March 16, 2020

By Kayla Matthews

Los Angeles is arguably famous around the world, even to people who never visit it. Landlords are understandably drawn to the LA rental market. However, they must understand what to expect before diving into an investment. This overview should help.

General Trends in the Los Angeles Renting Market

Los Angeles has name value driven by people characterizing it as a cool, culture-filled place to live. Those beliefs about the area bode well for landlords, too. Los Angeles recently ranked as the top market for real estate investment in the world.

And that designation is not new, since Los Angeles also received it for the three previous years. The city got the honor this year due to economics, environmental aspects and educational opportunities.

Thus, landlords could highlight how the city is internationally recognized for many positive aspects that appeal to people who may move to Los Angeles for work or study.

However, the average rent in Los Angeles could deter some potential tenants. A recent ranking put Los Angeles as the seventh most expensive city in California based on median asking prices for rental properties. The median monthly rent amount was $2,250 for a single-bedroom property. Although that figure represented the situation as of March 2020, the positive aspect for tenants is that the percentage indicates a 3.4% annual decline.

Also, information published in 2019 associated the LA rental market with a consistent rise in rental prices. It also pointed out how this trend means people may need to devote significant amounts of their earnings to the cost of renting a place to live.

A smart approach for rental property owners to take is to focus on the positive aspects of a property that could make a person especially willing to bear the cost. Links to public transit, a bustling arts scene, scrumptious places to eat and nearby schools or medical facilities are all things that could appeal to potential renters.

Los Angeles Neighborhood Samples

Using Rentometer Pro’s neighborhood report analysis tool, we looked at rental prices for single-bedroom properties in several Los Angeles neighborhoods.

Downtown: View Rent Comp Report

The downtown segment of Los Angeles includes Skid Row, Little Tokyo and Financial District. Data from Rentometer indicates that the average rent in the area is $2,600 per month for a single-bedroom property.

Interestingly, the apartments around the Pershing Square transit stop are among the lowest-priced options. As a result, landlords who have properties in the area should strongly consider calling attention to the transport connection.

Mid City West: View Rent Comp Report

The well-known sites in the Mid City West part of Los Angeles include Cedars-Sinai Medical Center, The Troubador music venue and a farmer's market. Since the average rent here for a one-bedroom property is $2,492 per month, it's a bit more affordable for tenants. However, landlords still have ample opportunities to enjoy profitable investments.

Venice: View Rent Comp Report

With Los Angeles rent prices for a single-bedroom property here averaging $2,727 per month, the housing costs may be too steep for some potential tenants.

However, Venice provides landlords with ways to diversify their portfolios, such as by focusing on high-end properties. Even if they don't live in Los Angeles, solutions exist for overseeing the property from afar.

Moreover, a Venice property may appeal to people who want to live luxuriously near the water. Also, notice the relatively small number of properties represented in the map above. A lower number of overall properties could mean landlords get the benefit of investing in a market that's not saturated.

Hollywood: View Rent Comp Report

Hollywood is the place people associate with entertainment, stardom and tourism. The average rent for a one-bedroom abode is $2,158 monthly.

Also, the rent prices at the higher end of the scale are, not surprisingly, often near West Sunset Boulevard and the world-famous Dolby Theatre. A bonus for landlords is that they could call out that landmark and other prominent sites to gain attention in the rental listings.

Silver Lake: View Rent Comp Report

Silver Lake is near the San Rafael Hills. The Kaiser Permanente Los Angeles Medical Center is there, as well as Little Armenia and the Mount Washington neighborhood. The average rent is approximately the same as in Hollywood, calculated at $2,177 monthly for a single-bedroom unit.

What Risks Exist in the LA Rental Market?

When landlords are seriously thinking about going ahead with a Los Angeles rental investment, it's crucial that they understand the risks involved. Besides the threats that could dampen the real estate market anywhere, such as economic downturns, Los Angeles has environmental risks associated with it — earthquakes and wildfires mainly.

Los Angeles residents know there is little doubt a major earthquake will strike the city. They understand the necessity of preparing for "the big one" and realize the inevitability of such a natural disaster. However, researchers are using data platforms and sensors that could give better ground motion predictions for future seismic events in the city.

Landlords who are concerned about earthquake activity should inquire about any related safeguards concerning the property before investing. Recent progress has occurred involving retrofitting wood-framed LA apartments to make them more resilient during earthquakes.

Data published by The Los Angeles Times in November 2019 indicated that 27% of the properties received such upgrades. Data collected 14 months before that indicated only 5% had done so.

Wildfires also pose dangers to Los Angeles tenants and landlords. Complicating the matter is the fact that wildfire is an interdependent risk. Property owners should implement fire mitigation strategies, but their overall success depends on what the owners of neighboring properties do to protect against wildfire damage.

Thus, landlords may consider investing in communities that make wildfire mitigation a collective effort. Making that choice could lower insurance premium costs.

The Los Angeles Renting Market Is Worth Consideration

No rental market is free from possible challenges. However, as this coverage shows, Los Angeles has numerous favorable aspects that make it attractive to landlords and tenants alike.

About the Author: Kayla Matthews is a smart home journalist and real estate writer whose work has been featured on Houzz, Dwell, Inman and Curbed.