The California real estate market is one of the hottest in the United States. An endless number of real estate investors, both international and domestic, consider California as the most profitable US housing market 2019. Of course, there is an explanation behind this phenomenon. The climate in the state of California is warm throughout the whole year which attracts residents from all over the country. Additionally, the state is well known for its recreational and leisure activities as well as the business opportunities it offers.
When talking about the California real estate market, however, there is no way to skip over one of the most popular and well-developed cities in the state- Los Angeles. The Los Angeles real estate market 2019 is one of the most rapidly growing and expanding markets at the moment. For this very reason, this blog will shed some light on the Los Angeles housing market and investigate whether purchasing a Los Angeles real estate investment is a good business opportunity.
#1 Why Invest In Los Angeles Real Estate?
The Los Angeles real estate market is extremely popular because it is the center of the film and television industry. As you can probably imagine, career opportunities of this kind bring a significant amount of people to LA. Besides the movie industry, the city offers many other business opportunities and job openings. The latter works in extreme favor to investors who own and manage a long-term Los Angeles investment property. That’s because where there are jobs, there is typically population growth. This can mean plenty of tenants for rental properties.
Certainly, the short-term rentals in the city do not fall behind. There is an endless number of fun leisure activities which attract a vast number of tourists yearly. Business travelers are also common occupants of Airbnb properties. However, as of July this year, new Airbnb laws will apply in the city. The strict regulations might have a serious impact on the short-term real estate investing business in LA.
For this reason, when you decide to invest in Los Angeles real estate, make sure you take into consideration all the potential rules and regulations as well as Los Angeles real estate market trends in order to operate your business successfully.
#2 The Los Angeles Real Estate Market 2019
Many people are questioning where to invest in real estate this year. Is it worth it to put a down payment for investment property in the City of Angels? Well, in order to answer that question, it is necessary to explore the Los Angeles housing market forecast 2019.
The prices of Los Angeles houses for sale rose by 3% over the past year. The Los Angeles real estate market 2019 will experience an increase of about 4% in the median home value over the next year, according to Zillow’s real estate market predictions. And even though the Los Angeles real estate market 2019 seems to be on the expensive side, Zillow reports a difference greater than $100,000 in listing prices and prices at which properties actually sold.
Of course, when examining the Los Angeles real estate market 2019, it is also advisable to check some ROI data. The following is provided by Mashvisor:
- Median Property Price: $932,371
- Average Price per Square Foot: $533
- Traditional Rental Income: $3,186
- Traditional Cash on Cash Return: 1%
Although the median property price is high, you can find relatively more affordable neighborhoods, like those listed down below for investing in long-term rentals in the Los Angeles housing market. Those locations also have higher cash on cash return as well. But before we get any further into where to invest in real estate for long-term rental properties, let’s review some key Los Angeles real estate market trends surrounding short-term rentals, namely, the new Airbnb regulations.
Short-Term Rentals in the LA Housing Market 2019
As previously stated, Airbnbs are extremely profitable in the city. However, the new rules that will apply in the Los Angeles real estate market 2019 will prevent real estate investors from taking advantage of them. So, without further ado, here are the main restrictions that will influence the Airbnb Los Angeles real estate market 2019.
The first and major factor is that hosts will only be able to rent out a primary residence. So buying Los Angeles houses for sale for the sole purpose of using them as second homes or vacation rental properties will no longer be permitted. Also, temporary or non-residential structures cannot be rented out on Airbnb either.
Even local hosts will only be able to sublet their properties for a period of 120 days annually unless they get special permission and pay higher taxes. Besides, in order to operate a part-time short-term rental, you will need to pay a fee of $89 dollars a year at the municipality.
With these Airbnb regulations, it’s wise to stick to long-term rentals. Let’s take a look at the best places to invest in Los Angeles for this rental strategy.
#3 Best Neighborhoods in Los Angeles: Long-Term Rentals
A long-term Los Angeles investment property is not any less successful than a short-term rental would have been. Actually, there are many profitable long-term properties in the Los Angeles real estate market 2019 which make money and bring profit to their owners. Here are the top three neighborhood with such properties:
- Median Property Price: $832,954
- Traditional Rental Income: $3,503
- Traditional Cash on Cash Return: 3%
- Median Property Price: $749,126
- Traditional Rental Income: $2,949
- Traditional Cash on Cash Return: 2%
- Median Property Price: $576,143
- Traditional Rental Income: $2,591
- Traditional Cash on Cash Return: 2%
It is clear that, even though very competitive and restricted, the Los Angeles real estate market 2019 offers successful opportunities for real estate investors. Nevertheless, in order to make smart investments in the Los Angeles real estate market 2019, it is necessary to be sure that your investment complies with the local rules and regulations. Moreover, to find the best areas and properties to invest in is of the utmost importance. Sounds scary, right? Do not worry! Mashvisor’s investment property calculator can be a great helper in this task. For instance, all the data above has been acquired through our investment property calculator. So, do not lose any time! To start looking for and analyzing the best investment properties in Los Angeles, click here.