In the past few decades, property prices have shot up in Torrance, CA. Investors who own rental homes have benefitted from a regular income as well as a steady increase in the value of their properties. If you’re looking to buy real estate for use as a rental property, you might wonder whether now is still a good time to buy.
Should You Buy Real Estate for Use as a Rental Property in Torrance, CA?
Most experts agree that buying rental properties in Torrance is a good long-term strategy because the area is incredibly popular, and it’s unlikely that there will be a shortage of tenants any time soon. Since the city is affluent, landlords don’t experience many problems with their tenants.
There are several distinct neighborhoods, and while the average property costs $1.2-$1.3 million in the most exclusive ones, a basic home or apartment in one of the more affordable areas can be purchased for $650,000 or less. Therefore, Torrance is suitable for seasoned investors with significant financial resources as well as beginners who might not be ready to invest a seven-figure sum.
Income and Growth
When you buy a property and rent it out, you earn money every month, but you also have an asset that increases in value over time. Home prices in the local area have increased by 3.8% in the past year. The average property is now worth over $1,140,000. Even though mortgage rates have increased, it’s likely that real estate prices will remain steady or continue to rise because there is so much demand.
When compared to other American cities, rents are high in Torrance. The average monthly rent is $2,400, and only 1% of properties cost less than $1,000 per month. Although purchasing a property won’t be cheap, you’ll have a monthly income of $2,000+.
No Shortage of Tenants
One of the biggest concerns of real estate investors is finding tenants. Fortunately, this isn’t an issue locally because there are almost always more people looking for a place to stay than there are homes available. The average property is rented out within a few days, so investors don’t have to worry about their house or apartment sitting empty for multiple months.
The population in Torrance is very diverse, so you’ll find a tenant no matter what kind of property you’ve purchased. The area attracts students, young professionals, large families, and elderly people looking to settle down.
Few Problems with Tenants
Another major problem for property investors is the quality of tenants. If a tenant doesn’t pay the rent or destroys the property, the landlord loses several months’ worth of income, and they have to spend thousands on repairs. Because of rent controls in California, it’s hard to evict tenants even if they don’t pay reliably.
In Torrance, the average household income is over $100,000, so it’s relatively easy to find people who can pay the rent. Since the area is affluent, the risk of problems with tenants is low.
There Are Various Types of Properties
If you’re a beginner real estate investor, you might not be ready to purchase an expensive multi-family home. Luckily, there is a wide range of options in the local area. You can start with a small apartment suitable for a single professional or a student. Once you’re receiving income from your first rental property, you can use the profits to invest in larger units.
There are also several neighborhoods to choose from. Currently, Merit-Carson is the most affordable area. The average home costs under $650,000 there. Belmar North, Delthome, and Park Plaza are the most exclusive neighborhoods, and a typical home in these areas sets you back at least $1.2 million.
What to Look for in a Property
The first step is to decide where you’d like to buy. As mentioned, there are several distinct neighborhoods in Torrance, and each one offers something unique. To determine which one suits you, check the home prices and rents and visit the areas. Some factors to consider are schools, transport links, the crime rate, the amenities, and the potential for future development.
If you have limited financial resources, you might consider buying a distressed property. Homes facing foreclosure are often cheaper, so investors can purchase a rental unit in an area that would otherwise be too expensive. However, these properties are sometimes in bad condition, so they have to be renovated.
How to Find the Ideal Rental Property
Finding a great rental property takes time and effort. Start by monitoring the market for several months or years to see what is available. You can set up alerts on property sites like Zillow, but the best way to find high-quality real estate is to reach out to a specialist. Teresa Mack has been buying and selling Torrance homes for over 15 years, so she can tell right away whether a property is a good investment.
Tell her about your budget and goals. Whenever a new property is put on the market, she’ll let you know. Because she has many industry connections, she’ll be the first to hear about homes for sale.
How to Choose Tenants
The risk associated with renting out a home is lower in Torrance than in other parts of the country, but it’s still important to vet prospective tenants. Always choose someone who has a stable job or enough assets to pay their rent for at least a year.
Whenever possible, meet tenants in person before signing anything. That way, you’ll be able to get a sense of what they’re like. Listen to your gut. If it tells you something is off, don’t ignore the feeling. Remember, there are plenty of tenants looking for a place, so you don’t need to accept the first person who applies.
Purchasing properties and renting them out is still an excellent strategy because the greater Los Angeles area is extremely popular. In Torrance, CA, you’ll find single-family homes, multi-family homes, and apartments to buy. Get in touch with Teresa Mack now to learn how to buy real estate for use as a rental property. With her longstanding experience, she’ll help you find homes that offer an excellent ROI.
