Best Places To Buy Rental Property In California For 2025

If your goal is steady income and long-term equity, finding the best places to buy rental property in California is half the battle. California isn’t one market—it’s dozens of micro-markets with very different rent-to-price ratios, landlord rules, vacancy trends, and job growth. Pick the right pocket and you can lock in durable cash flow today with solid appreciation potential tomorrow.

In this 2025 guide, we spotlight proven hubs and under-the-radar neighborhoods—from coastal metros to Inland Empire and Central Valley corridors—where fundamentals still pencil. We’ll weigh affordability, rent demand, cap rates, taxes/insurance, and local regulations so you’re not flying blind. For a national view, see our broader best places to buy rental property roundup.

Here’s what we’ll cover:

• Why California Is One of The Best Places To Buy Rental Property
• Top 15 Best Places To Buy Rental Property In California
• The Best Places To Buy Rental Property In California: FAQ

Why California Is One of The Best Places To Buy Rental Property

California has long been a hotspot for real estate investors, offering a unique mix of high rental demand, appreciation potential, and diverse investment opportunities. Whether you're looking for steady cash flow, short-term rental income, or long-term equity growth, the best places to buy rental property in California provide plenty of options. While some areas come with higher property costs, strategic investors can still find affordable markets with strong ROI. Below, we’ll break down the key reasons why California remains one of the top states for rental property investment:

• High Rental Demand
• Strong Market Appreciation Potential
• Diverse Rental Markets
• Strong Job Growth & Economic Stability
• High Rental Rates & Cash Flow Opportunities
• Low Vacancy Rates
• Favorable Tax Benefits For Investors
• Growing Infrastructure & Development

Ready to Buy Your First California Rental?

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High Rental Demand

Strong, durable demand is the backbone of any buy-and-hold strategy. In California, sheer population scale—over 39 million residents—meets tight housing supply and high entry costs. Add job hubs and major universities, and you get steady absorption year-round. If you’re hunting the best places to buy rental property in California, understanding these demand drivers keeps you focused on neighborhoods where occupancy and rents hold up.

Tourism and mid-term stays add another lane: coastal metros and destination markets support short- and mid-term strategies (where permitted). Always confirm local rules before underwriting.

Key Drivers of Rental Demand in California

Below are the key drivers that keep rental demand strong across California’s micro-markets—use them to zero in on the best places to buy rental property in California:

• Limited for-sale inventory keeps households renting longer.
• Diverse job base (tech, healthcare, logistics, entertainment) deepens the renter pool.
• Campus submarkets create reliable leasing velocity near major universities.
• Tourism + mid-term stays support STR/MTR strategies (permit-dependent).

Bottom line: prioritize submarkets where these drivers overlap, and you’ll narrow in on the best places to invest in rental property in California with resilient demand and fewer surprises.

Strong Market Appreciation Potential

One big reason the best places to buy rental property in California keep winning is appreciation. California’s supply constraints, high-wage job centers, and enduring lifestyle demand have historically pushed values higher over time. For buy-and-hold investors, that means the chance to pair steady rent checks with long-run equity growth.

Where Appreciation and Rent Demand Often Overlap

Below are California submarkets where scarcity, high incomes, and steady renter demand align—prime starting points when narrowing the best places to buy rental property in California.

• San Diego & coastal North County: Scarce land + high incomes; resilient rent growth.
• Los Angeles (select submarkets): Westside, South Bay, and transit-served nodes hold value.
• Orange County: Strong schools and jobs; low vacancy supports pricing power.
• Silicon Valley/San Jose: High wages and limited supply drive long-run gains.
• Sacramento: Government/healthcare base; popular move-to market from the Bay Area.
• Inland Empire (Riverside/Corona/Redlands): LA adjacency with improving fundamentals.
• Ventura/Oxnard corridor: Coastal constraint with growing renter demand.

Diverse Rental Markets

One reason the best places to buy rental property in California keep changing by strategy is diversity: coastal, urban, suburban, and inland markets each favor different playbooks. Match your goal—cash flow, appreciation, STR/MTR, or multifamily scale—to the right micro-market and regulations.

