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Risks and Rewards of Investing in California Real Estate | Merced Property Management

January 13, 2023
Risks and Rewards of Investing in California Real Estate | Merced Property Management - Article Banner

If you’re thinking about investing in California real estate, you’ll want to choose your market carefully. Buying an investment property in San Francisco is going to come with a lot of risk. Prices are extremely high, for example, so you won’t have a lot of positive cash flow over the first few years. 


In a real estate market like Merced, investors have an equal number of rewards and risks. There are a lot of great reasons to buy real estate here, and we love working with investors to map out a strategy for profit and long term ROI. 


We want you to be aware of the risks, too. 


Here’s a brief list of what’s rewarding about investing in Merced and what’s risky about it. 


Merced Real Estate Investing Rewards: Strong Rental Market


Let’s talk about some of the rewards to investing in Merced first. 


  • The local economy is strong, and there are plenty of good reasons for people to live and work in Merced and the surrounding communities. 
  • Population is growing. More than 5,000 new residents arrived in Merced just between 2020 and 2021. 
  • Most of the tenant pool is well-qualified. They’re hard workers, looking for a great home, and able to afford the rents that are here. 


There’s a diversity to the tenant pool in Merced that creates a lot of opportunity for investors. We have migrant workers and tech professionals. Health care jobs and social service jobs are providing more opportunities and higher salaries. 


Rents are also going up. This can be a huge reward for investors, who are able to buy reasonably priced properties in our market and still earn consistent rental income as the average rents rise.


Merced Real Estate Investing Risks: California Rental Laws 


Perhaps the main risk for investors in Merced is that legal landscape has changed over the last two years. California has always been a tenant-friendly state, and recent laws have provided additional protections for tenants. When you invest in a property here, you’ll need to have a solid understanding of:


  • Fair housing laws. State protections are even stricter than federal protections.
  • Section 8 requirements. State law allows Section 8 tenants to use their housing vouchers as income.
  • Rent control. Statewide rent control is in place, and you’ll need to know if your investment property is included or exempt in those restrictions.
  • Just cause evictions. It has never been easy to evict a tenant in California, and new laws have made it even more difficult. 
  • Security deposit laws. You’ll need to know how to lawfully collect, hold, and return a tenant’s security deposit or risk a small claims court action.


These laws do not need to scare you away as an investor. As long as you understand them and work hard to comply with them, there isn’t too much risk that you’ll violate them. Mistakes are easy to make, however, and that’s why we recommend you have a
good Merced property management partner on your side when you do invest.


Some Risks are Also Rewards 


Not everything is clearly a risk or clearly a reward when it comes to investing in California rental properties. 


  • Take home values, for example. 


Values have risen dramatically in the last few years. That’s a reward, obviously, if you already own a property. You’re going to have an asset that is steadily
increasing in value. That means more money in the short and long term.


It also means that you’re facing a more expensive sales market if you decide to invest now. It’s been a pretty crazy market over the last year, with unusual spikes and strengths. In Merced, home prices have risen but they’re still far more competitive than in other California markets where it’s nearly impossible to find an affordable investment property. 


The reward for investors is this: when you’re willing to hold your investment property for the long term, you’ll find you own a property that’s worth significantly more than it was when you bought it. And, you’ll have enjoyed years of tenants paying down your mortgage and covering your property expenses. 


There’s a risk that you may be paying more than you want to for a home in the current market. But, that investment will begin making you money immediately. That’s where smart investors find the reward.


  • And then there are the tenants


Tenants are both a risk and a reward as well. 


What do we mean by that? 


Well, the risks are obvious. Even
well-screened tenants are going to be a bit risky. There will be wear and tear on your property. They might accidentally or intentionally cause damage. You could find that they don’t pay rent on time, as you expected. There might be a lot of drama, tenant conflicts, and disputes with neighbors to manage. 


But, tenants can be a reward too. Especially a good tenant who communicates openly, notifies you of
maintenance needs when necessary, pays rent on time, and contributes to the care of your property. These tenants earn you money. They’re your customers. 


Buy the Right Merced Investment Property 


Two things will help you enjoy more rewards than risks when you invest in Merced. 


