Real Estate Investment in Sacramento, CA

Why Invest in Sacramento Real Estate?

Sacramento is the largest city in California. Home to 495,234 people, the city's population is constantly growing. In 2017, the population growth rate was 1.42%, significantly higher than the 0.7% national average. The nice coastal climate, economic growth, great healthcare and education access, and an improving public transportation attract a lot of people to move to the City of Trees.

Sacramento's economy supports key industries such as education, clean technology, agriculture, and healthcare. These sectors are well-established and constantly growing, generating revenue, jobs, exposure, and new ideas. California State University, Sacramento City College, American River College, and the University of Sacramento are places that draw future professionals.

As a result, Sacramento is an attractive place for real estate investors looking for a growing, profitable market and appreciation for income properties.

Investment Considerations for Sacramento Real Estate

There are a number of factors to consider, including:

  • Affordable entry price of homes - In terms of house affordability, the City of Trees is a nice choice for real estate investors. The entry prices of homes start from about $345,000 and the median property price is $400,060. Neighborhoods with pocket-friendly entry price of homes, high cash on cash returns, and rental incomes include Land Park (rental income: $1,532, CoC return: 1.26%), Upper Land Park (rental income: $1,533, CoC return: 0.95%), and Elmhurst (rental income: $1,552, CoC return: 0.87%). Another plus for real estate investors in Sacramento is the high appreciation, which is above the national average. With the affordable entry price of homes, high appreciation, and growing rent prices, investors can enjoy positive cash flow and nice profits.
  • Growing job market - The healthcare, education, clean technology, and agriculture industries are very stable and the unemployment rate in Sacramento is constantly falling. The job market is booming; thus, the city enjoys an influx of new jobs. Sutter Health, Intel Corp., Kaiser Permanente, Dignity Health, and Raley's Inc. are some of the largest employers in Sacramento that bring a bunch of working opportunities in the area. The solid economy and continuously growing job market mean a strong rental demand to real estate investors.
  • Rent growth - Over the past 3 years, Sacramento's rental vacancy rates have been falling to 3.72% (lower than the 5.89% national average) while the demand for rental housing in the city has increased. This led to median gross rent prices going up by 8.72% over the last 3 years, which is higher than the national 7.80% average. The traditional rent income in Sacramento is $1,385 with a 0.95% cash in cash return. This translates into consistent profit increases for real estate investors.
  • Strong and constant homebuyer activity - With its proximity to the Bay Area, more and more aspiring homeowners are choosing to purchase houses in Sacramento, thanks to its affordable prices compared to San Francisco. Therefore, real estate has experienced a high demand over the recent years. This makes the City of Trees a stable investment market for real estate investors.

What are the Best Neighborhoods to Invest in Sacramento

As mentioned earlier in the article, Land Park, Upper Land Park, and Elmhurst are some of the top neighborhoods in Sacramento for real estate investors. Land Park's median property price is $489,000, Upper Land Park's median property price is $443,700, and Elmhurst's median property price is $558,000. These areas experience the highest CoC return and cap rate percentages in the city, which makes them nice choices for investors.

Sacramento is a fast-growing city with a flourishing real estate market. Continuously developing economy, employment, and leisure ops offer a lot of opportunities for real estate investors in Sacramento to own single-family homes.

 

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