California offers a mix of high-yield inland plays and coastal appreciation bets—pick the format that fits your goals and the local rulebook.

Strong Job Growth & Economic Stability

California’s scale and industry mix are a big reason the best places to buy rental property in California hold up over time. As the world’s fifth-largest economy, the state’s tech, entertainment, military, healthcare, biotech, and finance hubs create deep renter pools and resilient demand across multiple metros.

Investor takeaway: prioritize submarkets anchored by these job engines—they’re often the first places where rents recover and the last places to see vacancy rise.

High Rental Rates & Cash Flow Opportunities

One reason the best places to buy rental property in California stay attractive is pricing power. Deep renter pools and tight supply support premium rents in major metros, while select inland markets still pencil for stronger yield. Pair the right submarket with disciplined underwriting and you can capture steady cash flow and long-term equity growth.

Low Vacancy Rates

Consistently tight vacancies are a big reason the best places to buy rental property in California keep cash flowing. Statewide rental vacancies hover below the U.S. average—recent reports put California near ~4.8%—and select submarkets are even tighter. In Orange County, for example, apartment vacancies have been cited around ~4.1%, reinforcing quick lease-ups and pricing power.

Where Vacancies Tend to Stay Low

Start your search with the pockets below—coastal job hubs, university anchors, and growing inland markets—where vacancies typically run under regional averages when scouting the best places to buy rental property in California.

• Coastal employment hubs: Orange County, San Diego, West LA—high wages + limited new supply.
• University anchors: Westwood/UCLA, Berkeley, Davis—predictable leasing cycles each year.
• Growing inland markets: Fresno, Modesto, Bakersfield—population gains with constrained inventory.

Favorable Tax Benefits For Investors

Investing in California rental properties offers several tax advantages that can significantly enhance an investor's return on investment. These benefits make cities like Los Angeles, San Francisco, and San Diego some of the best cities for real estate investing in California.

Mortgage Interest Deductions: Investors can deduct the interest paid on mortgage loans for rental properties, effectively lowering taxable income. This deduction can result in substantial tax savings, especially in high-value markets.

• Depreciation Write-Offs: The IRS allows investors to depreciate residential rental properties over 27.5 years, enabling them to deduct a portion of the property's value annually. This non-cash deduction reduces taxable rental income, enhancing cash flow.
• 1031 Exchange: Under Section 1031 of the Internal Revenue Code, investors can defer capital gains taxes by reinvesting proceeds from a sold property into a "like-kind" property. This strategy allows for portfolio growth without immediate tax liabilities.
• Deductions for Property Management, Repairs, and Maintenance: Expenses related to managing and maintaining rental properties, such as repairs, property management fees, and maintenance costs, are deductible. These deductions further reduce taxable income, improving overall profitability.

These tax benefits make California an attractive destination for real estate investors. Identifying the best places to buy rental property in California 2025 can lead to significant financial advantages, especially when leveraging these tax incentives.

Growing Infrastructure & Development

California's ongoing infrastructure and development projects significantly enhance its appeal as a prime destination for real estate investment. The expansion of public transportation systems, the emergence of new job centers, and the rise of mixed-use developments collectively contribute to increased property values and rental demand across the state.

• Expanding Public Transportation Systems: The state has committed over $1.3 billion to 27 new public transportation projects, aiming to fund transformative rail and transit improvements throughout California. In Los Angeles, the East San Fernando Valley Light Rail Transit Project is set to improve connections to key destinations with a 6.7-mile segment featuring 11 new stations. Similarly, the Bay Area's BART system and the San Diego Trolley are undergoing expansions to enhance accessibility and connectivity.
• Emergence of New Job Centers: Cities like Sacramento and the Inland Empire are experiencing significant growth, with new job centers attracting a diverse workforce. This growth creates opportunities for workforce housing, making these areas some of the best places to invest in rental property in California.
• Rise of Mixed-Use Developments: Investments in mixed-use projects are boosting property values near commercial hubs. A notable example is the 222 North City development in San Marcos, which will create 460 residential units across two 12-story towers, integrating residential living with commercial spaces. Such developments enhance the desirability of neighborhoods, offering residents convenient access to amenities and businesses.

