Introduction to Real Estate Investing in California

Enter the realm of real estate investing, a journey as unique as my own that started in Seattle and then moved to Hawaii, where high entry prices can make the investment realm seem intimidating. If you are considering a downpayment in the range of $100,000, splitting it across multiple properties with a $20,000 to $30,000 downpayment each can be a strategic move, especially in primary markets like Orange County, where achieving a Rent-to-Value (RTV) Ratio over 1 becomes increasingly challenging.

Exploring Secondary and Tertiary Markets in California

In primary markets, hitting a RTV Ratio of over 1 can be tough. Considering California's various regions, exploring secondary or tertiary markets can be an effective approach. Los Angeles, for instance, presents a wealth of opportunities, particularly for those looking for high returns.

Why Los Angeles for Investment?

When it comes to real estate investing in California, Los Angeles is a top choice. With more people moving there and a low homeownership rate, the city offers a fertile ground for rental investments. Young, single professionals often opt to rent apartments and houses rather than buying homes, driving up the rental demand and increasing potential returns.

Los Angeles, an economy characterized by full employment, has seen a remarkable recovery. After losing 300,000 jobs during the recession, the city has regained not only those lost jobs but an additional 100,000. Moreover, it is forecasted that by 2017, the unemployment rate will drop to 5.6%, indicative of a strong job market. Wages are expected to rise, and per capita income is projected to increase from $39,000 to $49,000 by 2017. The city’s economy is boosted not only by the thriving entertainment sector but also by the healthcare, information, education, exporting, and construction industries.

Neighborhoods with Highest Average Rental Income

For those looking to invest in residential real estate in Los Angeles, specific neighborhoods are particularly enticing. These areas offer high rental incomes, making them financially viable investments:

These neighborhoods not only provide high rental returns but also experience steady appreciation. The area can offer both short-term and long-term benefits, making them attractive for investors looking for consistent cash flow and property value growth.

Inland Los Angeles County: The Best Air Quality and Desirability

As an insider with decades of experience living and working in the South Bay area of Los Angeles, I consider it one of the best areas for investment. The high air quality, combined with the city's proximity to its downtown, makes it a consistently desirable location. The diverse range of price points within the South Bay allows for flexibility in investment strategy. Whether you are in Inglewood, San Pedro, Palos Verdes, El Segundo, or Playa Del Rey, each area offers unique opportunities.

Investing in properties with lower rents, especially those with a history of long-term maintenance, can provide a significant return. Be prepared to invest in minor repairs and upgrades, as these often justify higher rents. Patience is key in real estate investing; the longer you hold your property, the better the returns you can expect. As you pay down your mortgage, you may find the opportunity to 'cash out' and refinance, potentially acquiring more properties.

Consider carefully and determine the best investment strategy to capitalize on the dynamic market in Los Angeles. Arm yourself with the knowledge and patience to navigate this exciting field and achieve the high returns you are seeking.