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Best Places to Buy Investment Property in California in 2026
Are you going to buy property in California in 2026? This is one of the most interesting and in-demand areas for real estate investment in the United States, whether you're buying your first home or have been investing in property for a long time.
But California is different. Its economy, which is valued at more than $3 trillion, includes entertainment, new ideas, and top-notch services. This is a market where home prices and property values have gone up a lot in the last five years. It stretches from the sunny beaches of Southern California to the tech-driven cities of Silicon Valley.
If you're ready to acquire rental property in California, you need to look beyond the average price and learn about the main things that affect profitability, such as property taxes, mortgage rates, cash flow, rental demand, and long-term appreciation.
This article goes into great detail on the best places in California to buy investment property, whether you want to rent it out long-term or short-term as a holiday rental. It also explains how to get the most out of your passive income and return on investment.
Is California a Good Place to Invest in Real Estate in 2026?
California is still a popular place for real estate investors from all over the world because it has strong demand, property values that go up over time, and long-term safety for your investment.
The median property price right now is $855,100, which is 7.4% higher than it was last year, according to Houzeo. Homes sell quickly, sometimes in as little as 30 days, which illustrates how competitive this market still is.
San Francisco, Silicon Valley, and Los Angeles are always at the top of the list when it comes to property appreciation. But investors are now looking at new areas where housing prices are lower and rental property demand is still rising.
Mountain View and Palo Alto are two suburbs of Silicon Valley that are still high-value neighborhoods where firms and IT professionals drive up housing demand. In the meantime, the Central Valley (which includes Fresno and Bakersfield) is growing quickly, property prices are going down, and rental yields are going up.
Buying a home in California costs more up front and in monthly mortgage payments, but Proposition 13 keeps median property tax rates lower than in many other states by limiting annual increases to only 2%.
Rental Property for a Short Time vs. a Long Time
One of the most crucial things to think about when you buy rental properties is whether you want to run a short-term rental (STR) or a long-term rental.
If you're thinking of renting out your home on Airbnb, keep in mind that areas like Los Angeles and San Diego have tight rules from the government. Some say the host has to live on the property. These limitations could hurt your ability to make passive money, but they might also cut down on competition, which is good for hosts who follow them.
Your returns on long-term rentals depend on the rent you get each month, how many homes are empty, and how much they cost. Short-term rentals, on the other hand, depend on tourism demand, the time of year, and occupancy rates. If they are managed well, they can make more money.
California's Best Cities to Buy Real Estate for Investment
The greatest areas to buy investment property in 2026 are cities that have a good mix of low prices, high rental demand, and the potential for property values to go up.
Los Angeles
- Median Property Price: $ 1,120,000
- Median Rent Price 2 Rooms: $ 3,373
- Median Rent Price 4 Rooms: $ 6,475
- Cash on Cash Return: 2.00%
Los Angeles is one of the best places in the world to buy real estate, but it's not the cheapest. Investors have to pay a lot to get in, but LA's global fame, entertainment sector, and constant population growth help keep rental demand strong.
As the city gets ready for the 2028 Summer Olympics, property values and home prices are likely to go up even more. This gives investors who buy early a chance to make money over time.
San Diego
- Median Property Price: $ 889,950
- Median Rent Price 2 Rooms: $ 3,167
- Median Rent price 4 Rooms: $ 5,096
- Cash on Cash Return: 2.00%
The beaches, weather, and strong job market in San Diego keep its real estate market strong. According to Global Property Guide, San Diego is a great place to live and make money. Last year, homes went up in value by 8.6% and the average gross rental return was 5.27%.
Costs are high, but regular rental income and a restricted supply of dwellings make it a good long-term property investment.
Hawthorne
- Median Property Price: Around $944.000
- Median Rent Price 2 Room: $ 3,360
- Median Rent Price 4 Rooms: $ 4,248
- Cash on Cash Return: 3.00%
Hawthorne is a hidden treasure in Silicon Beach that has great amenities, a variety of sectors, and a lot of job growth. Over 70% of people are tenants, meaning continued demand for rental units.
Because it is close to places where people work and attractions on the coast, both long-term and short-term rentals will always have a steady cash flow and a good return on investment.
Santa Maria
- Median Property Price: Around $685.000
- Median Rent Price 2 Room: $ 2,736
- Median Rent Price 4 Rooms: $ 3,600
- Cash on Cash Return: 4.00%
Santa Maria has low home costs and a fast rental turnover, with homes usually selling in less than 24 days. It's one of the best places for investors who want high rental yields without having to pay more for living in Southern California.
This place is a good choice for making passive income because it has a cheaper cost of entry and a growing population.
Fresno
- Median Property Price: $ 384,970
- Median Rent Price 2 Room: $ 1,360
- Median Rent price 4 Rooms: $ 2,581
- Cash on Cash Return: 5.00%
Fresno is one of the best places in California for real estate investors to get good deals. Prices for homes are far lower than in San Francisco or Los Angeles, but there is still a lot of demand for rentals because the population is growing and there are more jobs available.
