Best Neighborhoods in Santa Clarita for Renters and Property Investors

Why Santa Clarita Attracts Renters and Investors

Before diving into individual neighborhoods, it helps to understand why Santa Clarita performs well as a rental market overall.

Location- The city of Santa Clarita is situated in the northern part of Los Angeles County. It is easily accessible from the I-5 as well as Highway 14. Many of the major employers are in the fields of entertainment production, health care, manufacturing, and logistics. The College of the Canyons, a two-year community college, is the city’s major educational institution. The city is actively seeking new light industrial as well as tech companies to locate in the city through its economic development programs.

Using information from the U.S. Census Bureau, it is easy to see why Santa Clarita has grown so much over the past couple of decades and why the median household income is higher than the state average. For one, rental homes, specifically single family homes and town homes, are in high demand. As a result, rental vacancy rates for these types of properties are typically lower than average. It is for this reason that renters and investors alike find the rental market in Santa Clarita to be quite attractive.

For investors seeking rental properties in Santa Clarita, demand has kept vacancy rates low, resulting in a pool of longer-term tenants consisting of professionals, and families seeking single-family homes and townhouses to rent.

Valencia: The Master-Planned Core

Valencia is the most established and recognizable community within Santa Clarita. Developed as a master-planned community beginning in the 1960s, it offers a walkable paseo trail system, a mix of single-family homes, condos, and townhomes, and proximity to the Westfield Valencia Town Center.

Who it attracts: This is an up and coming location that would draw in young professionals, families relocating from the LA proper, dual-income households looking for a larger home with more amenities and space to accommodate their active household while being in close proximity to the city of LA.

Rental market snapshot:

• Strong
• Tenant turnover is typically lower with residents staying 2 or more years on average.
• The property is close to many major employers and the 5 freeway which makes it an excellent choice for commuters

Stable Income. For investors seeking stable rental income, Valencia is a property investor’s paradise. Valencia Properties rarely become vacant. That’s because of the planned design of the Community with many HOA communities (Homeowners Association) in the area. Investors must take into consideration the HOA fee into their projection of net operating income (NOI).

Stevenson Ranch: Upscale Suburban Appeal

Stevenson Ranch is an unincorporated area of Los Angeles County, but located on the western edge of the City of Santa Clarita. The area comprises hillside homes, many of which are relatively new, and amenities that include shopping centers along Pico Canyon Road, such as the Pico Canyon/Valley Ridge community center. The neighborhood is an upscale suburban residential area that is highly prized by high-income renters and by families with executives.

Type of Home: Higher-income renters and families consisting of professionals (e.g. executives) and their families who are looking for newer homes found in an upper-class, suburban community. These properties would have a few hillside homes with great mountain views along with views of the surrounding hills. Homes found in this neighborhood would typically be found on the quieter, tree-lined streets.

Rental market snapshot:

• Higher average rental rates compared to most Santa Clarita submarkets
• Consistent demand however a tighter renter pool exists due to the higher price points in Stevenson Ranch.
• The schools are another key draw to the area with some of the best elementary and middle schools in the SCV area feeding into some of the better high schools in the SCV area.

For investors: Stevenson Ranch real estate for sale, especially existing homes for resale can provide high returns in terms of selling price, however, initial cost to purchase and hold for rent could provide lower cash flow compared to same priced homes in other Santa Clarita neighborhoods. Investors looking for Appreciation over Cash Flow returns should definitely consider Stevenson Ranch.

Saugus: Value-Oriented with Strong Family Demand

Saugus, is located to the east of the city of Valencia, and is known to offer up affordable homes, a number of the homes in the area are older Ranch style homes. Saugus also offers a mix of new construction, and pre production homes that have been built in tracts.

Demographics: The community includes working families, renters seeking additional square footage at affordable rental rates and established long term residents. Many residents in this submarket are of school age and or have school aged children. Many are of middle income and have modest means. They are the type of individual or family who are eager to secure quality housing at fair and affordable rental rates. They are generally of long term orientation and intent on securing and maintaining quality rental housing for extended periods of time.

Rental market snapshot:

• Lower average rent compared to other submarkets such as Valencia or Stevenson Ranch, yet similarly lower acquisition costs.
• High demand for rentals in the submarket due to affordability when compared to other submarkets in Santa Clarita.
• Six Flags Magic Mountain and adjacent hotels, amusement parks, etc. plus large amounts of light industry such as distribution centers and manufacturing including food processing. Service sector businesses including restaurants.

Investor Note: Saugus has better cash flow per dollar invested than other comparable areas in the Santa Clarita Valley. Saugus has very stable long term rental tenants and is served by public transportation including Metrolink.

Canyon Country: Growth Corridor with Rising Demand

Canyon Country, one of the fastest growing areas of the Santa Clarita Valley, is located just east of the city of Santa Clarita along the Highway 14 corridor. In the last decade this area has seen tremendous growth and new construction of homes and of retail and dining venues.

Demographics: Young singles and couples, newly minted families, and the occasional older household looking for more bang for their buck in school district served areas. Most are priced out of Valencia and Saugus.

Rental market snapshot:

• Prices of rental properties have gone up due to new inventory of more desirable buildings.
• Demand from recent employment in the logistics and/or light industrial fields from workers stationed along the 14 freeway corridor.
• There are an adequate number of retail and dining options to have made Saugus a more self-contained area than it was ten years ago.

