Interested in multi family homes in the California real estate market, but don’t know where to invest? Read on to find out which location is better- Los Angeles or Long Beach?
Most successful real estate investors understand the relevance of location in real estate. So many different factors in the economy could make one spot better than the other. That’s why you want to always do a real estate market analysis before making the decision to invest. You want to ensure that you’re finding, and making, the best real estate investments. That’s why Mashvisor exists. We want to help real estate investors build their careers through an amazing real estate investment portfolio. If you’re considering multi family homes, you’re already on the right path to making money in real estate.
Today we’re talking about investing in multi family homes and the better option for you. First, we’re going to give a bit of background on multi family homes and then get into the data. Finish reading this blog to learn about multi family homes in the Los Angeles real estate market and the Long Beach real estate market.
Multi Family Homes
What Is a Multi Family Home?
It’s basically a building with multiple residential units. Each unit is suitable for living, so whoever’s living there would have their own kitchen, living room, water and electricity bills, and so on. Because these buildings hold multiple different residents at one time, they’re usually found in highly populated areas, such as major cities. Multi family homes can be rented, owned, or serve as an investment property for real estate investors who can take on the role of landlord and collect rent payments from tenants.
The Difference Between Multi Family Homes and Single Family Homes:
The difference is right there in the name. We know that multi family homes are capable of holding multiple tenants at the same time. The difference between them and single family homes is that single family homes only have one residential unit available. What this means is that, if you were to own it as a real estate investment, you’d only be able to rent the unit to one tenant.
Real estate investors typically go for single family homes because they’re just seen as easier investments. Both types can serve as short term rentals or long term rentals. However, investing in multi family homes could be a great financial and rental strategy for you. As home-ownership continues to decrease, people are beginning to opt for renting. This is great for real estate investors owning multi family properties, providing multiple units for people to live in.
Types of Multi Family Properties:
- Apartment Building: Units in this type of building are the most likely to be rented by tenants rather than owned. Apartment buildings can hold up to hundreds of units in the same building.
- Condominiums: Known as ‘condos’, these are private residences in a building or community with multiple units.
- Townhouse: A number of homes attached to each other at the sides. Each has their own separate entrance.
- Duplex: Two housing units either next to each other (like townhouses) or on top of each other (like apartments).
Multi Family Homes in Los Angeles
Now that you have a good idea of the subject of this blog, let’s get into the real estate analytics. The following data is provided by Mashvisor’s investment property calculator. To learn more about how it works and how it can help any real estate investor, click here.
Multi Family Homes & The Los Angeles Real Estate Market- City Level:
- Median Property Price: $970,761
- Monthly Traditional Rental Income: $3,395
- Traditional Cap Rate: 1.43%
- Traditional Cash on Cash Return: 1.43%
Let’s now get some more insight into the real estate market by looking at a few neighborhoods in Los Angeles.
South Los Angeles
- Median Property Price: $625,580
- Monthly Traditional Rental Income: $3,045
- Traditional Cap Rate: 2.16%
- Traditional Cash on Cash Return: 2.16%
- Median Property Price: $1,364,368
- Monthly Traditional Rental Income: $6,168
- Traditional Cap Rate: 1.97%
- Traditional Cash on Cash Return: 1.97%
- Median Property Price: $1,567,636
- Monthly Traditional Rental Income: $3,805
- Traditional Cap Rate: 0.56%
- Traditional Cash on Cash Return: 0.56%
Multi Family Homes in Long Beach
You got the data on multi family investment property in Los Angeles, now let’s cover the numbers for Long Beach to find out which is the better option for you.
Multi Family Homes & the Long Beach Real Estate Market- City Level:
- Median Property Price: $1,282,141
- Monthly Traditional Rental Income: $5,922
- Traditional Cap Rate: 2.25%
- Traditional Cash on Cash Return: 2.25%
So far the Long Beach real estate market is looking a bit more favorable than the Los Angeles real estate market. On the city level, multi family homes in Long Beach are making more monthly rental income and have a higher cap rate and CoC return than those in Los Angeles. Let’s take a look at our data for some neighborhoods in Long Beach.
- Median Property Price: $2,074,333
- Monthly Traditional Rental Income: $8,972
- Traditional Cap Rate: 2.39%
- Traditional Cash on Cash Return: 2.39%
- Median Property Price: $1,547,176
- Monthly Traditional Rental Income: $7,407
- Traditional Cap Rate: 2.54%
- Traditional Cash on Cash Return: 2.54%
- Median Property Price: $1,109,056
- Monthly Traditional Rental Income: $6,411
- Traditional Cap Rate: 2.87%
- Traditional Cash on Cash Return: 2.87%
Which Option Should You Go For?
Before making any investment, there’s always a couple of main factors every real estate investor looks for. Things like cap rate, expenses, cash flow, return on investment, and so on are the typical things. One extra thing that should be considered is you yourself. Your personality, is it the patient type? Can you look at the bigger picture? If you want to invest in multi family properties, you’re going to need to have the right personality to take on the role of landlord. I mean, you could always hire professional property management, but that will cost you. In the end, it depends on what you’re willing to take and give.
So, Los Angeles or Long Beach? According to Mashvisor’s data, we’d say Long Beach is the way to go. Yes, most neighborhoods in Long Beach have properties with higher property price than in LA, but high property price means high property value. And don’t forget, you’re investing in multi family homes in California, which is known to have an expensive housing market. Another reason to go with Long Beach is the monthly rental income and cap rate, which is noticeably higher in Long Beach than in Los Angeles.
Always keep in mind, however, these numbers only provide the overview of each market. Los Angeles is still a good choice and an investor can find some of the best real estate investments there.
We’ve given you the numbers. To start your search for investment property in Long Beach or Los Angeles, click here to use our property finder tool (for Airbnb rentals or Traditional rentals).
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