These infrastructure and development initiatives not only improve the quality of life for residents but also make California the best place to buy a rental property in California. Investors seeking the best place in California to buy rental property will find that areas benefiting from these projects offer promising returns and long-term growth potential.

Read Also: How To Invest In Real Estate In California

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE Webinar Training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

Top 15 Best Places To Buy Rental Property In California

Now that we've covered why California is a great market for rental property investment, let’s dive into where you should be looking.

With its strong job market, high rental demand, and growing infrastructure, California offers plenty of opportunities for real estate investors. However, knowing the best places to buy rental property in California can make all the difference in maximizing cash flow, appreciation, and long-term profitability.

Some markets are ideal for short-term vacation rentals, while others offer steady, long-term rental income in high-demand areas. Whether you’re looking for affordability, high rental yields, or fast-growing markets, certain locations stand out as the best cities to buy rental property in California.

In this section, we’ll break down the best places to invest in rental property in California, highlighting rental demand, affordability, appreciation potential, and the best property types to buy in each location. Let’s get into the top 15 rental markets in California where investors are seeing strong returns and long-term success:

1. San Diego: Booming tourism, military presence, and high appreciation rates
2. Los Angeles: Strong rental demand, diverse job market, and high-income tenants
3. Sacramento: Affordable housing, government job stability, and high rental yields
4. Fresno: Low entry costs, high cash flow potential, and growing economy
5. Riverside: Affordable alternative to LA with strong rental demand
6. Bakersfield: Emerging market with high rental yields and strong job growth
7. Madera: Affordable housing, high appreciation rates, and rental stability
8. Santa Clarita: Suburban appeal, high-income renters, and steady appreciation
9. Pomona: Strong student housing demand and steady appreciation
10. Anaheim: High short-term rental potential near Disneyland and convention centers
11. San Bernardino: Affordable home prices and growing rental market
12. Modesto: Popular with Bay Area commuters, creating strong rental demand
13. Oxnard: Coastal city with strong appreciation potential and rental demand
14. Stockton: Revitalizing market with affordable properties and steady appreciation
15. Chula Vista: Proximity to San Diego with strong rental demand and job growth

Each of these rental markets offers unique investment opportunities, whether you’re looking for short-term vacation rentals, multi-family units, or long-term single-family homes. Now, let’s dive into why each of these cities is a great place to invest in rental property!

San Diego, CA

San Diego stands out as one of the best places to buy rental property in California, offering investors a combination of high rental demand and strong appreciation potential. The average rent in San Diego was $3,100, reflecting a slight decrease from the previous year (-$38 year over year).

The city's robust job market, with significant growth in emerging industries, has added 47,500 jobs since the first quarter of 2020. This economic vitality attracts a steady influx of residents seeking rental housing.

For investors focusing on California real estate investment, San Diego offers promising opportunities in both short-term and long-term rentals. Coastal neighborhoods like Pacific Beach and La Jolla are particularly popular for vacation rentals, while areas such as North Park and Hillcrest attract long-term tenants due to their vibrant communities and proximity to employment centers.

Looking ahead, San Diego's limited housing inventory and ongoing demand suggest continued appreciation in property values, solidifying its position among the top cities for rental property in California.

Los Angeles, CA

Los Angeles is easily one of the best places to buy rental property in California, thanks to its massive population, booming industries, and consistently high rental demand. With an average rent of $2,161 per month—about 39% higher than the national average—it’s clear that renters are willing to pay a premium to live in LA.

The city’s diverse economy—spanning entertainment, tech, and international trade—continues to attract professionals, artists, and students who need housing. This makes LA one of the best markets for rental properties in California, especially for multi-family units in Koreatown and Downtown, where rental demand stays high. For investors looking for long-term stability, single-family homes in the San Fernando Valley or West LA are great options, offering steady appreciation and strong tenant demand.

With its growing job market and ongoing housing shortage, Los Angeles will remain one of the best rental markets in California for years to come. Whether you’re investing in long-term rentals or short-term Airbnb properties, LA has something for every investor looking to build wealth in real estate.

