Top Rental Investment Cities in California

California is nicknamed the "Golden State" for good reason.

When it comes to real estate, some of the hottest and most stable markets in the country are located here. While major cities like San Francisco and Los Angeles will continue to hold strong in the future, the entry prices are now so high that many would-be investors feel priced out.

The best bet for those who want to get a piece of the "gold" is to look at some second-tier cities that hold good potential to boom, or are already booming, as prices are lower and the possible gains can happen even faster and more dramatically than in the major cities.

Long Beach
Located just 22 miles south of Downtown Los Angeles, Long Beach is a city that has everything from a historic downtown to miles of sandy beaches.

Properties in Long Beach are also significantly cheaper than the Westside of Los Angeles, where once middle-class, laid-back communities like Culver City and Hermosa Beach have now been transformed into havens of the rich and famous.

Home prices in this area for a modest house or condo often reach up into the atmosphere of ridiculous.

Meanwhile, Long Beach has been steadily investing in its own downtown area for the last decade or two, and now offers a great quality of coastal living that is unparalleled for its price point in Southern California.

The future for Long Beach looks bright on many levels, especially when you consider that the city is connected to the Los Angeles Metro train, meaning that those who work in the big city can live here and commute with ease.

The rental market will always be strong even if the local economy remains lukewarm.

California's state capital has several things going for it that place it near the top of the list of great investment cities.

First of all, as one of the oldest cities in California, Sacramento has an excellent stock of historic homes and apartment buildings -- the kind of structure and attention to detail you see in highly sought-after neighborhoods in San Francisco -- but for about half the cost.

Second, Sacramento has room to grow, and is attracting both businesses and residents that are being priced out of the Bay Area.

Finally, Sacramento has been making some very heavy public investments lately, including the recently green-lighted riverfront streetcar plan, which will give the city the same kind of boost in desirability that happened in Portland, OR, after it implemented a similar project.

San Jose
Many people don't realize that the largest city in the Bay Area is not San Francisco but the more southern, and sunnier, city of San Jose instead.

While San Jose has seen rapid growth and investment since the Internet boom that started in the late 1990s, it has not reached the point of maxing out that its peninsula neighbors to the north have.

The city still is home to many affordable mid-range communities, which will continue to draw residents due to the city's good weather, competitive prices and proximity to one of the nation's strongest job markets.

San Jose also has room to grow, which means that the lower prices will keep new construction around for years to come, and that potential investors have the opportunity to snatch up brand new properties at bargain prices.

Posted on Apr 29, 2015