Fresno is an excellent place for investors who want to buy property that will give them good cash flow and an increase in value.
The Best California Cities for Vacation Rental Investments
If you’re more interested in Airbnb-style rental houses, these cities are among the most profitable for 2026.
Riverside
- Median Price: $ 679,359
- Airbnb Occupancy Rate: 67%
- Average Airbnb Rent 2 Rooms: $ 3,166
- Average Airbnb Rent 4 Rooms: $ 5,151
- Cash On Cash Return for Airbnb: 4.00%
Riverside is an excellent place to invest in real estate for a short time because it is close to Los Angeles and Palm Springs. Tourists and business travelers keep occupancy rates high and income consistent.
Visalia
- Median Price: $437,450
- Airbnb Occupancy Rate: 69%
- Average Airbnb Rent 2 Rooms: $ 2,112
- Average Airbnb rent 4 Rooms:$ 4,437
- Cash On Cash Return for Airbnb: 5.00%
Because Visalia is close to Sequoia National Park, tourists come all year round. It's a great market for anyone who want to invest in holiday rentals because housing prices are low and returns are high.
Bakersfield
- Median Price: $ 399,999
- Airbnb Occupancy Rate: 65%
- Average Airbnb Rent 2 Rooms: $ 2,094
- Average Airbnb Rent 4 Rooms: $ 4,093
- Cash On Cash Return for Airbnb: 5.00%
Bakersfield is known for being cheap and growing. Forbes says it's one of the top 10 most competitive rental markets. Property investors on a budget should consider it because property costs are low and Airbnb profits are high.
Anaheim
For those interested in Airbnb’s history, here are some current key statistics:
- Median Price: $ 900,000
- Airbnb Occupancy Rate: 77%
- Average Airbnb Rent 2 Rooms: $ 4,248
- Average Airbnb rent 4 bedrooms: $ 8,523
- Cash On Cash Return for Airbnb: 5.00%
Anaheim is still one of the best cities in California to acquire investment property for short-term rentals because it is close to Disneyland and other big attractions. This is a great choice for serious investors because it has high occupancy, good yields, and steady housing values.
Stanton
- Median Price: $ 710,000
- Airbnb Occupancy Rate: 74%
- Average Airbnb Rent 2 Rooms: $ 3,352
- Average Airbnb Rent 4 Rooms: $ 7,679
- Cash On Cash Return for Airbnb: 3.00%
Stanton is adjacent to Anaheim and Knott's Berry Farm, and it is both cheap and always in demand by tourists. For people who want to buy property, it's a good balance between the expense of buying and the prospective revenue.
Elk Grove
- Median Price: $ 702,444
- Airbnb Occupancy Rate: 71%
- Average Airbnb Rent 2 Rooms: N/A
- Average Airbnb Rent 4 Rooms: $ 4,595
- Cash On Cash Return for Airbnb: 2.00%
Elk Grove is in the Sacramento metro area and has steady house values, good local amenities, and the potential for home values to go up. It's great for families and investors who want long-term security and a small amount of passive income.
Things to Think About Before Buying a Rental Property
When buying property in California, wise investors pay attention to these important financial factors:
- Down payment: You need to save up enough money to cover 20% to 25% of the cost of the house. Compare lenders, interest rates, and terms on loans or mortgages to make sure you can afford the payments.
- Cash-on-cash return: Look at how much money you make compared to how much you invest.
- Cap Rate: The cap rate is a way to compare rental properties by dividing the property's value by its annual net income.
- Taxes: Learn how Proposition 13 and the average property tax rate affect your total costs.
- Insurance: It protects your property and income against damage or being sued.
Tax Factors for Real Estate Investors to Consider in California
Proposition 13 says that property taxes in California can only go up by 2% per year. This is a big plus for people who want to invest in real estate for a long time. But when you buy a house, it is reassessed at its current market value, which can entail a greater initial tax burden.
Rental revenue is taxable, but investors can lower their tax bill by deducting mortgage interest, maintenance charges, depreciation, and other costs.
If you know what your tax requirements are ahead of time, you can make sure that your rental property keeps making money and building value over time.
How to Get the Most Money from Rent and ROI
To get the most out of your passive income, keep your costs steady and your revenues rising. Do what you can to automate. You may use tools like iGMS to handle all of your guest communications, cleaning schedules, and team coordination from one place.
Here are just a couple of the things you can do with automation:
- Avoid making two reservations
- Make texting and reviews easier to use
- Make your team work better
- Save time and make more money from your rental.
That's how smart real estate investors grow their businesses while still giving guests great experiences.
Final Thoughts
In 2026, California is still one of the finest places to acquire investment property. Yes, home prices are high, but because there is a lot of demand for them, property taxes are low, and prices keep going up; this is one of the best long-term real estate investments in the world.
Investing in rental property in California can help you develop wealth, make a stable cash flow, and protect your financial future, whether you want to make money passively, grow your capital, or diversify your portfolio.
About the Author
Zorica Milinkovic is a B2B SaaS writer who is passionate about psychology, marketing, and, when inspiration strikes, cooking. You can find her on LinkedIn.
