Return: 16.52%

Traditional Cap Rate: 16.52%

Union

Median Property Price: $123,000

Traditional Rental Income: $2,264

Traditional Cash on Cash Return: 14.06%

Traditional Cap Rate: 14.06%

Cantua Creek

Median Property Price: $85,000

Traditional Rental Income: $1,330

Traditional Cash on Cash Return: 12.84%

Traditional Cap Rate: 12.84%

Niland 

Median Property Price: $51,750

Traditional Rental Income: $875

Traditional Cash on Cash Return: 10.29%

Traditional Cap Rate: 10.29%

North Edwards

Median Property Price: $99,995

Traditional Rental Income: $1,404

Traditional Cash on Cash Return: 9.51%

Traditional Cap Rate: 9.51%

What about airbnb?

Similarly, Airbnb is another rental strategy that will help you generate high rental income. Airbnb particularly demonstrates high gross profits as it allows hosts to rent their rental property on a short-term basis. If you are looking to invest in rental properties in the California real estate market, we encourage you to consider Airbnb.

Related: California Real Estate: Why and Where to Invest?

Below we have compiled a list of the best places to invest in California for Airbnb rental properties.

Meyers

Median Property Price: $399,000

Airbnb Rental Income: $5,875

Airbnb Cash on Cash Return: 14.43%

Airbnb Cap Rate: 14.43%

Airbnb Occupancy Rate: 36.75%

Orick

Median Property Price: $137,000

Airbnb Rental Income: $1,964

Airbnb Cash on Cash Return: 10.86%

Airbnb Cap Rate: 10.86%

Airbnb Occupancy Rate: 41.71%

Napa

Median Property Price: $702,000

Airbnb Rental Income: $8,260

Airbnb Cash on Cash Return: 8.62%

Airbnb Cap Rate: 8.62%

Airbnb Occupancy Rate: 56.77%

Twentynine Palms

Median Property Price: $115,000

Airbnb Rental Income: $1,457

Airbnb Cash on Cash Return: 7.81%

Airbnb Cap Rate: 7.81%

Airbnb Occupancy Rate:  41.19%

Oakhurst

Median Property Price: $314,950

Airbnb Rental Income: $3,098

Airbnb Cash on Cash Return: 7.44%

Airbnb Cap Rate: 7.44%

Airbnb Occupancy Rate: 40.71%

Mashvisor has run a market data analysis on the California real estate market to generate and provide you with the best places to invest in as listed above. Using Mashvisor’s rental property calculator, you can estimate the expected rental income, expenses, and profit from an income property. Note that for the best places to invest in California real estate listed above, cash on cash return and cap rate are the same because Mashvisor’s rental property calculator assumes all cash payments by default to simplify calculations. To learn more about the rental property calculator, visit Mashvisor! Would you like to start searching for investment properties now? Click here!

In conclusion, home prices in the California real estate market continue to be on the rise as more demand for housing is seen. One can certainly not neglect the tight inventory of investment properties that has caused prices to go up and the affordability gap to widen. Now might be the time to invest in the California real estate market before prices rise too high. Refer to the aforementioned cities for further investment, whether using traditional rental strategies or Airbnb. Splendid journey!

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