Marcy Moyer
eXp Realty of California, Inc.

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eXp Realty of California, Inc.
2603 Camino Ramon, San Ramon, CA 94583
DRE#: 01191194

Santa Cruz, know for the beach, the boardwalk, Pacific Ave, hippies, and organic food, along with University of California Santa Cruz is also probably the best place for investors looking for rental properties right now. Here are some reasons why.


  • 62% of Santa Cruz residents live in rentals, compared to a ntional average of 43%
  • Average sale price of Santa Cruz homes has doubled in the last 5 years
  • Cap rates for Santa Cruz rental properties are between 3.5-4% very easy to obtain, as opposed to 2.5-3% in The Silicon Valley
  • No rent control but there is a one year moratorium on Santa Cruz short term rental permits so Air B&B investments not the way to go now.
  • While the market is apprectiating the competition for investment homes in Santa Cruz is not as great as in Silicon Valley
  • There are still Santa Cruz home sales contingent on the sale of another property, making 1031 exchanges much easier.
  • Accepted offers almost always have contingnecies so you have time to figure out if the property makes sense for your portfolio.
  • Would you rather visit your rental property in Santa Cruz or Milpitas? I would pick Santa Cruz any day.
  • UCSC only guarentees housing for students for 2 years. They have over 18,000 students. The housing shortage is so acute that students are living 3 to a room or in their cars, not because they don't have the money for housing, but because there is such a shortage.


Smart Silicon Vally investors should look at Santa Cruz as a place where your money goes further and the cash flow is so much better. 

I have put my money where my mouth is and own 3 Santa Cruz rental properties myself.

I encourage you to contact me if you have any questions about how and why to buy a rental property in Santa Cruz.

Marcy Moyer

eXp Realty of California


Specializing in Probate, Trust, and Investment Properties

Santa Cruz Rental Property 


Many of my Silicon Valley Investors are finding that the price it costs to purchase an investment rental property  in someplace like Palo Alto, Mountain View, or even downtown San Jose has gone up much faster that the rental market value has.  It is not unusal to see CAP rates of 1 or 2 % which is the return on your investment after expenses are paid, but before any costs for a mortgage. So if your mortgage is 4.25% for an investment rental property and you only make 2% after expenses and before a mortgage you will lose 2.25% in cash flow over the year. What that means is that on a million dollar property with a $700,000 loan you will have a negative cash flow of about $17,500 every year. When the market appreciates you make up for the loss in appreciation, but when the market goes down, you lose the negative cash flow as well as the decreased value in the property.

In order to keep your cash flow, at least neutral, you need to have a CAP rate closer to your mortgage, which you can do by becoming a Santa Cruz rental property owner.

If a Santa Cruz rental property owner buys a million dollar property at a 4% CAP rate and a loan of $700,000 at 4.5% the difference between profit and loan payments will only be about $3500.

These numbers are not exact as loan rates change daily and amoratization schedules are different, but the bottom line is the lower the CAP rate the worse the cash flow.

Due to the prices in Santa Cruz being so much lower than the prices in the Silicon Valley and the rents being fairly equivalent, the cash flow and CAP rate are just better for Santa Cruz rental property owners.

UC Santa Cruz posts average rental rates every year.

July 1 2016 - June 30, 2017

Rental Type Rent Range Average Number of
Room and/or double room in Household $500-1500 $923 500
Studios/Efficiencies $850-1600 $1202 105
1 Bedroom House/Duplex $1200-2000 $1688 44
1 Bedroom Apartment/Condo $1300-2000 $1656 61
2 Bedroom House/Duplex $1900-3400 $2643 54
2 Bedroom Apartment/Condo $1700-3100 $2376 81
3 Bedroom House/Duplex $2400-4500 $3461 80
3 Bedroom Apartment/Condo $2500-4000 $3157 21
4 Bedroom House/Apartment $2900-5400 $4183 34
5 - 8 Bedroom House/Apartment $4500-7000 $5474 20

These figures include both unfurnished and furnished rentals.  They can include the cost of utilities, Wi-Fi, private baths, allowing two or three people per room, special locations (e.g. oceanfront), housecleaner, and/or gardener.  The locations vary from the San Lorenzo Valley to Aptos with the majority being in Santa Cruz. 

