6 Reasons Why Irvine, California is a Great Place to Invest
Orange County is home to some of the most competitive real estate players in the market. Low vacancy, corporate tenants, coastal location, and a strong economy have been driving prices over the years. Overall, the county offers investors a secure location to place their capital.
However, there are many different markets within the county, each offering its own unique benefits to landlords. Some offer value-add opportunities, while others provide more stable investments. In this article, we want to introduce you to one of the safest and most desired communities within the county – Irvine – and outline why investors should consider this city for their next acquisition.
A Deeper Look at Irvine
Irvine was incorporated on December 28, 1971, and is considered one of the nation’s largest planned urban communities. It encompasses more than 65 square miles and is filled with boutique stores, national chains, and established trendy dining concepts. The city’s ongoing dedication to safety and growth has provided investors with an optimal place to invest for years. Here’s why!
1- Great Demographics
The first rule in seeking a substantial investment property is to find an asset with strong demographics. This allows investors to be secure if they lose a tenant or face any other uncertainty with their property. For example, higher-income areas tend to do better during economic downfalls, so a high median household income can prove to be less risky.
Irvine’s demographics are ideal for any investor. According to 2022 data, Irvine has a population of over 304,408 with the median age of residents being 34.2 years old. The median household income is $105,126 – 60% above the national median. As for homeownership, Irvine also ranks above average. The median property value in Irvine is $1,247,500 with 46.8% of residents owning their homes.
Thanks to these demographics, investors can feel protected through any market fluctuations.
2- High Employment Rates
According to the City of Irvine, Irvine has over 23,000 companies within its border, including one-third of all Fortune 500 companies. Over 280,000 people are employed within the city.
High employment helps drive markets. In simple terms, the more people working, the more people there are to spend money. The money spent within the city boundaries will improve the local economy. The centers within Irvine generate more than $60 million in annual revenue. As a result, Irvine ranks #1 in the United States for fiscal health. This is a direct result of consumer spending.
3- Home to Four Major Universities
Owning real estate in a college town provides investors a unique advantage – This is because no matter how the market is performing, individuals are attending school. In fact, during economic downturns, enrollment rates increase. People return to school to either advance their careers or shift their professional direction.
Irvine is home to four major colleges – The University of California, Irvine (UCI), Irvine Valley College (IVC), Concordia University, and Brandman University. Additionally, 34 other colleges and universities have campuses or offices within Irvine. With such high enrollment rates, property owners tend to experience lower vacancy rates and more consistent rental rates.
4- Hedge Against Inflation
One of the biggest draws to owning real estate is its ability to offer investors a hedge against inflation. This means that property owners can anticipate that their real estate will maintain or increase its value over a specified time, keeping their equity safe. In instances where an investment is not protected, such as stocks and bonds, investors tend to lose equity due to inflation. Now, let’s take a closer look at how real estate is a hedge against inflation, and how this concept is captured in the Irvine market.
The average inflation rate in the US between 2000 and 2022 is 2.25%. Investors looking to secure their capital want to ensure that their return increases at a rate equal to or more than the inflation rate. In real estate, most leases have an identified rental rate increase, typically 3% annually. This structure displays how quickly real estate appreciates in comparison to inflation and how investors are protected from financial loss.
The Irvine market tends to continue with rental increases at the rate above, even during economic downturns. This is in thanks due to the strong economy and growing population. As a result, investors can feel secure in long-term investments within the city.
5- New Buildings Protect Capital
Investors must also take into account the capital required to maintain and improve a building. As properties age, renovations are needed to maintain their values; otherwise, tenants will request to pay below-market rents.
In Irvine, most properties have been constructed in the last forty years. From a grand perspective, this is considered a newer community compared to most. More modern buildings combined with strict city guidelines on building maintenance have proven to protect landlords from losing equity due to deteriorating buildings.
6- Guaranteed Exit Strategy
All of the combined reasons above provide investors with a guaranteed exit strategy. This means that if they need to sell, there will be a competitive market to bring the asset to. Even in financial hardships, Irvine properties tend to trade at aggressive cap rates, ensuring that an investor’s equity is preserved over time.
Learn About Your Opportunities in Irvine, CA
Irvine is home to numerous retail, office, multifamily, and industrial investment opportunities. As you look through current inventory, you will find an array of newly developed Class A assets, combined with value-add opportunities in less desirable neighborhoods.
Understanding where to invest and how much to pay can be tricky, which is why you should always work with a professional. If you want to learn more about investing in Irvine, contact an expert today.