Sacramento Investment Property for Sale - 2023 Rental Home Appreciation
The Sacramento real estate market presents an excellent opportunity for investors to enter California’s booming housing market.
The Sacramento housing market is more affordable than San Francisco and San Diego. Still, it has a lot of demand for long and short-term rental properties. The high demand for housing and low inventory creates fierce competition, driving home prices up and keeping real estate professionals busy.
The sale-to-list price ratio in Sacrament is 103%, with only 1.5 months of inventory. Most homes only stay on the market for a week. Real estate investors interested in a Sacramento rental property should act quickly before it becomes like other California markets.
Sacramento's Attractive Housing Market
Sacramento is located northeast of the Bay Area and within a relatively short driving distance of San Francisco, San Jose, and Oakland. It’s also not too far from the famous Napa Valley and numerous outdoor recreation areas. As a result, Sacramento is an ideal location for long-term and short-term rentals.
Real estate investors can find nearly every property type in Sacramento’s property listings. Sacramento homes make some of the best investment properties if you’re looking to invest in a single-family home, multi-family housing, vacation rental, or short-term rental.
The Sacramento area is home to some of the best neighborhoods and suburbs for real estate investors to consider. They include Elk Grove, Folsom, Land Park, Natomas, and Roseville.
- Elk Grove: Elk Grove is a suburb of Sacramento located south of the city along Highway 99. It’s known for its award-winning schools and parks that attract families. The median listing price in Elk Grove is $332/sqft, and the median sales price is $663,450. The median rent is $2,200/month.
- Folsom: Folsom is a suburb of Sacramento located northeast of the city along Highway 50 and Lake Folsom. It may be known for the famous Folsom State Prison, but it has a very low crime rate that attracts families. The median listing price in Folsom is $378/sqft, and the median sales price is $777,000. The median rent is $2,300/month.
- Land Park: Land Park is in Downtown Sacramento near the Sacramento Zoo and William Land Park. It’s considered a laid-back, family-friendly neighborhood. The median listing price in Land Park is $536/sqft, and the median sales price is $779,000. The median rent is $1,800/month.
- Natomas: Natomas is north of Downtown Sacramento and divided into two neighborhoods, North Natomas and South Natomas. It’s a rapidly growing neighborhood with a lot of renovation and development. The median listing price in Natomas is $320/sqft, and the median sales price is $475,000. The median rent is $1,400/month.
- Roseville: Roseville is located northeast of Sacramento along I-80. It’s known as a safe, growing community that’s a great place to raise a family. The median listing price in Roseville is $342/sqft, and the median sales price is $685,000. The median rent is $2,600/month.
Rental Home Appreciation in Sacramento
Sacramento has a solid long-term rental market where 40% of households are renter occupied. The city has a 2.76% rental vacancy rate and slightly lower rent prices than cities in the Bay Area.
According to Realtor, the median listing price in Sacramento is $339 per square foot with a median sale price of $495,000. Zillow’s Home Value Index reports a +19.9% change in property prices since last year, above the national average. The median rent in Sacramento is $1,900 per month. That’s not a bad return on investment.
Sacramento also has a strong short-term rental market. According to Mashvisor, Sacramento’s housing market thrives on its non-owner-occupied rentals. Mashvisor reports an Airbnb occupancy rate of 67%, and those hosts generate almost $3,000 a month in rental income.
With such a solid long and short-term rental market, a Sacramento rental property has the potential to yield significant returns for real estate investors and property management companies.
Economic Growth in Sacramento
Sacramento is the seat of Sacramento County, the capital of California, and the state’s 6th most populous city. It’s comparable to but smaller and more affordable than San Diego.
Sacramento’s primary industry is the state government. However, it has a very diverse economy with a strong job market. The city’s other industries include agriculture, manufacturing, technology, and healthcare. Besides the State of California, Sacramento’s largest employers include Kaiser Permanente, Sutter Health, SynGen, and Intel. These employers provide well-paying jobs and fuel the city’s economy. In fact, Sacramento offers residents a reasonable cost of living, and the average household income is over $80,000 per year.
Sacramento offers tremendous investment opportunities whether you’re looking to invest in a long- or short-term rental.
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