First, buy the right property. You want to think like a tenant and invest in a property that they will find appealing. You’re not buying a home for you to live in yourself. Avoid the fixer-uppers. Sure, they cost less, but it will take some time to get that home renovated and onto the market. Look for homes in good condition that you can rent right away. 


Second, invest in
good Merced property management. Your property manager will manage much of the risk that you take on as an investor, and we’ll also help you reap better rewards. 

Professional Help

Don’t try to navigate the local real estate market without professional help. We can help you find the right Merced investment property and walk you through the particulars. Please contact us at Wisdom Property Management & Realty, Inc. We lease, manage, and maintain investment properties in Merced, Atwater, Livingston, Winton, and Delhi.

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Leveraging Social Media to Market Rental Properties in California: Tips for Merced Landlords
By Ashley Stayner January 16, 2025
It is time to get social, and we’re going to insist you become an influencer even if you don’t naturally gravitate towards the likes of Instagram, Facebook, and other social media platforms. Leveraging social media to market rental properties in Merced and throughout California is essential. You gain a lot more traction on social sites than you do by simply posting a listing on Zillow or HotPads. All of your potential renters are on social media, and you should be there too. Let’s talk about some tips, assuming you’re not already going viral on the ‘gram. Part One: Put Together Your Profile A successful social media strategy starts with a profile that will attract the kind of attention you want. If you’re already a presence on social media, that’s great. If you’re just getting started to better market your rental home , be intentional about how you present yourself. Your audience will likely be potential renters who will view your page and consider the homes you have to offer. If you’re posting homes for rent on your personal social media pages, you can easily include all of the people you already know in your network. However, you also want to make sure your personal page is professional. If you’re prone to angry political posts, you might alienate a lot of potential renters on the other side. Your social media presence, as a landlord, needs to be welcoming to everyone. Generally, we recommend that you establish a separate profile for the work you plan to do sharing your rentals. This will help narrow your social media postings on that particular profile to the rental property you’re marketing or related topics. Visitors won’t get confused, and they won’t have to scroll past photos of your pets and vacations to find the homes you offer for rent. Before you start posting about your available rental properties, you’ll want to make sure you have all of the pertinent information on your profile. There has to be updated contact information, for example. You’ll also want a credible profile photo. Maybe it’s a snapshot of the property you’re trying to rent. It could be a picture of the neighborhood or even a photo of the state or region you’re in. A picture of yourself is also fine, as long as it’s professional. Reaching the Right Social Media Audiences When we’re talking about social media marketing, it’s important to understand that the audience is everything. Social spaces are crowded, and you want to reach the right people. According to the Pew Research Center, more than 72 percent of Americans use social media daily. By using hashtags, joining local or industry-specific groups, and following popular sites and spots throughout Merced, you’ll focus on the people who are looking for a new rental home or on the people who know people who are looking for a new rental home. Create a Social Media-Friendly Listing What will get the most attention on social media sites? Photos and videos. These will be your most important tools when we talk about posting your rental listing on social media sites. This is the type of content that gets attention. It gets likes. It gets shares. It gets comments. All of those things will expand your audience and increase your reach. Although text plays an essential role in social media, and you’ll use it to share details such as: Rental amount Move-in ready dates Rental qualifications Security deposit amounts Images and videos are especially crucial. You’ll want to upload clear and crisp photos so that they render well on mobile devices. You’ll want short, engaging videos that showcase your property and provide people with a glimpse of how things look. If you want to be more impactful with how you market Merced homes for rent on social media, focus on the property’s layout, show real-time room sizes, give viewers a close-up of amenities , and an idea of the property’s location. When you have special features to show off, such as walk-in pantries, garden tubs, smart home technology like video doorbells, and fenced backyards, video is a great way to show those things off while giving viewers an idea of what it’s like to actually be there. Plenty of social media platforms are built for video; you can use Instagram reels, Facebook and Instagram live videos, Snapchat story updates, and of course YouTube. Hashtags are Essential Please tell us you know what a hashtag is. They’re helpful when you’re posting because they get the attention of your target audience. Using hashtags on your posts makes them more accessible because when people search for a particular hashtag, your post will be there, ready for them to view. Use specific hashtags that identify your location, the type of property, or the neighborhood name. Try #Mercedrentals, #Mercedhomeforrent, #Mercedapartment, and similar hashtags to get attention and focus on your desired audience. Promote Your Merced Rental Listing
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