As is the case every year, the California Housing Market 2018 is among the best places to invest in real estate. The Golden State is home to many diverse real estate markets, profitable for both traditional investment properties and Airbnb vacation rentals. There are plenty of reasons to invest in California investment properties. We’ll discuss some of these reasons and list the best places to buy an investment property in the California Housing Market 2018.
California Housing Market 2018: Why It’s Successful
The California real estate market is successful for various reasons. Its large and strong $2.8 trillion economy, for instance, continuously adds jobs in different sectors. This enlarges the prospective tenant pool for traditional rental properties. California real estate is also known for its high property prices, which lead to high rental income. Despite these high prices, there is no housing bubble in sight, further incentivizing real estate investors to purchase rental properties.
Related: California Is Emerging as the Best Place to Invest in Real Estate in the Coming Years
Airbnb is also a viable investment strategy, and many factors in the California Housing Market 2018 have led to its success. For starters, Airbnb is legal in the California real estate market. The state also hosts many world-class tourist destinations, ensuring a large pool of Airbnb guests.
Related: The Ultimate Guide to the Airbnb Investment Property
Where to Invest in the California Housing Market 2018
The previously mentioned factors, and many others, have significantly influenced the California housing market 2018 to become a very profitable rental market. So, where should you be buying an investment property in Cali? According to Mashvisor’s comparative market analysis, the 10 best places to buy an investment property in California are Anaheim, Joshua Tree, Long Beach, Los Angeles, Oakland, Sacramento, San Diego, San Francisco, San Jose, and Santa Barbara.
Anaheim
Median Property Price: $588,186
Airbnb:
Rental Income: $3,508
Cap Rate / Cash on Cash Return: 3.46%
Traditional:
Rental Income: $2,650
Cap Rate / Cash on Cash Return: 1.68%
Anaheim’s property prices are below average in the California real estate market, making the city a very inexpensive location in the market. Although on paper Airbnb seems to be the optimal rental strategy, short term rental regulations here make long term rentals the better choice.
Joshua Tree
Median Property Price: $281,319
Airbnb:
Rental Income: $2,588
Cap Rate / Cash on Cash Return: 6.71%
Traditional:
Rental Income: $952
Cap Rate / Cash on Cash Return: 0.97%
Joshua Tree is a hidden gem for Airbnb investment properties. Joshua Tree has the lowest median property price of the cities on this list. It is even lower than the national average! To top it all off, real estate investors will benefit from its high Airbnb rental income and return on investment.
Related: Investing in Joshua Tree: An Unexpectedly Good Opportunity
Long Beach
Median Property Price: $827,550
Airbnb:
Rental Income: $2,360
Cap Rate / Cash on Cash Return: 0.96%
Traditional:
Rental Income: $3,052
Cap Rate / Cash on Cash Return: 1.12%
In some ways, Long Beach is the typical city for the California housing market 2018. Its median property price is high, but it generates plenty of rental income for both investment strategies, though its best real estate investments favor the traditional strategy.
Los Angeles
Median Property Price: $831,560
Airbnb:
Rental Income: $2,208
Cap Rate / Cash on Cash Return: 0.97%
Traditional:
Rental Income: $2,678
Cap Rate / Cash on Cash Return: 1.19%
LA is a world-known city, so it’s only natural for Airbnb vacation rentals to be very profitable. Nonetheless, the optimal rental strategy in Los Angeles is traditional real estate investing.
Oakland
Median Property Price: $858,568
Airbnb:
Rental Income: $2,678
Cap Rate / Cash on Cash Return: 0.96%
Traditional:
Rental Income: $3,456
Cap Rate / Cash on Cash Return: 1.46%
Oakland is one of the best places to buy an investment property in California for similar reasons as LA. Ironically, both have similar real estate statistics. The main difference is that the traditional strategy is clearly the optimal rental strategy in Oakland.
Sacramento
Median Property Price: $370,263
Airbnb:
Rental Income: $864
Cap Rate / Cash on Cash Return: 1.06%
Traditional:
Rental Income: $1,380
Cap Rate / Cash on Cash Return: 0.98%
Sacramento, like Joshua tree, is an unexpectedly great location in the California housing market 2018. It has a very low median property price, but instead of being a lucrative area for Airbnb as Joshua Tree is, it favors traditional investing albeit with relatively moderate rental income.
San Diego
Median Property Price: $831,560
Airbnb:
Rental Income: $2,208
Cap Rate / Cash on Cash Return: 0.97%
Traditional:
Rental Income: $2,678
Cap Rate / Cash on Cash Return: 1.19%
San Diego, like all the other best cities in the California Housing Market 2018, is a money-making city for both traditional properties and Airbnb vacation rentals. It is similar to LA and Oakland in terms of property prices.
San Francisco
Median Property Price: $1,623,043
Airbnb:
Rental Income: $4,046
Cap Rate / Cash on Cash Return: 0.97%
Traditional:
Rental Income: $4,685
Cap Rate / Cash on Cash Return: 0.90%
San Francisco is a real estate powerhouse in not just the California real estate market, but in the entire world. Its median property price is extremely costly, as is to be expected, but its rental income is also top-notch. Its hefty prices shouldn’t be a barrier for real estate investors since they can easily search for inexpensive properties in San Fran using Mashvisor’s rental property calculator. Want to learn more about this? Click here!
San Jose
Median Property Price: $1,054,788
Airbnb:
Rental Income: $1,959
Cap Rate / Cash on Cash Return: 0.15%
Traditional:
Rental Income: $2,985
Cap Rate / Cash on Cash Return: 0.90%
While not quite as expensive as properties in San Francisco, San Jose’s rentals are still too expensive for the majority of real estate investors. Once again, they can search for cheaper properties using Mashvisor’s real estate market analysis as part of its rental property calculator.
Santa Barbara
Median Property Price: $1,527,675
Airbnb:
Rental Income: $4,733
Cap Rate / Cash on Cash Return: 1.74%
Traditional:
Rental Income: $4,269
Cap Rate / Cash on Cash Return: 1.08%
Like the two cities mentioned before it, Santa Barbara is one of the most expensive rental markets in the California housing market 2018. The payoff is definitely worth it, especially if a real estate investor finds a low-priced property, as the city boasts extremely high rental income for both strategies.
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