Ever considered buying a second home or planned to invest in a home rental in Laguna Beach? Here’s what you need to know!
If you have ever contemplated purchasing an investment home in Laguna Beach, right now is the perfect time! Investment loan financing has never been easier and interest rates are at all time lows. There has never been a better “climate” in which to buy a property in this highly coveted location and if you’ve ever wondered if owning a rental property along the Laguna Coast is for you, read on!
For one, mortgage interest rates are still hovering around 3-year lows. With lower financing, it becomes more cost-efficient to invest in rental homes. Vacancy rates in this coastal area are also at historic lows. At present, the vacancy rate in the state of California is at 4%, and this is even lower for Laguna Coast communities, which means that you can typically look forward to a consistent cash flow throughout the year.
Couple this with a very high demand for home rentals and you have a perfect trifecta! This low supply/high demand environment has resulted in owners commanding top rentals rates, and rates continue to rise. All these factors play together to provide an opportune investment scenerio for beginner real estate investors and seasoned professionals alike.
The Diverse Market Provides Consistent, Year-Round Demand
The market for homes for rent in Laguna Beach is diverse – from traditional yearly tenants to short-term renters, there is always a demand for housing for a variety of reasons. Local homeowners doing remodels require interim housing, corporate clients need housing for company projects and relocating professionals. Many national and international vacationers prefer to stay in houses over hotel rooms.
In addition, Laguna Beach’s strategic location near airports in Orange County, Los Angeles, Long Beach, and San Diego makes it conveniently accessible to global travelers from the Pacific Rim, the United Kingdom, Europe, and Canada. Because of this diverse market, rental homes along the Laguna Coast can expect a steady stream of renters throughout the entire year.
There is a Growing Trend Towards Vacationers Choosing Home Rentals Over Hotels
Turn-key, furnished homes have become more popular in recent years for “staycation” tenants from all over the world. Laguna Beach is particularly popular for vacationers from nearby Los Angeles and San Diego who are seeking the ideal place to spend a month or so relaxing at the beach. Vacation rental homes are also in demand by seasonal tenants who want to escape the heat of desert areas from places like Las Vegas, Palm Springs, and Arizona, or colder areas along the East Coast. Laguna’s year round moderate temperature appeals to all!
Based on recent studies, 50% of vacationing families now chose furnished home rentals over a hotel because vacation homes provide a wider range of useful amenities for day to day tasks. Offering fully equipped kitchens, spacious living areas, laundry facilities, free WIFI, outside gardens and patio areas and, in some cases, private pools and spas. An impressive 94% of those who have stayed in a rental property say that they were satisfied with the experience.
Vacation rental homes also offer more substantial space for occupants 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. In addition, vacation homes offer greater privacy. Plus, the cost of renting a home rental property is much less expensive for families – around 50% less per square foot compared to an average hotel room – making it a much better option for vacationers, especially when booking multiple weeks or months. Consequently, these types of real estate investments have become very lucrative for savvy investors who know how to properly furnish and equip a property.
Invest in a Seasonal Second Home along the Laguna Coast of Southern California
One of the most sought-after investment opportunities is purchasing a property as a seasonal second home and renting when it would otherwise sit vacant. Ideal for owners that are not planning on using the property frequently, these types of investments are perfect for generating income with periodic or monthly renters when owners are not occupying them. And there is no better place for a second home than the California Riviera! With a median temperature of 72 degrees and sunny skies almost every day of the year – Laguna Coast is definitely an idyllic spot to escape to for owners and renters alike!
Investing in a second home allows you the flexibility of choosing when to offer it to tenants and when to use it yourself. Simply block out the dates when you prefer to stay in your home and accept bookings for months or seasons when you are away. The added advantage is that the property rarely sits vacant – tenants offer security and oversight when the home is not in use by owners!
High Demand for Long-Term Rentals Means Higher Rental Rates
Long term rentals are a more traditional type of real estate investment that generate consistent income over time. There is considerable demand for these types of investment homes as well.
Not everyone can afford to buy a house. In the entire country, home ownership is around 64.2%, according to the U.S. Census Bureau’s residential vacancies and homeownership statistics for the first quarter of 2019. In Southern California, the percentage is even lower, only 28% of residents can afford to buy a home.
With more renters relative to homebuyers or homeowners, this creates competition among renters – resulting in higher rental demand, less turn-over, lower vacancy rates and, consequently, higher rental rates. Rents 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.
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 is to determine your objectives. Ask yourself what you want to get out of your investment. Is this a property you are purchasing to retire in eventually (while you generate income until you can move in full time down the line)? Rather, are you planning on using the property as a second home while it pays for itself when it would otherwise remain vacant? Or would you be buying strictly for long-term investment income?
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). We can help you strategize so that you generate maximum investment for the minimum investment.
Choose a Property that Yields Income to cover all or most of your Total Monthly Payments
By purchasing a home rental property that generates sufficient income compared to your monthly costs, there is minimal qualifying necessary – and you build your equity via principal reduction of the loan. When you consider the price appreciation of your property over time, you end up with a high rate of return (typically higher than any other investment you can own!).
Since the Interest on your mortgage and your property taxes are both tax-deductible, the government is essentially subsidizing your home purchase, all while your tenants are making most of your payments for you. In addition, most property improvements are tax-deductible. This is how tremendous wealth has been created by investors of real estate!
Work with a Seasoned Local Realtor for Expert Advice
To ensure that you get the appropriate guidance and assistance, it is essential to work with an experienced local realtor who specializes in rental home investment properties in Laguna Beach. An informed professional will understand the right property features to hone in on and guide you to properties that generate maximum income.
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 – all this is key to assuring success! The team at Laguna Coast Real Estate has over 30 years of experience in real estate and has developed time-tested strategies with a proven track record of making rental home investment WINNERS! We provide all the tools necessary to parlay a coastal vacation home purchase into the most successful and profitable investment possible, procuring unprecedented results.
Cynthia Ayers, Broker of Laguna Coast Real Estate
Locally based, The Laguna Coast Real Estate team of real estate professionals understands the Laguna Beach market, its many nuances, and, most importantly, the specific type of properties that attract high net-worth tenants worldwide. If you wish to invest in a home rental in Laguna Beach or are interested in exploring other real estate investment opportunities along Southern California’s Laguna Coast, feel free to contact us at 949-494-0490 or email CynthiaAyers@cox.net.
Invest in a Home Rental in Laguna Beach Related Information:
Why Real Estate is the BEST investment – Laguna Beach Homes
Five Expert Tips for Purchasing Your Dream Vacation Home
Real Estate Services – Why list your property with Laguna Coast Real Estate?
Free Home Market Analysis
Affordable Secret Community in Laguna Beach
Summer “get-away” Vacation Homes in Laguna Beach