For investors: The area is developing rapidly and offers opportunities for growth. Right now, the area is less expensive than more mature areas in the SCV, and thus offers better cash flow per acquisition dollar. Properties are being rented to strong, long-term tenants, and the area is easily accessible by public transportation, including Metrolink.

Newhall: Historic Walkable Urban Core

Newhall is the original downtown of the Santa Clarita Valley, and after many years of decline, it has experienced a full-scale revitalization of its historic streets and is now home to many local restaurants, art venues, and creative economy businesses and organizations. This rapidly changing urban core is becoming increasingly attractive to young renters seeking a community-oriented environment in which to live, work, and play.

Who it attracts: This historic neighborhood is home to many Young Professionals, Artists, and remote workers. Also, many renters are in search of a community-oriented atmosphere, and a setting that is more Walkable and features local flavor over mass-produced suburban developments.

Rental market snapshot:

• Small to Medium size apartments, Studios and 1 Bedroom apartments have the strongest demand.
• The tenant profile is made up of a young and diverse group of people.
• There is a strong demand for smaller units (studios and 1 bedroom apartments).
• The arts district as well as the growing and developing mixed use properties in the area have greatly elevated the area’s exposure or profile to potential renters looking to live within walking distance to local restaurants, shops, entertainment, venues and businesses.

For investors: We would categorize Newhall as an opportunity currently in the process of significant growth and development. Many historic and mid-century buildings have been recently restored, or are currently under development. Investors are able to obtain excellent yield while appreciating in value as the neighborhood continues to grow and mature. Understanding the local zoning code, and current and future development projects within the Arts District is imperative to any investor looking to participate in the growth of Newhall.

Choosing a Neighborhood to Help You Get the Most Out of Your Santa Clarita Rental Properties

Whether you are a real estate investor purchasing your very first rental property or adding to your real estate portfolio in Santa Clarita or the surrounding area, selecting the best rental property neighborhood is key. Too many investors rely on their “gut” when choosing the best real estate to invest in only to end up losing money on rental property. By following a set of easily understandable rules, any savvy investor can make smart rental property buying decisions.

Align neighborhood with tenant profile:

• If your target tenants are families, prioritize school district boundaries and proximity to parks.
• Young professionals- Newhall or Valencia. Many of the new businesses and restaurants are within walking distance to apartments and would be ideal for young professionals in the Santa Clarita area.
• If cash flow is your focus, look at Saugus and Canyon Country as they are providing better yields.

Understand HOA implications:

Many of the communities within Santa Clarita are Homeowner’s Association (HOA) governed. Most of these HOAs allow short-term rentals, but have rules pertaining to exterior modifications of homes and may charge annual or monthly fees. It is very important to review a property’s CC&Rs prior to purchasing as a rental property.

Vet tenants thoroughly:

Many great neighborhoods offer great tenants. That’s why running a series of rental screening reports is a crucial element of selecting the right rental property to start. In addition to the in-depth rental reports, a strong background check as well as a thorough credit report can help point you in the right direction of a responsible renter, protecting your valuable time as well as your most valuable assets: rental properties.

Work with local property management expertise:

Working with a local property management company that knows the Santa Clarita Valley can make a significant difference in the day-to-day performance of a rental investment. Many investors rely on professional management to help find quality tenants, reduce vacancy time, and handle the ongoing demands of managing a rental property, as companies like New Age Realty Group approach this by combining local market knowledge with dedicated leasing and tenant management services.

Monitor local development:

Neighborhoods are not static. They change over time and it’s best to know what is currently going on in a neighborhood prior to purchasing a property in that area. For Canyon Country specifically, there have been a lot of changes over the last 10 years. Therefore, if you are an active investor, you should stay up to date on current City of Santa Clarita Planning Department documents, proposed zoning changes and commercial development.

Long-Term Rental Success Starts with the Right Foundation

Fundamentals of the city and the rental market are good, low crime, good schools, diverse employment, and a growing population. But the neighborhood, type of property, and good management all play a huge role in how well a rental property does in the long run.

Tenants would benefit by learning the best neighborhoods for their lifestyle prior to renting a house or apartment. Landlords/Investors would benefit by treating the search for the best neighborhood for their investment in rental properties in the same manner as they would for searching for other investments, by researching to obtain as much data as possible to ensure their investment goals are met.

Whether investing in Canyon Country or other Santa Clarita, CA areas, landlords must always place strong emphasis on proper screening of rental applicants in order to effectively control risk. Regardless of location, effective tenants are essential in helping a property to pay well and lead to positive long-term returns on investment for all landlords, including those new to rental real estate. When reviewing potential tenants, landlords must be willing to look beyond an applicant’s rental history and verify all required information prior to lease signature in order to find the very best tenant to fill a particular rental property.

Whether you are looking to establish a portfolio of rental properties or looking to add to your current holdings in the Santa Clarita Valley, it is important to remember that you are trying to build a long-term foundation for your rental income. The best way to do this is by choosing the right neighborhood, hiring a local property management company to handle the day to day tasks for you, and thoroughly screening all of your rental applicants. For properties with prior tenant disputes, checking an evictions search as part of your due diligence can help you avoid inheriting problematic rental histories.