Are you looking to invest in Torrance, California real estate? If so, you should be glad to know that the rental market in Torrance, CA is strong.
For starters, investing in real estate can be incredibly rewarding. It can help guarantee steady income, long-term financial security, tax savings and more!
That notwithstanding, no two real estate markets are ever created equal. Some are better than others. For this reason, proper research is key to avoid buying in the wrong hosuing market.
Torrance, CA is an ideal choice for rental investments right now for multiple reasons. Here are a few:
- Rent is going up. According to Zumper, the average rent for a 1-BR apartment in the city is currently $1,795. This is a 6% increase compared to the last year.
- Torrance home values are appreciating at an above-average rate. According to Neighborhood Scouts, appreciation for the median price of homes in Torrance has been tracking above average over the last decade. The cumulative rate of appreciation has been 52.98%. This ranks it among the top 30% in the entire country.
There are tons of popular neighborhoods to invest in in Torrance. Evidently, investing in this city is a no-brainer! Making the right investment move can certainly be lucrative.
In this article, we’ll go over the top reasons you should consider investing in Torrance, CA real estate.
Why Invest in Torrance, CA Rental Properties
1. Generate Cash Flow
Cash flow is the net income you receive after deducting all expenses from your gross monthly rental income. Expenses usually include property taxes and mortgage payments.
One key benefit of investing in non-commercial real state is gaining the ability to generate cash flow. Your cash flow will only continue to increase with time as you pay down your mortgage and build up the equity.
As already mentioned, the average price of rent amounts in Torrance, CA have been increasing by about 6% every year. Currently, the median list price rent stands at $1,787 per month.
2. Help with Leverage
Leverage, in real estate, is simply the use of borrowed capital to boost the potential return of an investment property. This occurs when an investor uses the mortgage to reduce the capital needed to buy an investment property.
Generally, a 20% down payment on a mortgage, for instance, could get you the home you want. You can then leverage that investment in one of two ways:
- You could decide to secure a second loan against the increasing equity on the home; or,
- Refinance the original loan amount. You can use the money you’ve freed to purchase another property.
3. Build Equity and Wealth
This is another reason to invest in Torrance, CA real estate. The property you buy can help build you equity and wealth. You see, with every mortgage payment, you’ll be building wealth.
And, as you create more and more equity, you gain the leverage of buying even more properties. More properties means more cash flow and wealth!
4. Generate Wealth Through Appreciation of Property Values
Broadly speaking, property values usually increase in value over time. So, if you invest in the right property, you may be able to turn a profit when you decide to make a sale. Furthermore, rents usually tend to increase as well, which can mean increased cash flow in the future.
Torrance, CA ranks among the top 30 cities in the country in regard to property appreciation values. In the last 10 years, properties appreciated in value by over 50%.
5. Take Advantage of Tax Breaks and Deductions
Once you invest in real estate, you’ll be able to take advantage of numerous tax breaks and deductions. Generally, you’ll be able to deduct reasonable expenses that come with owning, operating, and managing a rental property.
Tips When Buying Investment Property in Torrance, Ca
Just like no two housing markets are ever created equal, the same holds true when it comes to rental properties. You’ll need to do proper diligence prior to buying an investment property.
The following are some of the things you’ll want to do prior to making the leap.
- Look at the metrics. Look at the vacancy rates, employment opportunities, population growth, and demographics. The last thing you want to do, for instance, is invest in a city where unemployment is rising.
- Assemble a team of professionals. This is especially critical if you are just starting out. To be successful, you’ll need to have a team of experts helping you along the journey. This team can include a real estate lawyer, a property inspector, a general contractor, or a property manager.
- Make a proper judgment of the cash flow. Cash flow is what differentiates a successful investment from a failed one. You’ll want to invest in a property where the rental income exceeds the running expenses.
- Inspect the property. Looks can be deceiving. What may seem like a great investment can turn out to be a major money pit. So, before proceeding with the purchasing process, have the home inspected by a professional.
- Perform a rent survey. In other words, conduct a comparative market trends analysis. This can help you determine how much rent to charge. Also, it can help you know whether rental demand exists for the property type you wish to invest in.
Bottom Line: Why Buy Torrance Real Estate Investments
The Torrance housing market is arguably one of the most promising out there. There is demand for rentals, property prices are appreciating in value, and the economy is doing well.
If you are a first-time investor, consider hiring a professional to help make the process smooth and free from potential pitfalls.
Contact Pinnacle Property Management today for all your investing and property management needs.
If you're looking for areas to invest in California, read our post here.