We cannot confirm these listings were rented at these prices.


Students will pay $500-$850 to share a room. Some rooms have 2 and some 3 students. This puts upward pressure on all the rentals in Santa Cruz.

There is a severe housing shortage in Santa Cruz.  

Santa Cruz rental property owners can get more for their dollar than they can in Silcon Valley. It is not rocket science.

If you are planning on buying an investment property think of Santa Cruz.


Marcy Moyer

eXp Realty of California


Specializing in Probate, Trust, and Investment Properties

I am a realtor and a Santa Cruz rental property investor since 2000. There are many reasons to invest in Santa Cruz rental properties, some of which I have discussed in this article. Today I want to talk about what the pros and cons are in renting to UCSC students. 


Here are the pros that I have experienced.

1. Vacancies are virtually non existent: There are almost $18,000 UCSC students and in any given year there is only room to house about 8,000 of them on campus. There are always many thousands of students looking for a place to rent, so the potential pool leaves no vacancies in your Santa Cruz investment rental properties.


2. Students pay more money:  They frequently will pay more per bedroom and sleep 2-3 in a room just to have a place to stay. Here is a link to what students expect to pay from the UCSC community housing page.


3. The rent money is very secure: The students get financial aid and/or are supported by their parents. In 17 years and 4 rental properties as a Santa Cruz rental home investor I have only had a problem getting paid once.


4. UCSC makes the rental process very easy for a Santa Cruz rental investor: They give workshops to the students on what they need to do to look attractive to a Santa Cruz rental investor. They come to you with complete rental applications, credit reports, references, and certificates saying they understand what it takes to be a good renter. The university posts your rental for free so you have a large pool of possible renters.


5. Students replicate themselves making the rental process even easier: My experience has been when one student moves out they have another take their place making the process seamless for the Santa Cruz rental investor.


6. Santa Cruz students are often long term renter: If you get the students early, in their sophomore or junior year they often stay for 3-4 years or more. making the cost of turnover very low.


7. Santa Cruz students can vacate in the summer if you want a summer beach home that is rented for 9 or 10 months: If you are a Santa Cruz rental property investor who wants a place in the summer for yourself you can rent to students during the school year and keep it for yourself in the summers. Many students go home in the summers, and the ones who don't can always find a sublet from another student who is going home. It is a way to have a vacation home that more than pays for itself.


Cons of renting to UCSC students:


1. Insurance on the house can be tricky: Recently many insurance companies, including the one I have always used, State Farm have decided they do not want to insure homes that are filled to the brim with students in college towns. They see them as Frat houses and won't write new policies. You can get commercial insurance, which is more expensive than residential or find the rare insurer who will do it. I found that CIG insurance out of Monterrey was willing to write a residential policy at competitive prices.


2. Large homes can be a hot bed of petty emotional issues for the Santa Cruz rental property investor.: If you are the owner of a large home with 6-10 students they may turn to you when there is a spat between the tenants. It is a time and emotional drain. I put one person in charge and have that person deal with issues like who is going to clean the house, noise complaints, bullying, etc. They have the final say. It works pretty well.


3. Students are often unaware of what it takes to take care of a house: Students do not always understand what it takes to care of a home and things can be damaged by mistake, even without large parties or Frat behavior. The way to ameliorate this is to buy a house that does not have delicate finishes and educate the students on basic home maintenance. My tenants know they need to call me right away if something is wrong and not let a small problem get out of hand. I would rather be over called than under called, and they know it.

So as a long time owner of Santa Cruz rental property I can enthusiastically say that renting to Santa Cruz students is a good thing from an investor perspective and not something to be afraid of.


If you have any questions about becoming a Santa Cruz rental property investor please feel free to contact me.

Marcy Moyer

eXp Realty of California


Specializing in Probate, Trust, and Investment Properties