Why Invest in Santa Monica Real Estate?
Located right near the world-famous Los Angeles, Santa Monica is an enchanting coastal city with iconic beaches, a renowned pier, numerous leisure ops, and a diverse dining scene. This makes it a sought-after destination, attracting millions of tourists every year. The city is home to more than 92,000 inhabitants, boasts a delightful coastal climate, offers access to top-notch healthcare and education facilities, enjoys economic growth, and a well-established public transportation system. As a result, its rental properties are always highly valued.
Santa Monica is part of Silicon Beach which indicates a thriving, technology-driven economy. Its top industries include IT, retail trade, tourism, professional, scientific and technical services, which is part of the reason why its residents are wealthier than average and thus capable of spending more on real estate. According to City officials, Santa Monica businesses generate more than $130 million through business license taxes, sales and use taxes, and transit occupancy taxes. The University of Santa Monica, Santa Monica College, and Emeritus College are places that draw future young professionals.
The real estate market in Santa Monica is a competitive one. There's a high demand for real estate properties, yet the prices are rather expensive. However, the city shows plenty of potential for single-family homes, condos, and townhouses.
Investment Considerations for Santa Monica Real Estate
There are a number of factors to consider, including:
- High occupancy rates - There are only 7.8% of unoccupied residential properties in Santa Monica. In addition, the cash on cash return on traditional rental units is 0.50% and the rental income is $4,697. Taking into account that renters make up 67.3% of the city's population, real estate investors owning rental properties have great opportunities for earning a steady stream of year-round income.
- Tech Hub - Santa Monica is home to numerous successful startups, such as Hulu, TaskUs, and Headspace. With its charming backdrop and close proximity to LAX, it's no surprise that many variously-sized startups and tech firms call it home. Being a part of the Silicon Beach, the city has 19% of its residents working in high-paying professional, scientific and technical services sectors. This means that Santa Monica is one of LA's hottest tech scenes. Plus, the job market has grown by 1.4% in 2017 and the unemployment rate is 4.4%, which is lower than the national average of 5.2%. Therefore, real estate investors can choose from plenty of employed tenants who can afford to pay their rent on time.
- Constant and strong homebuyer activity - Thanks to its convenient location, job market growth, and booming tech sector, an increasing number of aspiring homeowners decide to purchase houses in Santa Monica. Hence, real estate has enjoyed a high demand lately. Actually, while in May 2017 properties spent an average of 33 days on the market, only a year later that number dropped down to 18. This clearly indicated an intense homebuyer activity in the area. For real estate investors, this translates into viable changes of achieving profit, but also a risk of overpriced properties. All in all, Santa Monica remains a stable market for investors.
- Popular tourist destination - Famous for its welcoming bars and restaurants, tourist-luring activities, and beachside shops, Santa Monica has been a popular tourist spot for a long time. In 2017 alone, the city earned $1.96 billion dollars from tourism, which represents a 5.1% increase compared to the previous year. The cash on cash return for short-term rental properties is 1.07% and the rental income is averaging at $5,867. As a result, real estate investors owning short-term rental units can enjoy nice profits year-round.
What are the best neighborhoods to invest in Santa Monica
- Regarding top neighborhoods, Downtown Santa Monica has some of the most affordable prices of single-family homes, which is why it should be taken into account when thinking about investing in real estate. Montana Avenue and Ocean Park are other great residential areas in the city, boasting chic shops, nice restaurants and enjoying a high popularity amongst newly arrived tenants.
- Santa Monica is a continuously growing city with a stable economy and real estate market. The constantly flourishing technology sector, low unemployment, and leisure ops offer a plethora of opportunities for real estate investors to own single-family homes.
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