There was a time when an investor with multiple properties came to discuss Long Beach listings. While the rental yield seemed decent, I remember suggesting we revisit the loan conditions and tenant protection regulations. Following that consultation naturally reveals what to check first when buying investment properties in Long Beach.

As of July 2026, the average rent for apartments in Long Beach is $2,709 per month, which is a 2.44% increase from the previous year (RentCafe). Studio apartments average $1,958, one-bedroom units are around $2,469, and two-bedroom units are approximately $3,112. Applying the 1% rule to see if the rent exceeds 1% of the purchase price, it generally turns out that cash flow is often balanced in small units with two or more bedrooms in this area.

Loan conditions differ from those for primary residences. For investment properties, the down payment typically ranges from 15% to 25%, and a credit score of at least 620 is the minimum requirement, though a score above 740 is needed to secure favorable interest rates. Interest rates are usually set 0.5 to 0.75 percentage points higher than those for primary residences (Fannie Mae, Freddie Mac investment property guidelines). When considering rental income for loan qualification, only 75% of the expected rent is counted as income, and it's important to prepare lease agreements or appraisal rent schedules in advance.

The cap rate is a metric used to compare profitability by dividing net operating income by the purchase price. To calculate net operating income accurately, it's essential to deduct vacancy periods, management fees, property taxes, and insurance from the rent listed in advertisements, rather than simply multiplying the advertised rent. Even in areas like Long Beach where rents consistently rise, a single month of vacancy can significantly alter annual returns.

To have rental income recognized during the loan assessment, you need an existing lease agreement, or if the property is vacant, a rent schedule prepared by an appraiser. If you are acquiring a property with existing tenants, it's advisable to confirm lease transfer conditions and security deposit procedures before closing. If the property is a condo or townhouse, you should also check for any HOA regulations that restrict rentals.

Tenant protection regulations should also be reviewed. While Long Beach does not have its own rent control ordinance, the Tenant Protection Act (AB 1482) applicable throughout California is in effect. This law allows for a maximum increase of 5% plus the annual change in the consumer price index, capped at 10%. However, in the area that includes Long Beach, the maximum increase rate will rise to 8.7% starting in August 2026. Additionally, Long Beach has its own Just Cause ordinance, which stipulates that if a tenant has lived there for over a year, they cannot be evicted without just cause, and in cases of no-fault eviction, relocation assistance may be required.

Property taxes are based on California Prop 13, which sets the tax rate at 1% of the assessed value, with local bonds and other factors typically resulting in an effective tax rate between 1.1% and 1.25%. Landlord insurance also differs from standard homeowners insurance, as it includes coverage for rental loss and tenant liability, leading to higher premiums. If you hire a property management company, expect to pay a fee of 8% to 12% of the monthly rent, and it's common practice to set aside about 1% of the property value annually for maintenance costs.

Ultimately, that investor purchased a property in Long Beach and later utilized a 1031 exchange to defer capital gains taxes when the property appreciated. They calculated the cap rate and cash flow first, then considered tenant laws and holding costs before making a move. This article does not constitute investment or legal advice, and it is recommended to consult with real estate and tax professionals, and if necessary, a lawyer before finalizing any contracts.