Planning to invest in a home rental in Laguna Coast? Here’s what you need to know
If you are considering investing in a home rental in Laguna Beach, now is the perfect time to do so! There hasn’t been a better time to buy a property in this location than now.
For one, mortgage interest rates are at 3-year lows. With lower financing, it becomes more cost-efficient to invest in rental homes. Secondly, vacancy rates in this area are meager.
In general, the vacancy rate in the state of California is at 4%, and this is much lower for Laguna communities, which means that you are can look forward to a consistent cash flow throughout the year.
And thirdly, there is a very high demand for home rentals, which has resulted in top rentals rates, and this continues to increase. All these factors play together to provide a lovely investment opportunity to beginner real estate investors and seasoned professionals alike.
The Diverse Market Provides Constant, Year-Round Demand
The market for homes for rent in Laguna Beach is diverse – national and international vacationers who prefer to stay in houses over hotel rooms.
Those from nearby Los Angeles and San Diego who are looking for a place where they can spend their staycation, and seasonal renters who want to escape the heat of desert areas in places like Las Vegas, Palm Springs, and Arizona, or cold areas on the East Coast and Canada.
Also, Laguna Beach’s strategic location near airports in Orange County, Los Angeles, Long Beach, and San Diego makes it conveniently accessible to international visitors from the Pacific Rim, the United Kingdom, Europe, and Canada.
Because of this diverse market, rental homes can expect a steady stream of renter throughout the entire year.
There is a Growing Trend Towards Vacationers Choosing Home Rentals Over Hotels
Based on research from TripAdvisor, 50% of travelers choose a home rental over a hotel because of better amenities, and 94% of those who have stayed in a rental property say that they were satisfied with the experience.
Rental homes also offer more substantial space for vacationers to rest and relax with their friends or family. The average size of a vacation rental is about 2,000 square feet, while a standard hotel room is just 400 square feet or less.
Plus, the cost of renting a home rental property is much cheaper, around 50% less per square foot compared to an average hotel room, making it a better option, especially when booking multiple nights.
High Demand for Long-Term Rentals Means Higher Rental Rates
Aside from the prospect of short-term rent from vacationers, investing in a home rental property can also provide you with a steady income from long-term rentals.
Not everyone can afford to buy a house. In the entire country, home ownership is only at 64.2%, according to the U.S. Census Bureau’s residential vacancies and homeownership statistics for the first quarter of 2019.
And in Southern California, the percentage is even lower, with only 28% of residents who can afford to buy. With more renters relative to homebuyers or homeowners, there is higher rental demand and, consequently, higher rental rates.
The average vacancy rate is around 7%, and this is even lower along with coastal areas in prime locations such as Laguna Beach, where the average rent is $2,307, which is 7% higher compared to last year.
38% of apartments have a monthly rent that ranges between $1501-$2,000, while 62% are higher than $2,000. Apparently, rental rates have been at all-time highs along the Laguna Coast for the past ten years, and prices continue to rise – especially for families who prefer to live in excellent school districts like Laguna Niguel, Newport Beach, Newport Coast, and Laguna Beach.
You Get to Enjoy Your Seasonal Second Home in Laguna Beach
In addition to looking at the high demand for short-term and long-term rentals, you can also enjoy your home rental property whenever you and your family would like to spend some time in Laguna Beach.
Block out the dates when you would be staying in your home and accept bookings for the years that you are away. Investing in a property like this allows you the flexibility of choosing when to offer it to tenants and when to use it yourself.
You Get to Enjoy Your Seasonal Second Home in Laguna Beach
In addition to looking at the high demand for short-term and
long-term rentals, you can also enjoy your home rental property whenever you
and your family would like to spend some time in Laguna Beach. Simply block out
the dates when you would be staying in your home and accept bookings for the
dates that you are away. Investing in a property like this allows you the
flexibility of choosing when to offer it to tenants and when to use it yourself.
Practical Tips for Investing in Home Rental Properties in Laguna Beach
Set Your Objectives Before Investing in a Home Rental Property
The first thing you need to do before you invest in this type of real estate property is to determine your objectives. Ask yourself what you want to get out of your investment.
Is it so that you have a home to retire to eventually? Or would this be for income generation? Once you have answered this question, you will then need to plan a strategy that will result in optimizing your profits or return on investment (ROI).
Choose a Property That Would Yield Income That is Higher Than Your Total Monthly Payment
By purchasing a home rental property that would generate more income compared to your monthly costs, you can build your equity by principal reduction of the loan.
And, when you consider the price appreciation of your property over time, you end up with a high rate of return (maybe even higher than any other investment you have!).
Interest on your mortgage and your property taxes are both tax-deductible, the government is subsidizing your home purchase, and your tenants are making most of your payments for you.
With your monthly payments covered, with practically no cash out on your part, you can accumulate savings by allocating a portion of your salary towards the principal every month, and this would appreciate over time.
And all the improvements you make on the property are also tax-deductible.
Work with a Seasoned Local Realtor for Expert Advice
To ensure that you get the appropriate guidance and assistance, it is always best to work with an experienced local realtor who specializes in rental home investment properties in Laguna Beach.
One of the advantages of working with an expert local realtor is you get proper guidance on which properties will generate maximum income for you.
A local realtor will also be familiar with the local and legal restrictions that might exist in your target location, so they will be able to help make sure that city regulations do not limit your profitability.
Here at Laguna Coast Real Estate, our team takes pride in more than 30 years of experience in real estate.
Our time-tested strategies and proven track record of making rental home investment winners make us the best ally in your home rental property investment.
Our team of real estate professionals understands the local Laguna market, its many nuances, and, most importantly, the specific type of properties that attract high net-worth tenants worldwide.
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