Real estate investing is a very lucrative business, but there are many things you’ll need to learn and understand before you can jump into the real estate market. The biggest factor to your success in real estate is location, and California is one of the best states in the United States to invest in real estate.
However, there are certain rules and regulations that go along with investing in certain types of properties, and things like cost of living and inflation also need to be considered. Here are a few things about California that you should know before you buy rental properties in this state.
There Are Some Restrictions When it Comes to Vacation Rentals
California is a popular destination for both domestic and international travelers, with Hollywood in the southern part of the state, and the infamous California Wine Country in the northern part. For a state that typically receives over 200 million visitors each year, it seems like it’d be the perfect place for you to invest in a vacation rental property.
Unfortunately, there are some places in California that have very strict laws when it comes to vacation rentals or short-term rentals. For example, the city of Calabasas (located in northwest Los Angeles County) prohibits property owners from renting their property for less than 30 days. San Francisco has a similar restriction, prohibiting property owners from renting out their property for more than 90 days out of a single year.
It’s One of the Best Places for Investing in Commercial Real Estate
While vacation rentals can get tricky in California, the Golden State is one of the best states to invest in commercial real estate. San Jose is a good example of a city that is seeing an increase in economic activity, which is an ideal place for entrepreneurs to move or start a business— meaning that they’ll need to rent office space.
Oakland is another city with excellent economic growth, making it a prime location for business owners. So if you happen to come across a commercial property for sale in either of these cities or another city in California that is bustling with growth, you’ll have the potential to earn great returns.
Economic Growth Also Means Population Growth
If more businesses are moving to a certain location, you can also predict that more people will be looking for a place to live in or near these areas. This makes California a great place to invest in residential property as well.
The only downside is that the cost of living in California is the third highest in the United States, with median home prices totaling over $700,000. However, the average rent in California is over $3,000, and you can purchase a California property with help from a loan company. Just ensure that the property you choose in located in a prime location that will attract renters, including:
- A location within or near cities with a lot of job opportunities
- A location near good school districts, for families with children
- A location near entertainment and other amenities, such as shopping centers, restaurants, movie theaters, parks, and even beaches
The state of California as a whole also has a low vacancy rate when it comes to residential rental properties, with about 90% of homes being occupied. This means that you’re not likely to have an issue with finding tenants to rent your property.
Because California is a good state to invest in commercial properties, it’s also a good state to invest in industrial properties such as warehouses and manufacturing buildings.
It’s also a good state to invest in raw land. Just remember to familiarize yourself with all of the state and local laws that pertain to rental properties, as they can vary from city to city, even though they’re all located within the state of California.