Housing experts believe the rental market in California will remain strong, which makes it a great time to invest in rental homes. The luxury rental market is booming since some people can’t afford to buy in better California neighborhoods. Renting gives some people an opportunity to send their children to better schools and trendy hotspots. According to a recent article by the LA Times, experts expect rents in Southern California to rise again, although not at the frantic pace of the past few years. Since vacancy rates in Southern California are the lowest in the country, it’s likely you’ll receive steady passive income through an investment property. In Orange County, the vacancy rate is 2.4 percent. A good Orange County Realtor will show you luxury homes that appeal to today’s renters with refined tastes and high expectations. Average rent in Orange County is up 3.5 percent to about $1,660. With a luxury rental home, you will likely get a market rent above $2,000 a month.
- Interest rates are still low
Because interest rates are low, not only is now a good time to take out a mortgage for an investment property but it’s less expensive to use credit for fixing up or renovating a rental home. You’ll draw high-paying tenants with upgrades in your rental such as quartz countertops, hardwood flooring and custom cabinets. Although the interest rate on an investment property is slightly higher than the rate for a primary residence, the rates are still extremely low.
- Baby boomers retire to California
A lot of baby boomers retire to Orange County, but not all of them want to own a home. Some baby boomers are free spirits who don’t want to feel tied down with a home. Whether you offer seasonal leases or one-year leases, you will likely find baby boomers become loyal tenants. When hunting for investment properties with your Realtor think about universal design issues that make aging in place easier.
- Orange County draws young people
In addition to drawing baby boomers, Orange County is also a magnet for young people just starting out. Most millennials in their 20s start out as renters, but they aren’t all willing to “rough it.” Some young people would rather pay more money to live in a luxury rental home than to pay a mortgage on a starter home without granite countertops and stainless steel appliances.
At the Feldman Group Real Estate, we help investors including mom-and-pop investors who want to buy rental homes in San Clemente, Newport Coast, Newport Beach, Laguna Beach, Mission Viejo, and Nellie Gail Ranch. For more information on investing in California rental properties to capitalize housing trends, please contact us.