Real Estate Investment in Oakland, CA

Why Invest in Oakland Real Estate?

With a diverse population, lively cultural scene, shady oak trees, beautiful green spaces and hip tourist attractions, Oakland is a place that offers many opportunities to real estate investors. Its Bay Area general location, proximity to the famous San Francisco, and its own unique urban identity are some of the main drivers of the area's real estate market. More and more potential renters and active home buyers are searching for a place that's affordable, offers top-notch healthcare access, leisure options, and education opportunities, thus Oakland is often the top choice.

With a 0.86% population rate growth in 2017 (higher than the national 0.7% average), Oakland is home to more than 420,000 people and the number is constantly growing. The economy is strong and steadily growing, supporting key industries like healthcare services, business services, food processing, transportation, light manufacturing, international trade, logistics, and retail. Therefore, the real estate market in the city is pretty heated up which makes Oakland a great option for real estate investors.

Investment Considerations for Oakland Real Estate

There are a number of factors to consider, including:

  • Steady job growth - With companies like Kaiser Permanente, The Clorox Company, Sungevity, Pandora Media, and Ask Media Group having their headquarters or key offices in Oakland, the city has been enjoying a steady job market growth of 2.6% (higher than the 1.6% national average) over the recent years. Plus, the Port of Oakland itself provides about 200,000 jobs, as well as attracts plenty of business visitors. This attracts renters and buyers to the city which means that real estate investors can see a stable cash flow likelihood.
  • Increasing rental demand and prices - Hosting a plethora of companies, start-ups, universities, and colleges like California College of the Arts, Lincoln University, and Mills College, Oakland is an area with lots of recent graduates and highly-skilled professionals. And, thanks to the job market and population growth, the rental demand and prices are also continuously growing. The average rental income is $3,030, the cash on cash return is 2.3%, and the cap rate is 4.8%. Hence, real estate investors can enjoy an excellent rental income and find numerous employed renters who can afford to pay their rent on time.
  • Tech hot spot - With a blooming technology scene, Oakland's tech sector mirrors the area's rich diversity and culture. The city is renowned for its economic vitality and job growth, striving to create a diverse and inclusive tech ecosystem. Oakland's commitment to diversity, that is successfully applied to its technology scene, draws people of all ethnicities. Entrepreneurs, start-ups, and young tech workers are attracted by the city's diverse tech environment. This translates into an influx of home buyers and renters, which is very beneficial for real estate investors in Oakland.
  • Popularity as a living destination - There are multiple factors that make Oakland an attractive city for so many people. Cultural diversity, its Bay Area location, proximity to San Francisco, health care access, education options, economic growth, affordability, and charming sceneries are just some of them. Also, over the past years, Oakland has recorded the one of the highest real estate appreciation rates in California. While this may seem like the city is a seller's market, the economic and demographic factors are expected to continue growing, which means that real estate investors can still benefit both from renting or flipping properties.

What are the Best Neighborhoods to Invest in Oakland

The top neighborhoods for real estate investing in Oakland are Montclair, Cleveland Heights, and Longfellow. Montclair boasts of single-family homes with a median property price of $695,000, Cash-on-cash (CoC) return of 2.7%, cap rate of 5.3%, vacation rental CoC return of 4.2%, and vacation rental cap rate of 6.9%. With a median property price of $195,000, Cleveland Heights' properties are considerably cheaper than other areas; plus, it has a great location, close to other parts of the city, yet enjoying some peaceful isolation. The CoC return in Cleveland Heights is 2.9%, cap rate is 5.8%, vacation CoC return is 3.7% and vacation cap rate is 6.6%. Longfellow is a nice choice for real estate investors interested in traditional renting. Plenty of people from San Francisco are considering this neighborhood thanks to its affordability. The median property price is $524,000, CoC return is 3.7% and cap rate is 6.5%.

Oakland is a fast-growing, renaissance city with an abundance of development and real estate investment opportunities. Continuously growing population, job market, and leisure options make real estate investment in Oakland a wise choice for property investment.

 

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