San Diego rent is increasing at a torrid pace. This means growing yields for San Diego real estate investors that partake in the rental industry. So what’s going up, how much is it going up, and what are the best ways to maximize future investment opportunities?
SoCal’s Coming Rental Boom
Southern California is one of the most popular second-home and vacation destinations on the planet. However, it is now seeing greater growth in overall real estate demand which will continue to push up local rental rates.
San Diego rent rates have already been heading in a positive direction, but a series of new reports from the California Association of Realtors predicts similar increases in the area for at least the next two years. Accordingly, San Diego County is currently leading as one of the top 2 markets regarding rental properties.
Following a 25% year-over-year boost in local home prices, rising interest rates and foreclosures falling to a new seven year low will likely push rental rates past their projections.
Many residents simply won’t have a choice to purchase a property, as they are still too expensive. Although, one index recently showed that mortgage lenders may be easing qualifications for purchase loans as refinancing dries up.
Still, for both multifamily and single family rental property owners, San Diego County is expected to remain a ‘landlord’s market’ for some time.
What San Diego Rent Rates Mean For Investors
Rising rental rates favor investors. Yields may be good now, but as rents go up, so will total returns. San Diego rent rates are predicted to provide more cash flow and profit for those making intelligent acquisitions now.
At the same time, San Diego County real estate investors can expect to continue to see steady capital gains for a long time. This is due largely in part to the prospects of passive wealth building and the security of larger equity cushions.
However, more than just being a blessing for buy and hold real estate investors, this upward rental trend can also make the Southern California region even more profitable for debt investors, wholesalers, rehabbers and more.
Capitalizing On the Rising Market
Many busy real estate investors may already be kicking back; relaxing at the thought of just being able to pick up any piece of rental property. Projections for the market are encouraging to say the least. While this may work for those that need to park their cash for wealth preservation and tax benefits, it’s clearly not maximizing the potential the market offers today.
Correctly presented, this current trend can help those flipping houses in San Diego, CA to get more out of properties now. The numbers will look a lot better when forecasting potential returns for the next 5 years.
Still, wise real estate investors will do their best to continue to buy low and lock in value and profit upfront. Everything piled on after that is gravy.
Leasing strategy definitely plays a role. Ambitious landlords will either write longer leases for good tenants with steady rent increases built in or opt for shorter leases now to be able to re-rent units at higher rates in the next 24 months.
One thing is crystal clear, it is an amazing time to go all out with expanding rental property portfolios. Just consider the benefits of bringing in a professional property management service. It will allow you to enjoy more free time, reduce liabilities and maximize net rental property returns.
