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San Diego Among Top Cities for Rental Growth in 2017

Running a successful rental property is as much about the services and location as it is the region in which it is situated. You can purchase property after property and offer the exemplary service, but if your properties are located in low-growth areas, you will never turn a profit.

For the savvy real estate investor and developer, you need to consider the market in which you are buying. Is there room for growth? What are the real estate trends? Are rental property prices inflated? How is job growth in the region? All of these questions influence the health of the real estate and rental market.

California dominates rental real estate market

For the savvy real estate investor and developer, you need to consider the market in which you are buying. Is there room for growth? What are the real estate trends? Are rental property prices inflated? How is job growth in the region? All of these questions influence the health of the real estate and rental market.

Of course, Oakland, San Francisco, and the Bay Area continue to dominate the market, however, there is a fear of oversupply in the region which could lead to a drop in rental rates. Oakland, San Jose, and San Francisco are all experiencing slower growth and rent cuts.

San Diego experiences steady growth

Unlike the potential boom and bust markets in Northern California, Southern California, specifically, San Diego continues to experience steady growth in the rental market. The rental real estate market grew by 4.3 percent in 2016 and the fundamentals of the economy are strong.

San Diego is breaking ground all over the City with new developments in a variety of neighborhoods, including Downtown, North Park, South Park. Golden Hill, Hillcrest, Little Italy, Mission Valley, and Fashion Valley, among other neighborhoods and districts. Furthermore, despite this explosion of new and planned developments, rental rates continue to rise in the city. With a consistent need for rental housing around the several universities in the San Diego area, property owners should consider the benefits of a full-service property management company. 

San Diego has recovered from the effects of the 2008 Financial Crisis and has experienced steady job growth for the past few years. In fact, San Diego is tied with Los Angeles for the 11th top rental real estate market in the country.

If you're thinking about leasing out your residential property within the San Diego area, now is a great time to consider your real estate investment options. 

San Diego vs. Los Angeles

San Diego also offers several advantages over Los Angeles, its tied partner in the rental real estate market. For the uninitiated in California real estate, San Diego is a good ice breaker. It carries characteristics that are similar to Los Angeles, sunny weather, beaches, and an easy-going attitude. But it is far less complicated a place to make an initial real estate investment.

Los Angeles is a complicated mixture of competing jurisdictions at the county and city level. You must contend with Los Angeles, which maintains a complicated relationship with Los Angeles County and the various cities that make up LA County. Furthermore, many utility and maintenance districts are independent of city authority. So, to build new properties or to bring an existing property into compliance, isn’t as simple as working with a single agency – you must coordinate multiple competing agencies.

By contrast, San Diego is run by a single City government which maintains firm control over utility and maintenance districts. San Diego is much smaller than Los Angeles, so there is less to learn about the region. In Los Angeles, you could invest in two residential properties that are, literally, hours apart. In San Diego, the furthest points from one another aren't longer than a 40 minute drive. This can make the property manager's job complicated, as they may not have time to make those long commutes. However, a property management company should have a central location within a city to service an entire area. 

Additionally, San Diego’s proximity to Mexico means that there are often commuters coming and going from Mexico. Many people work cross borders and maintain multiple residences to support their diverse work locations. A substantial portion of San Diego leaseholders are Americans keeping their permanent home in Mexico and Mexican citizens who work in San Diego. Property owners who lease out these their real estate to commuters may have the added challenge of trying to collect rent from their constantly moving tenants. 
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In short, San Diego offers immense opportunities for the ambitious rental owner. You can easily break into the market, enjoy steady growth, and avoid the jurisdictional and legal complexities experienced further north. Once you establish a stable base in the market, you can use your San Diego properties to launch ventures in other areas of California.

If you're considering leasing out your San Diego investment property, consider PropertyADVANTAGE as your trusted property manager. With expert property managers and a central Carlsbad location, we service all of the San Diego county area. 

Topics: property management

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