Regardless of whether you’re planning on acquiring your first rental property asset or you’re a seasoned real estate investor seeking to diversify your portfolio in order to optimize your cash flow, you should strongly consider the innate potential for above-average return on investment in Sacramento. The city is commonly overlooked due to its relative geographic proximity to more high-profile markets like the Bay Area and Los Angeles—but savvy investors that take the time to analyze the real estate market dynamics and forecasted trends in the greater Sacramento region will soon discover there are a plethora of great factors supporting the decision to make an investment there. Here is a closer look at what makes Sacramento an outstanding candidate for your next investment property
Affordability
It’s no secret that the California real estate market is one of the priciest on a statewide basis across the entire United States. Accordingly, the sheer financial barrier to entry for aspiring real estate investors may initially appear prohibitively steep, particularly for those individuals just starting out on their investment journey. It’s hard to blame them for this misconception. According to data reported by the National Association of Realtors (NAR), the average home value in California is $716,275—which is well over twice the national median. The good news, however, is that there are affordable properties on the market in the Sunshine State, you just have to know where to look. Sacramento—which is the capital city by the way—has a median property price of just $416,133 ($267 per sq. ft.). This is only modestly above the U.S. average, and well under the average in bordering local markets. Another bonus is that the overall cost of living in Sacramento is also significantly more affordable than other mainstream California venues. Sacramento comes in 26% lower than Los Angeles and 65% more affordable than San Francisco. This optimal affordability relative to its neighboring cities makes Sacramento the ideal spot for investors on the hunt for smart real estate deals.
Economic Prosperity
Put simply, the Sacramento economy is booming—and it’s not showing any signs of slowing down anytime soon. The diversified economy is bolstered by the presence of several major employers spanning many prime industries from education and agriculture to technology and healthcare. This translates into very low unemployment rates in Sacramento, a key metric to look out for when evaluating the viability of a given real estate market. Also consider that living in nearby Silicon Valley and San Francisco is becoming increasingly pricy. This trend has prompted a large number of workers to migrate to Sacramento, bringing with them an influx of new business activity and job opportunities. Real estate investors should thus have little trouble in finding well-qualified tenants to fill their properties, as the demand for housing is growing by the day.
Growing Population
Increased economic activity—which Sacramento is seeing plenty of—results in a corresponding uptick in the demand for flexible housing options such as rental properties. As more displaced workers make the move to Sacramento after having been priced out of more expensive markets like LA and San Francisco, landlords will see an increase in the number of viable tenants for their properties who are willing to pay a premium for the right accommodations. In the past year alone, the vacancy rate in Sacramento fell to a mere 2.88%--significantly below the U.S. median of 6.6%. Translation: real estate investors won’t have to worry about their properties sitting empty for long. With more than 53% of the entire city’s population comprised of renters, the opportunity to establish reliable, lucrative passive income streams is certainly there for the taking.
Take Action Now
Security Financial Services (SFS) has been assisting Northern California real estate investors achieve their goals since 1943. Because we use a dynamic funding structure comprised of our own capital and low-cost lines of credit, SFS can get you the capital you need to grow and scale your business in a fraction of the time it takes conventional lenders and with better interest rates than the competition. Contact us today to learn more about the advantages of partnering with SFS on your next investment project!