RentalScaling Your Portfolio

Rental Property Investment Opportunities in San Jose, California

3 Reasons to Invest in San Jose, CA Real Estate

San Jose has quickly become one of the most popular cities for real estate investors looking to snatch up California investment property. This California metro area is growing and was recently ranked near the top of U.S. cities with the fewest homes for sale. California real estate investing has traditionally been an excellent option, due in part to appreciation of property and a consistent average return on investment.

In San Jose, a lack of homes for sale is causing home prices to skyrocket, so potential buyers are facing an affordability crunch. The median price for a single-family home in San Jose jumped to $1.7 million in December 2021 – a 23% increase YOY.

San Jose’s lack of inventory and increasing home prices shouldn’t be a deterrent for real estate investors interested in investing in rental properties. It’s a great city for investors interested in new construction investments. The rise in construction permits and activity has brought continued growth to the San Jose build to rent market, and investors are reaping the benefits.

In November 2021, San Jose’s construction permits for single-family increased 31% YOY. Fix and flip construction projects are also turning a profit. In Q3 2021, fix and flip investors profited $213,000 – compared to the national average of $68,847, according to Attom Data Solutions.

Thinking about a San Jose investment opportunity? Here are three things you need to know to see if San Jose is one of the best cities to invest in rental properties given your real estate investment strategy.

1. San Jose has a Thriving Job Market and Economy

San Jose's job market and economy are thriving. The region has the fastest rate of employment growth among the nation's largest metropolitan areas. In April 2020 – at the height of the pandemic – San Jose’s unemployment rate shot up to 12%. By the end of 2021, it had fallen to 3%.

Job market growth increased 3% over 2021, and future job growth is projected to be nearly 40% in the next 10 years which is higher than the national average of 34%.

San Jose is also located in Silicon Valley, which is home to tech behemoths such as Apple and Google, as well as a slew of successful startup businesses. The very high average pay rate for any job in San Jose is simply another reason for people to move here. In addition to Apple, whose new San Jose campus is under construction, and Google, businesses like Samsung, Qualcomm, Netgear, Cisco, Paypal, and others are in the city. Samsung opened a new campus here in 2015. Apple’s new San Jose campus is under construction.

2. The Big Tech Market in Silicon Valley

San Jose is also located in Silicon Valley, which is home to tech behemoths such as Apple and Google, as well as a slew of successful startup businesses. While Apple, whose new San Jose campus is under construction, and Google are the most famous here, businesses like Samsung, Qualcomm, Netgear, Cisco, Paypal, and others are in the city. Samsung opened a new campus here in 2015.

Silicon Valley is dominated by young professionals, and a lot of the city’s housing demand stems from that demographic. The very high average pay rate for any job in San Jose is simply another reason for people to move here. Investing in housing that caters to their needs and fits their budget is key. Would-be renters will pay a premium for it, and investors will reap the rewards.

If Silicon Valley continues to generate so many high-paying jobs, it will continue to attract people who will eventually start families.

3. San Jose has a Growing Rental Market

The San Jose rental market is booming. The city has a mixture of owner-occupied and renter-occupied housing units. Single-family homes account for about 53% of San Jose's housing units, and nearly 45% of San Jose residents live in rental homes.

There are five colleges in San Jose, which has contributed to the booming rental market. For real estate investors, owning rentals in a college town can be highly profitable and creates an excellent opportunity for build-to-rent homes and long-term renters. As one of the best places to buy investment property in California, San Jose clearly appeals to rental property investment.

San Jose investors could buy property for the purpose of build-to-rent homes and rent them out to the thousands of engineering and computer graduate students in the area. These students are vying for jobs in the city’s tech industry, so they’re not necessarily going to leave right after graduation.

Why Investors Should Consider San Jose

Even though home prices are increasing in California, real estate investors have plenty of reasons to consider San Jose. Just like Sacramento and San Diego, San Jose has quickly become one of the best cities to buy rental property in California.

San Jose has a track record of being one of the best markets for long-term investments. The city’s Big Tech sector makes it one of the hottest real estate markets in the country. Among all the cities of Silicon Valley Bay Area, San Jose city probably has the perfect balance of residential and commercial areas.

San Jose inventory is low, but opportunities are there for investors who move quickly to seize the opportunity. If you want to move quickly, you need the right lender capable of financing California investment property loans. Lima One Capital has the best suite of products for California real estate investors, and we’re able to move quickly when you find the right opportunity. Contact us today to discuss your San Jose investment property, or if you have a deal in hand, you can speed up the process by applying now.

Lima One Capital offers rental property loans, a rental loan program, and a wealth of knowledge about real estate investing. If you’re looking to jump in the market on one of the best places to buy investment property, we’re available to help.

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18301 Von Karman Avenue, Suite 700
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