A world center of business, international trade, entertainment, culture, education, technology and media, the city of Los Angeles has a well-earned reputation as the "Entertainment Capital of the World." Whether exploring the beaches of Santa Monica, the ultra-luxurious shops of Beverly Hills, or the bright lights of Hollywood, residents of the Los Angeles metropolitan area are never lost for something to see or do.
The real estate market in Los Angeles is just as active, and renters have a difficult time tracking down the condos, houses and townhomes that meet their needs. This leaves great opportunity for investors and Los Angeles homeowners alike to rent their homes or condos and earn sums of rental income larger than the famous hillside "Hollywood" letters are white.
Q2 2015 Los Angeles Rental Market Update
In Q2 2015, Los Angeles was the ninth-best housing market in the Western U.S. for rental property investment and 15th-best in the country as a whole. Since Q1 2015, Los Angeles kept its ninth-place spot in the Rental Ranking Report's regional rankings for the Western U.S. but dropped two spots in the national rankings.
Despite being one of the most desirable housing markets in the country from a tenant's perspective, the Los Angeles market is far from perfect from the perspective of a rental property investor. While Los Angeles rents are high, so is the cost of buying rental housing there. As a result, the capitalization rate for Los Angeles rental real estate is quite low; it is a mere 4.03 percent, more than 40 percent less than the national average for that metric and was one of the lowest "cap rates" in the country in Q2 2015.
Of course, Los Angeles rental real estate can still be a lucrative investment. L.A.'s stellar annual rental price appreciation in Q2 2015 of 7.79 percent, which was about 56 percent greater than the national average for that metric during that time period, was almost as remarkable as its astonishingly low vacancy rate of just 3.00 percent, which was around 55 percent less than the national average for that metric. An impressive annual job growth rate of 2.52 percent (almost 25 percent more than the national average) and median age of housing inventory of just 45 days (18 days less than the national average) further indicate that Los Angeles rental properties are currently a sound investment and will likely continue to be for many quarters to come.
Q1 2015 Los Angeles Rental Market Update
All Property Management's Q1 2015 Rental Ranking Report found Los Angeles to be the ninth-best city for real estate investors in the West and 19th in the entire U.S. While these rankings aren't particularly impressive, Los Angeles did quite well in several of the metrics used used to evaluate it, including vacancy rates, median days on market and home value appreciation. On the other hand, it offered a poor capitalization rate and middling increase in median rental prices in the year ending in Q1 2015.
If you want to buy rental property in Los Angeles, you have to move fast as the median of 41 days its housing inventory has been on market is the fifth-lowest in the country and underscores the strong demand for housing in the area.
What data is this Rental Ranking Report based on?
To calculate the statistics found in the Q2 2015 Rental Ranking Report, All Property Management gathered data, including the most recent government housing and jobs data, for 75 metros across the United States. Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth rates, changes in rental prices, and the average number of days properties have been on the market to determine which U.S. metros will give investors the highest returns on rental investments. Click here to learn more about the Rental Ranking metrics.
Should I invest in Los Angeles rental property?
Quite simply, this is one of the best times in recent memory to invest in rental real estate in the Los Angeles metropolitan area. Low vacancy rates, strong property value appreciation and impressive rental price increases indicate that acquiring Los Angeles rental property can net you a quality rate of return at the moment.
Thinking about renting out a property in Los Angeles? Save time, avoid hassle and maximize your rental income by having a professional property management company operate your rental property for you. Click here to get a free quote from a local property manager or call 877-780-4510 to have the All Property Management staff get quotes for you.
All Property Management specializes in connecting rental property owners with professional property managers in communities across the United States. These property managers help set rental rates, advertise properties, screen and manage tenants, collect rent, manage vendor relationships and ensure compliance with local, state and federal housing regulations. They take the hassle and worry out of managing rental properties - all while maximizing rental property owners' rental incomes.