Sacramento, CA

Sacramento has emerged as a compelling choice for those considering where to buy rental property in California. The city's growing economy and relatively affordable housing market make it an attractive option for investors. As of January 2025, the median rental price in Sacramento stands at $1,899 across all home types, reflecting a stable rental market.

For those interested in California rental property investment, Sacramento offers a variety of property types to match different investment goals. Neighborhoods like Midtown Sacramento are trendy areas with high demand for apartments and condos, while East Sacramento is a historic area with well-maintained homes and strong rental demand.

Looking ahead, Sacramento's rental market is expected to remain stable, with modest increases across most home types. The city's growing economy and expanding employment opportunities continue to attract new residents, keeping housing demand strong.

In summary, Sacramento stands out as one of the best locations for rental properties in California, offering a balanced mix of affordability, demand, and growth potential for savvy investors.

Fresno, CA

Fresno is one of the best places to buy investment property in California. The city's combination of affordable housing and rising rental demand makes it particularly appealing. As of January 2025, the average rent in Fresno is $1,256 per month, which is 19% lower than the national average, indicating room for growth.

In recent years, Fresno's rental market has tightened significantly. A report from Fresnoland as recently as last year ranked Fresno as the ninth most competitive rental market in the nation, highlighting the increasing demand for rental properties.

For those considering where to invest in rental properties in California, Fresno offers promising opportunities. The city's growing population and economic development contribute to a robust rental market, making it one of the best cities to invest in rental property in California.

Looking ahead, Fresno's combination of affordability and increasing rental demand positions it as a compelling choice for real estate investors aiming for long-term growth and stable returns.

Riverside, CA

Riverside is one of the best places to buy a house for rental income in California, offering investors a strong rental market fueled by affordability and proximity to Los Angeles. Located just 55 miles east of LA, Riverside has become a top choice for renters seeking lower housing costs while maintaining access to job opportunities in the greater Los Angeles area. As more people get priced out of LA’s skyrocketing housing market, demand for rentals in Riverside continues to surge.

As of January 2025, the average rent in Riverside is $1,825 per month, a 17% increase over the national average, making it one of the most profitable cities for rental property in California.

For those new to real estate, Riverside is an excellent entry point into California real estate investing for beginners. The city's expanding job market, strong rental demand, and more affordable property prices provide investors with solid cash flow and appreciation potential. With consistent population growth and ongoing development, Riverside remains a top-tier market for investors looking for long-term rental income and value appreciation.

Bakersfield, CA

For investors looking for where to invest in California real estate, Bakersfield is an excellent choice due to its low home prices and high rental yields. As of January 2025, the average rent in Bakersfield is $1,189, and home values have increased 4.6% over the past year, making it an affordable market with strong upside potential.

Bakersfield’s economy is driven by agriculture, energy, and logistics, ensuring stable job growth and rental demand. Many residents prefer renting over buying, keeping occupancy rates high. The highest ROI rental property markets in California often feature low purchase prices with strong rental income, and Bakersfield checks both boxes.

The best properties to invest in are single-family homes and multi-family units, which offer consistent cash flow with minimal vacancies. Bakersfield’s low cost of entry and increasing rental demand make it one of the best places to buy rental property in California 2025 for new and seasoned investors.

Madera, CA

Madera is emerging as a compelling option for investors seeking the best places to buy rental property in California. As of January 2025, the average rent in Madera is $1,019 per month, which is 34% lower than the national average, indicating affordability for tenants and potential for rental demand growth.

Perhaps even more notably, the city has experienced a 4.5% increase in rent over the past year, reflecting a positive trend in rental income for property owners.

Madera's proximity to Fresno and its expanding local industries contribute to a growing population seeking housing options. Investors focusing on California real estate investment will find opportunities in single-family homes and multi-family units that cater to families and professionals relocating to the area.

Given its affordability, rental growth, and strategic location, Madera stands out as one of the top cities for rental property in California.

Santa Clarita, CA

Santa Clarita stands out as a high-income suburban market with notably low vacancy rates, making it an attractive destination for real estate investors. The average rent in Santa Clarita is $2,210 per month, which is 42% higher than the national average, reflecting the area's affluence and strong rental demand.

