The city of Costa Mesa, where some 109,960 people lived according to the U.S. Census in 2010, is part of Orange County, California. It was incorporated in 1953, when it was then a semi-rural community with a population of only 16,840 people. Today, it is a suburban city, with a strong economy that is dependent on light manufacturing, commerce, and retail. It is perhaps best known for its lage and astoundingly beautiful shopping center, the South Coast Plaza. It is one of this country’s strongest sellers, with the highest volume. Meanwhile, industrial activity equally important, with most industrial properties, including warehouses, being in the southwestern quarter. In addition, the city has two libraries, 26 public schools, a municipal golf course, and 26 parks.
Income property is the type of property that people or corporations purchase and, sometimes, develop to boost its value. The goal is to rent or lease the property until it appreciates in price, after which they will sell it to profit from the increase in value. Income property is often commercial, although it can also be residential. In the latter case, financial experts speak of “nonowner occupied”. For these properties, higher interest rates than owner occupied mortgages can be asked, because they are classed as high risk mortgages.
Costa Mesa Income Property for Sale & Lease – Should You Buy or Lease?
If you are interested in income property, you have two major options available to you: buying or leasing. Let’s examine the pros and cons of both options.
When buying income property, the advantages include the fact:
- That your expenses are constant because the mortgage payments don’t change.
- That you can get really good tax deductions, including property taxes and mortgage interest.
- That you have the option of using your income property for your own personal use should you not be able to find somebody to rent it
- That you can build up substantial equity as a result of the property appreciating in value over time. Of course, that is dependent on how long you intend to hold on to the property.
There are also some disadvantages to buying income property, such as:
- Income property, just like other real estate, is hard to dispose of. It may take a number of months to complete a sale even during a seller’s market.
- Having high upfront costs, not in the least due to a 30% down payment on the mortgage. You will also have maintenance, appraisal, and other property management costs to pay.
- The usual problems that come with being a landlord, such as having a tenant from hell, possible changes to the tax code that could reduce your tax benefits, problems in the neighborhood.
Income property is usually not leased. If you were to lease an income property, then you would do so for your own personal use, turning it into a residential property. But for some properties where the owner allows you to sublease, the option of leasing an income property for the purpose of getting some income is possible.
Advantages of leasing include:
- It is easier to move to another property, subject to restrictions in the lease contract.
- You have less responsibility and expenses compared to the owner of the property.
Disadvantages of leasing include:
- You don’t have much control over the property.
- You can expect the rent to increase at regular intervals
- You don’t build up equity.
Costa Mesa Income Property for Sale – Trends and Statistics
- The asking price for income properties in Costa Mesa $314,841.90, which is a 0.7% increase over the past three months, and a 10.5% increase year on year. This is higher than the state ($206,014) and the metro ($254,071.41) area.
- The index of total available income properties for sale in Los Angeles-Long Beach-Costa Mesa is 29, which represents a 13.4% increase over the past three months but a 2.5% decrease year on year.
- The index of total number of listings of income properties available in Los Angeles-Long Beach-Costa Mesa is 24, which is an 8.9% increase over the past three months, but a 1.3% decrease year on year.
- The profile view index income property for sale in the Los Angeles-Long Beach-Costa Mesa metro area is 97, which is a 24.9% increase over the past three months, and a 22.5% increase year on year.
- The index of total number of units of income property for sale in the Los Angeles-Long Beach-Costa Mesa area is 21, which is a 12.2% increase over the past three months, but an 11% decrease year on year.
Costa Mesa Income Property for Lease – Trends and Statistics
Unfortunately, there are no trends and statistics available on potential income earned on leasing out a property that you have purchased. This is in part due to the fact that you could purchase a vast array of different types of properties, and their monthly lease amounts vary greatly. Investing in income property is one of the commercial real estate investments most likely to give you the highest possible returns if managed properly. At the same time, it is one of the most complicated options out there, due to the variety of opportunities that you could choose.