November 7th, 2022 at 11:00 am

Buying an investment property in Southern California

Real estate investing is a tried-and-true path to secure a stable cash flow and passive income, and the stunning west coast region of Southern California continues to top the list of desirable locations for any real estate investor. 

The Golden State, with its unparalleled natural beauty and temperate climate, is a dream destination for travelers, retirees, families, and young professionals. And a high level of development around prime cities and coastal areas means top revenue from rental income and property sales. 

2021 brought a nationwide boom in residential property values, but the market has leveled out and even turned in favor of buyers in many neighborhoods. For long-term growth, Southern California remains an attractive target for buying an investment property. 

Buying investment property: What’s the process?

Preparation, research, and the right professional contacts are key to successful real estate investing. Start with these steps:

Identify your goals and resources

What is it that appeals to you around real estate investment, and how can you match your knowledge, skills, and resources to the process? Consider your: 

Based on these factors, you can determine your best game plan to identify a good investment. 

Balance financing and timing

When you look at your budget, pair it with a timetable of when you’ll need to tie up or risk funds. Beyond the actual sale price, this includes: 

Plus, if you invest in special-situation real estate such as probate, foreclosure, as-is, or for-sale-by-owner properties, you may need to extend the anticipated times for several of these phases. 

Target the right location

In the real estate market, location is king when it comes to successful real estate investing. Your research should include the following: 

Many of these factors are the same as you would consider when searching for your own home, but you’re analyzing profitability versus personal preference. In general, you’re looking for growing communities with positive quality of life ratings and business opportunities for residents. 

As an investor, consider a location’s: 

Shop for properties

Once you settle on key locations, you’re ready to start the search for the right property. The best way to get results? Connect with a top-notch Berkshire Hathaway HomeServices California Properties REALTOR® who has experience working with investors, the types of properties you’re targeting, and the locations you’re investigating. 

A skilled agent can: 

When you shop for your own home, it might involve falling in love with the master suite or envisioning your family gathering for the holidays around a fireplace in the great room. But as an investor, you don’t need romance—instead, you need to calculate the dollar return on every choice and feature. 

A talented agent can identify and evaluate: 

Ready to browse? Search our listings for Southern California properties. 

Make the deal

Negotiation is critical to closing the right deal. Remember, you’re not married to this property—instead, you’re looking for the best opportunity. If a seller isn’t open to your offer, be ready to let go and move on. 

To improve your negotiation strength: 

Best locations to buy Southern California investment property

With statewide home prices predicted to rise into 2023, California is ripe for real estate investment. But prices and rental rates vary widely in the third-largest state in the nation, so how do you get started? 

Below we’ve rounded up some of the top locations for investment opportunities. 

#1: Palm Springs (Riverside County)

The largest resort city in the Colorado Desert’s Coachella Valley, Palm Springs is a unique blend of luxury and stunning landscape. For investors, the relatively low median home value compared to high house rent puts Palm Springs at the top of the list:

#2: Joshua Tree (San Bernardino County)

45 minutes northeast of Palm Springs, you’ll run into Joshua Tree, an unincorporated community that hosts the visitor center and west entrance to the Joshua Tree National Park. You’ll find an astonishingly low median home value and the opportunity to rent to nature-loving tourists and locals:

#3: Riverside (Riverside County)

Founded in the 1870s, Riverside boasts historic architecture, sights, and museums. Its economy includes light industry manufacturing, and it’s a tourist and filming destination:

#4: Pomona (Los Angeles County)

Less than an hour from L.A. with median home values at about 30% less than the city of angels, Pomona is a west coast suburban city with significant rental opportunities:

#5: Santa Ana (Orange County)

Santa Ana is close to L.A. but is more than a suburb, with a thriving arts community, museums, galleries, and rich architecture. Slightly over half its inhabitants are renters:

#6: Santa Clarita (Los Angeles County)

Santa Clarita is surrounded by three mountain ranges and boasts numerous city and county parks plus Six Flags Magic Mountain theme park right next to the city limits. Plus, at just 30 miles outside of Los Angeles, this is a prime location for both short- and long-term rental property investment:

#7: Anaheim (Orange County)

A half hour from Los Angeles and the home of Disneyland, Anaheim is a must for real estate investors considering short-term rentals for tourists and visitors. Its fairly equal division of renters and homeowners and high ranking as a healthy, diverse city in the highly desirable Orange County offers long-term rental opportunity as well:

#8: Simi Valley (Ventura County)

This Los Angeles suburban city is home to excellent public schools, many parks, and moderate political views. There are fewer rental properties but single-family home rental income runs higher than many southern California locations:

#9: San Diego (San Diego County)

Established in 1769, San Diego is the oldest settlement in California and is currently the second-largest city in the Golden State. Dive into specific neighborhood research when you’re ready to shop, but across the board, San Diego is a long-time favorite for California real estate investment:

#10: Thousand Oaks (Ventura County)

Logically named for its many oak trees, Thousand Oaks is a highly desirable suburban city just 15 miles outside of Los Angeles. A single-family property will cost you, but house rental income runs high:

#11: Santa Barbara (Santa Barbara County)

Situated between the Santa Ynez Mountains and the Pacific Ocean, Santa Barbara is located on the longest south-facing section of the west coast, nicknamed “The American Riviera” for its Mediterranean climate. The city is home to four universities, a large service sector, and a thriving tourism and resort economy:

Ready to look at investment properties?

If you’ve weighed the pros and cons and are ready to enter into real estate investment for the first time—or add a new property to your current inventory—the next step is working with a California realtor who can work in your best interests. 

Why hire a real estate agent? Southern California is a complex real estate investment market, and having a partner in your corner with the network, knowledge, and skills to identify and negotiate on the right properties is key to a profitable venture. 

Berkshire Hathaway HomeServices California Properties can connect you with a top-shelf REALTOR® with investment expertise. Visit our website to view REALTOR®profiles, browse available properties, and learn more about residential real estate trends. 


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