Investors might find single-family homes particularly appealing, given the area's family-friendly reputation and the premium rents such properties can yield. Additionally, the low vacancy rates suggest that well-maintained properties are likely to remain occupied, ensuring a steady income stream.

Looking ahead, Santa Clarita's combination of high rental rates, low vacancy, and ongoing development projects positions it as a promising locale for sustained rental income and property appreciation. Its proximity to Los Angeles, coupled with its own expanding amenities, further enhances its appeal to potential tenants seeking a balance between urban accessibility and suburban tranquility.

Pomona, CA

Pomona is emerging as one of the best places to buy rental property in California, thanks to its robust student housing demand and consistent property appreciation. Home to esteemed institutions like Cal Poly Pomona and Western University of Health Sciences, the city experiences a continual influx of students seeking convenient housing options.

As of January 2025, the average rent in Pomona stands at $1,738 per month, which is approximately 12% higher than the national average. This reflects a healthy rental market with promising returns for investors.

Investors might consider focusing on multi-bedroom properties to accommodate student groups, as well as single-family homes in proximity to university campuses. The steady demand from the student population ensures minimal vacancy rates and reliable rental income.

Looking ahead, Pomona's strategic location within the Los Angeles metropolitan area and its ongoing urban development initiatives suggest a trajectory of property value appreciation. For those evaluating the best cities to buy rental property in California, Pomona offers a compelling blend of immediate rental income potential and long-term investment growth.

Anaheim, CA

Anaheim stands out as one of the top cities for rental property in California, offering lucrative opportunities for both short-term and long-term investments. Its proximity to Disneyland Resort, a world-renowned tourist destination, makes it ideal for short-term rentals. However, it's important to note that the City of Anaheim has specific regulations governing short-term rentals, including a requirement for a minimum stay of three nights and the necessity to obtain a city permit.

For investors interested in long-term rentals, Anaheim's close proximity to Los Angeles presents a compelling opportunity. Many individuals and families are relocating from LA to Anaheim in search of more affordable housing options, leading to a growing demand for single-family rental homes. This trend contributes to Anaheim's reputation as one of the best markets for rental properties in California.

As of January 2025, the average rent in Anaheim is $2,070 per month, which is 33% higher than the national average, indicating a strong rental market.

Investors should consider Anaheim's regulatory environment and market dynamics when exploring opportunities in this vibrant city.

San Bernardino, CA

San Bernardino presents a compelling opportunity for real estate investors due to its affordable housing market and expanding rental demand. As of January 2025, the average rent in San Bernardino is $1,278 per month, which is 18% lower than the national average of $1,554. This affordability attracts a broad tenant base, including young professionals and families seeking cost-effective living options.

The city's housing market offers relatively low entry points for investors, with property prices more accessible compared to neighboring regions. This affordability, coupled with a growing population, has led to a 1.3% increase in rental rates over the past year, indicating a healthy and expanding rental market.

San Bernardino's strategic location within the Inland Empire provides residents with convenient access to major employment hubs in Southern California, further bolstering rental demand. Investors can capitalize on this trend by considering single-family homes and multi-family units, which are in high demand among the city's diverse tenant population.

Given these factors, San Bernardino stands out as a promising destination for those looking to invest in California's real estate market.

Modesto, CA

Modesto presents a compelling opportunity for real estate investors seeking the best places to buy rental property in California. Its strategic proximity to the Bay Area makes it an attractive option for individuals and families looking for more affordable living arrangements while maintaining access to the economic opportunities of the Bay Area. This migration trend bolsters rental demand in Modesto.

As of the beginning of this year, the average apartment rent in Modesto is $1,494, reflecting a decent increase from the previous year. This steady growth indicates a healthy rental market with promising returns.

The city's affordability, compared to neighboring regions, allows investors to acquire properties at lower costs while benefiting from a growing rental market. Additionally, Modesto's diverse economy, encompassing agriculture, manufacturing, and healthcare sectors, provides a stable employment base, further driving housing demand.

Given these factors, Modesto stands out as a prime location for investors aiming to achieve high returns in the California rental property market.

