Most buyers think that investing in California real estate is expensive. However, the housing market has been on a downward trend, and things aren’t as expensive as before. Despite that, prices will vary depending on the neighborhood you choose to invest in.
Hiring an agent with a real estate license in California may help you get a house with better deals. Here are some tips you need to know when investing in California real estate:
1. Invest In Cities With High Employment Rates
A 2019 study by Forbes found that specific markets in California have higher employment rates than others. Cities with high employment rates are likely to have more buyers. Also, you’re likely to sell your property at higher rates because of its economy.
Some cities you should consider investing in include Fresno, Stockton, and Riverside. These cities have been registering more than 2% growth over the years.
2. Consider The Southern California Housing Market
If you’re an investor looking to buy houses, it would be best to consider the Southern California market. Since 2012, it’s been experiencing a decrease. In fact, Orange County was the first to experience a drop in median home prices. You can find most house market prices at $18000 in this county.
Also, the local housing markets in these areas aren’t competitive because of high inventory levels. Some statistics show that Los Angeles County witnessed a 24% increase in home sales, while Orange County witnessed a 40% increase.
3. Capitalize On Low Mortgage Rates
Buyers are more likely to invest in the California real estate market because its mortgage rates have dropped since 2018. The highest mortgage in this state is 5.13%, while the lowest is 3.25%.
Keeping track of the mortgage rate fluctuations will influence the final interest that you’ll pay. The difference in the interest rates may be as high as $130000. You can avoid paying this high amount by investing in the housing market when it has better rates. The mortgage rates will also vary depending on the lending institution. Ensure you research what the lenders offer before settling on one.
4. Check Airbnb Regulations
Before investing in the California real estate market, it would best to check the various localities’ regulations. Pacific Grove takes Airbnb regulations very seriously. If your license expires and you’re a rental owner, it’ll require you to cancel or deactivate your listings. This city can impose a fine of 100% of your total revenue for illegally hosting renters.
Furthermore, it may bar you from acquiring another license for two years. If you operate within their legal confines, you’ll face no problems. Always remember to collect the occupancy tax from your renters.
Like Pacific Grove, Redwood City also has some laws that rental operators must follow. They include acquiring a business license, registering with the city, and collecting occupancy tax from renters. Furthermore, they also require you to have a contact person handling complaints while you’re away and provide enough packing sites for guests.
The Bottom Line
Investing in California real estate may be demanding if you don’t understand its housing market trends. It would be best if you abided by the cities’ regulations. Also, it would be advantageous to understand the market trends in various counties.
