The central valley is a good place to purchase rental homes, whether you’re interested in single-family residences or apartment buildings. You’ll need to adjust your strategy a little bit depending on the type of property you decide to buy and rent out.
Visalia is a Consistent Rental Market
One of the best parts about this market is that rents don’t fluctuate as much as they do in markets to our north or south. Everything stays consistent. Unfortunately, this also means the home values stay consistent. So, if you’re coming to the central valley and you want to buy apartment buildings or rent out a home that you have and you’re expecting an increase in rent and appreciation, you might be disappointed. You’ll need a different strategy when you’re investing here.
If you come here to purchase a property that is earning a reliable cash flow right out of the gate at its existing level, you have a better strategy. If rents go up and properties appreciate, that’s even better. But, don’t expect it.
Work with Local Professionals
The best practice for investing in the central valley is to call someone locally. There are a lot of pocket areas where you wouldn’t want to invest. You’ll need to understand the geography and the neighborhoods and the tenant pool. Find a local person who really knows the market. This might be a local Realtor or an agent who has experience here. Talk to a local Visalia property management company as well. Find out what they think of an area before you buy there. I know that when investors ask for my advice, I give straight and honest answers. I’ll tell you where I’d invest right now, and recommend that you talk to other local experts. Get a good idea of how this market works. You might be surprised.
Investing in Single-Family Homes
Single-family homes are great investments in this area. A ton of renters are here, and they’re happy renting, so they’ll be tenants for a long time. Single-family homes attract long term tenants, and you’ll know how to project your cash flow and your investment returns. However, the risk with a single-family home is that if you lose your tenant, you’ll have zero income until you can find a new tenant. With a property that has many doors, you still have other rent coming in. Turnover can often be 30 days or longer, so single-family homes come with a little bit of risk.
Investing in Multi-Family Properties
Apartments are excellent investments, too. You’ll have several sources of income in one building, and a single vacancy won’t hurt so much. In the central valley, we do not use the utility bill-back system. So, your water, sewer, trash, and electric will likely be included in the rental price of an apartment. You’ll have to pay those charges as the landlord, as well as your insurance and property taxes. We’re also in a flood zone throughout most of this area, so prepare to pay for flood insurance.
Get real numbers before entering into escrow in the central valley. Do your homework and find a good property.
Investors have the opportunity to do well in this area. If you have questions about finding investment real estate in California’s central valley, please contact us at The Equity Group.