Are you curious to find out what is the best place to buy a house in California? Well, you should consider investing in Joshua Tree. You probably have never thought about investing in such a place. Well, this small community offers excellent investment opportunities, so considering investing in the Joshua Tree, California housing market 2018 is a great idea. However, in what to invest? Should you be buying property or land in Joshua Tree? Keep on reading to find out more!
#1 What is Joshua Tree?
Let’s explain first what Joshua Tree is. This is not considered as a real city. Instead, it is a census-designated place in San Bernardino, California. The population in Joshua Tree from the last update barely reached 7,700 people. Moreover, Joshua Tree is a community of artists, musicians, working families, businesspeople as well as retirees. Still, it is considered as a very good location for various real estate investment strategies. Additionally, this location hosts the Joshua Tree National Park, which is slightly bigger than the state of Rhode Island in terms of area.
You are probably confused and would like to know why anyone would be thinking about buying investment property and/or buying land in Joshua Tree. Of course, considering the population size, buying land for investment purposes may sound unattractive. Yet, buying land as an investment and/or buying a rental property in Joshua Tree, California real estate market can be a profitable activity. Interested to know why?
The Joshua Tree, California real estate market began to grow in the mid-2000s. This was quite soon after the first introduction of the Joshua Tree Musical Festival, which is now in its 16th year. This music festival is held twice a year, in October and in May. Moreover, this event attracts many artists and travelers from all around the globe, of all ages and social backgrounds. Thanks to the Joshua Tree Music Festival, people were introduced to the lifestyle of Joshua Tree as well as to its breath-taking landscape. Therefore, many travelers began to visit this place more often. Consequently, people started buying land in Joshua Tree as well as buying investment property in Joshua Tree. The reason for such buying behavior was for people to have vacation homes where they could escape from the cities that are busy and noisy. Since then, the Joshua Tree, California real estate market began to grow.
#2 Buying Land in Joshua Tree vs. Buying Property in Joshua Tree
Before rushing in and answering the main question of this blog: “Should you start buying investment property or buying land in Joshua Tree?”, we will explore the features of buying land as an investment as well as the features of buying property out of state.
Buying Land as an Investment: Waiting for Success
Well, what is the biggest challenge a real estate investor may experience when buying land in Joshua Tree, California real estate market? The fact that you have to wait for any kind of success to arrive. So, why buy land? The main reason for a real estate investor to purchase land is the real estate appreciation or, in this case, land appreciation. However, with time, a real estate investor realizes that land appreciation occurs at a very slow rate. You might be very lucky if it ever happens.
Buying Land for Investment Purposes: Buy and Hold Investment Strategy
The only strategy you can choose from the whole list of real estate investment strategies is “buy and hold.” So, if a real estate investor wants to see the return on investment, he/she will need to apply the buy and hold strategy. Once again, there is no guarantee that with this strategy a real estate investor will be able to cover the expenses that the land generates.
Interested to learn about the best cities for buy and hold investment properties? Make sure to read “Top 7 Cheapest Cities for Buy-and-Hold Investment Properties.”
Buying Land for Investment Purposes: Negative Cash Flow
Even if you apply the buy and hold strategy, the land still leaves you with a negative cash flow. When buying land in Joshua Tree, be prepared as it comes with its own set of expenses such as property taxes, insurance as well as the upkeep of the land. Most probably you will end up with a negative cash flow as the land does not generate any rental income.
Buying Land as an Investment: Hard to Find Financing
Even if you made your mind up about buying land in Joshua Tree, be ready as it will be hard to get the financial aid you need. Why is buying land so difficult? Well, there are not so many mortgage lenders that are willing to finance such a type of real estate investment. This is simply because such an investment falls into the category of “high-risk real estate investments.” Again, you should realize that when buying land in Joshua Tree, it will not generate a positive cash flow and real estate appreciation takes several years to appear. Thus, do not be surprised when a mortgage lender asks for 20-50% of down payment with a higher interest rate.
Buying Property: You Control the Success
A real estate investor is able to repair, renovate and manage the investment property. After the work is done, there is an immediate increase in the value of the property in the California real estate market. Consequently, this allows the investor to charge higher prices for rent. Therefore, a real estate investor has higher profits over the year.
Buying Investment Property: Different Real Estate Investment Strategies
Buying property out of state allows a real estate investor to choose the best one of many real estate investment strategies. Starting from fix-and-flip, to real estate wholesaling, there is a numerous number of real estate investment strategies when buying investment property. Curious to learn, which investment strategy would suit you? Make sure to read “How to Determine the Best Real Estate Investment Strategies for You.”
Buying Property Out of State: Positive Cash Flow
With the correctly chosen real estate investment strategy, a real estate investor is able to manage properties that generate positive cash flow. Potential tenants provide a monthly rental income that falls into two categories. The first part of the rental income goes for covering the expenses of the property. The second part goes into the pocket of the owner.
#3 Which Is the Best Investment Strategy: Buying Property or Buying Land in Joshua Tree?
When deciding between buying property or buying land in Joshua Tree, our advice would be to go with buying investment property. Why is this so? Well, Joshua Tree welcomes many travelers all year long. To be more specific, it hosts over two million. Consequently, people need to find a place to stay, either through Airbnb rentals or traditional rentals. Of course, you may wonder: “Why not build an income property after purchasing the land?” You may end up paying more than $300,000 when building a home. Hence, it would be quite challenging to reach the break-even point.
#4 How to Buy Investment Property in Joshua Tree
Now that you’ve decided that buying investment property in Joshua Tree is a good choice, you have to know how to do so. Real estate market analysis is the first step towards buying investment property. You already know that performing real estate market analysis manually takes too much time and effort. That is why it is advisable to use Mashvisor’s rental property calculator.
The next step is to conduct investment property analysis. This is done in order to find the best properties in the California housing market 2018 according to their real estate metrics. Once again, you should use Mashvisor’s investment property calculator in order to save your time and avoid making mistakes while calculating real estate metrics. Well, Joshua Tree is not the only best place to buy a vacation home. “Where else?” you would wonder. Make sure to read “The 5 Best Places to Buy a Vacation Home in California in 2017” to find out about the other places.