Owning a rental property as an investment in Los Angeles is an excellent and savvy financial move, but not for the reason you may think.
While the average rent in Los Angeles is 37.5% higher than the national average, rental property owners benefit from more than just checking rent checks each month. They also experience the lucrative advantage of property appreciation.
By the end of this article, you will learn exactly what rental appreciation is, how it affects your investment, and appreciation changes and trends in Los Angeles, California.
Rental property appreciation means the increase in the property’s value over time. For rental property owners, appreciation is a big deal because it increases their long-term wealth. Even if they collect rent every month, the real money is in owning a property which becomes more valuable over time.
For example, you could purchase a rental property today for $700,000, and in ten years, it is worth over $1 million. That’s an appreciation of $300,000! When you decide to sell your rental property, you can sell at a profit.
While property appreciation is a big money maker for landlords, it also helps justify rental increases. The more valuable your property is, the more you can ask for monthly rent.
Is it worth investing in rental property in Los Angeles? Let’s dive into the property appreciation and rent increase rates in the City of Angels to help you decide.
As of 2025, the median property value in Los Angeles is an impressive $928,000. Property values in just the last year have increased by 16.7% in Los Angeles. But in the last five years, they have increased by 114.2%.
This means that if the value of your home in 2020 was $500,000, in 2025, it could be $571,000.
Property values are expected to continue increasing, as well. By 2026, home values are predicted to grow between 8% and 13%.
As the value of homes increases, so do rents. In 2024, rent in Los Angeles averaged $2,644 per month, showing an 11% increase from the previous year. In the past four years, the median rent in LA increased by a whopping 23%.
For landlords, this is excellent news, as they can cash more passive income from their initial rental property due to the real estate market.
While we are on the topic of increasing rents in Los Angeles, it’s important for real estate investors to know about local rent control laws. In California, there is a cap as to how much you can increase your rent.
California Bill 1482 was made into law in 2020, which limits rent increases for existing tenants by 5% plus inflation over a decade. However, there are some exemptions to this bill. Single-family properties owned by independent landlords and apartment buildings built within the last 15 years are exempt.
In Los Angeles, specifically, rental property owners must follow the Rent Stabilization Ordinance (RSO) of 1979. This limits rent increases from 3% to 8% and will depend on the annual CPI (Consumer Price Index). Once again, there are plenty of exceptions.
Due to these limits on rent increase, landlords should focus on property appreciation when searching for a profitable long-term real estate investment.
There are various factors that contribute to rental property appreciation in Los Angeles.
The population in Los Angeles has been gradually increasing since 2021. In the last year, there was a 0.64% growth rate, which means more people need housing in LA. And, with 64% of LA residents renting their homes, this means rental property values and rent increase due to supply and demand.
The less housing and rentals available, the more valuable and expensive they become.
From October to November 2024, Los Angeles also saw a 0.8% decrease in property listings. This means there weren’t as many homes to purchase in the area.
Los Angeles has one of the most dynamic economies in the world, especially in the tech and entertainment industry. When businesses choose to set up their offices in Los Angeles, it creates more employment opportunities, causing people to move to the area for work.
With the population growing and increased employment and wages, more people are looking to live in the area and likely rent their homes.
Interest rates affect how much people can afford to pay for a home, which can impact property values.
When interest rates are low, more people can afford to buy homes, which causes a high demand for properties. So, property values increase because there is a higher demand.
When interest rates are high, borrowing money can be more expensive, so fewer people can afford to buy a home. With higher interest rates, property values could slow down or even drop.
Financial experts predict that the current mortgage interest rates may drop slightly, but most lenders will have an average 6.5% rate throughout 2025.
Aside from economic and environmental factors, rental property owners can take property appreciation into their own hands. Adding upgrades, such as updated designs and appliances, adding more storage space, and including eco-conscious amenities can increase the property’s value.
Are you ready to test out the rental market in Los Angeles?
Lotus Property Services is the area’s leading property management company, helping hundreds of LA landlords maximize their rental income while advising on how to increase property value.
Our team of real estate experts is ready to take the day-to-day tasks of managing a rental property off your shoulders. So you only have to worry about tracking property appreciation and cashing rent checks!
Did you enjoy this article? Then make sure to read Glendale, CA Rental Market Trends for 2025 next!
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