Oxnard, CA

Oxnard, a coastal city in California, offers a unique blend of agricultural heritage and seaside living, making it an attractive destination for real estate investors. The city's economy is significantly bolstered by its robust agricultural sector, with Ventura County being renowned for its diverse and year-round crop production, including strawberries, citrus fruits, and avocados.

As of the time of this writing, the average rent in Oxnard is $2,119 per month, which is 36% higher than the national average, indicating a strong rental market.

Investors might consider focusing on properties in neighborhoods such as Via Marina and Channel Islands, which are among the most sought-after areas in Oxnard.

Looking ahead, Oxnard's combination of a thriving agricultural industry, coastal appeal, and strong rental demand positions it as a promising locale for sustained rental income and property appreciation.

Stockton, CA

Stockton is gaining attention as a revitalizing market, offering affordable housing options with significant appreciation potential. The average rent in Stockton is $1,266 per month, which is 19% lower than the national average, making it an attractive option for renters and a promising opportunity for investors.

The city's strategic location, approximately 80 miles east of San Francisco, makes it a desirable alternative for those seeking more affordable living while maintaining access to Bay Area employment opportunities. This proximity has contributed to a steady influx of residents, bolstering housing demand.

Recent data from Redfin indicates a positive trend in property values. In December 2024, Stockton home prices were up 5.7% compared to the previous year, selling for a median price of $460,000.

Investors are also encouraged by the city's redevelopment initiatives, particularly the South Pointe Village housing project, which plans to add at least 520 housing units along the waterfront. Such projects are expected to enhance the city's appeal and stimulate further economic growth.

Given these factors, Stockton presents a compelling case for real estate investment, combining affordability with promising prospects for appreciation.

Chula Vista, CA

Chula Vista's strategic location between downtown San Diego and the U.S.-Mexico border makes it a compelling choice for real estate investors. This positioning attracts a diverse tenant base, including professionals working in San Diego and individuals engaged in cross-border commerce. Despite its proximity to these bustling areas, Chula Vista offers more affordable rental options compared to central San Diego.

The average rent in Chula Vista is $2,084 per month, which is 34% higher than the national average but still lower than San Diego's average of $2,337 per month.

Neighborhoods such as Bayfront, Otay Town, and Harborside are among the most affordable in Chula Vista, with average rents of $1,928, $2,072, and $2,132 per month, respectively.

Investors might consider focusing on single-family homes and multi-family units in these neighborhoods to cater to the growing demand. Chula Vista's ongoing development projects, including the Bayfront redevelopment, are expected to further enhance its appeal, suggesting promising prospects for property appreciation.

Read Also: How To Flip Houses In California

The Best Places To Buy Rental Property In California: FAQ

Investing in rental properties in California offers numerous opportunities, but it's essential to be well-informed before making a decision. Below are some frequently asked questions to guide potential investors.

What are the best cities to buy rental property in California?

Cities like Los Angeles, San Diego, and Sacramento are often highlighted due to their strong rental demand and economic growth. However, emerging markets such as Fresno and Riverside also present promising opportunities for investors.

How do I determine if a rental property is a good investment?

Evaluate factors such as location, property condition, local rental rates, and potential for appreciation. Conducting a thorough rental analysis and understanding market trends are crucial steps in this process.

What financing options are available for purchasing rental properties in California?

Investors can explore conventional mortgages, private loans, or partnerships. It's important to assess each option's terms and how they align with your investment strategy.

Are there tax benefits associated with owning rental properties in California?

Yes, owners can benefit from deductions on mortgage interest, property taxes, and depreciation. Consulting with a tax professional can provide detailed insights tailored to your situation.

Should I manage the property myself or hire a property management company?

This decision depends on factors like your proximity to the property, availability, and experience. While self-management can save money, hiring a property management company can alleviate the day-to-day responsibilities and ensure professional oversight.

Read Also: How To Wholesale Real Estate In California

Final Thoughts On The Best Places To Buy Rental Property In California

The best places to buy a rental property in California depend on each investor's individual goals. However, with a state that's full of opportunities, it's hard to go wrong wherever you buy your first rental property. With strong rental demand, appreciation potential, and economic growth, investors can find lucrative opportunities across the state. By choosing the right location and strategy, rental property owners can build long-term wealth in California’s dynamic real estate market.

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.