Investing in Sacramento real estate – Should I buy a vacation home and rent it out for profits?
So, you’re asking yourself “Should I buy a vacation home and rent it out in Sacramento?”
The answer is: Yes!
If you’re looking for a city to buy a vacation home that you can also use as an investment, then Sacramento is currently one of the best markets in California to do so. There are several aspects that make Sacramento among the top places to buy a vacation house as a real estate investment.
From the low average prices of investment properties, to the high demand for short-term rental properties, or the active tourism in the city around the year – Sacramento is becoming one of the most sought out destinations for full-time real estate investors who are looking to make a profit as well as part-time real estate investors who are looking to have a vacation home to spend the holidays at while also making money off of it throughout the year.
Should I Buy a Vacation Home in Sacramento?
To answer this question, let’s take a look at some of Sacramento’s real estate stats before diving into the neighborhood level and giving you the stats of each neighborhood to help you determine where you want to for investment properties in this city. Here are the relevant real estate data about Sacramento:
- Median Home Price: $328,667
- Median Rental Income: $1,429
- Average Cash on Cash Return: 1.79%
- Walk Score: 47
- Transit Score: 34
- Bike Score: 69
As you can see from the numbers, home prices in Sacramento are considered very affordable compared to other more high-end cities in California.
With a good average rental income and a preferred transportation method of bikes, investing in Sacramento real estate seems most suitable for short-term rentals targeting tourists and business travelers over traditional rental properties.
For this reason, it is important to note Sacramento’s legal status when it comes to Airbnb and short-term rental properties and their viability for investing.
Short-Term Rental Properties/Airbnb in Sacramento
The laws and regulations in Sacramento affecting the performance of short-term/Airbnb rental properties are slightly in favor of this type of investment when compared to other areas in the US.
Homeowners are able to rent out properties that they use as primary residences (if they live in the property for at least 184 nights during a calendar year) for as many days as they want. Hosts who do not use the property as a primary residence can rent out the property for short-term tenants for a maximum of 90 days per calendar year.
With a 12% transient occupancy tax, investing in short-term rental properties in Sacramento can be a very good investment whether you’re using the property as your primary residence or using it as a vacation home.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
To put this into perspective in relation to the question “Should I buy a vacation home in Sacramento?”, you can achieve very good returns if you buy a vacation home that you intend to use or visit during certain times of the year, and you can still make a profit from it for 90 days of the year by renting it out and cashing in on the high rental rates.
Now that we have a brief overview of the market trends and performance in Sacramento, let’s take a look at some of the best performing neighborhoods in the city to help you determine the best choice for you to invest in.
Should I Buy a Vacation Home in Midtown-Winn Park Capital Avenue?
Midtown-Winn Park Capital Avenue is among the highest priced neighborhoods in Sacramento, which is to be expected from any urban center.
However, the high property prices are justified with a higher-than-average rental rate for short-term rentals.
Here are our stats for investing in rental properties in Winn Park Capital Avenue:
- Median Home Price: $795,000
- Median Short-term Rental Income: $2,377
- Median Traditional Rental Income: $1,268
- Average Short-term Cash on Cash Return: 0.59%
- Average Airbnb Occupancy Rate: 65%
- Walk Score: 93
- Transit Score: 53
- Bike Score: 100
Note: To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Should I Buy a Vacation Home in Land Park?
With the highest listing price on this list, Land Park can be considered a less-than-optimal neighborhood for purchasing an investment property. Although the median sales price of homes in Land Park is slightly higher than in Midtown, the average rental income generated from short-term rentals is slightly lower than in Midtown, making it a worse place to invest in short-term rental properties.
Here are our stats for investing in rental properties in Land Park:
- Median Home Price: $799,999
- Median Short-term Rental Income: $2,295
- Median Traditional Rental Income: $1,427
- Average Short-term Cash on Cash Return: 0.53%
- Average Airbnb Occupancy Rate: 59%
- Walk Score: 61
- Transit Score: 43
- Bike Score: 87
Related: The 6 Best Cities for an Airbnb Investment
Should I Buy a Vacation Home in South Natomas?
South Natomas has both the lowest median home price and the highest average cash on cash return on this list, making it perhaps the top choice for investing in Sacramento real estate.
Here are our stats for investing in rental properties in South Natomas:
- Median Home Price: $295,000
- Median Short-term Rental Income: $1,807
- Median Traditional Rental Income: $1,193
- Average Short-term Cash on Cash Return: 3.06%
- Average Airbnb Occupancy Rate: 38%
- Walk Score: 46
- Transit Score: 30
- Bike Score: 69
Note: To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Should I Buy a Vacation Home in North Oak Park?
North Oak Park is perhaps the most average performing neighborhood for investing in Sacramento. With average median prices, average rental income, and average cash on cash returns, North Oak Park can be a great neighborhood for investing for any real estate investor, and it has the lowest level of risk when investing in real estate out of all the neighborhoods mentioned on this list.
Here are our stats for investing in rental properties in North Oak Park:
- Median Home Price: $365,000
- Median Short-term Rental Income: $1,635
- Median Traditional Rental Income: $960
- Average Short-term Cash on Cash Return: 1.77%
- Average Airbnb Occupancy Rate: 42%
- Walk Score: 78
- Transit Score: 42
- Bike Score: 90
Related: Airbnb Reviews: Top Influencers Affecting Your Occupancy Rate
Bottom Line – Should I Buy a Vacation Home in Sacramento?
Our answer is: Yes!
Sacramento can be a very good market for investing in real estate in general, and in short-term vacation homes in particular. The city’s numerous attractions, great weather, and year-round activities all make Sacramento pulse with life and maintain a high demand for short-term rentals that people can use to enjoy their short stays and vacations in the city.
Are you trying to find the best investment property to use as a vacation rental in Sacramento or any other city in California or the US? Use Mashvisor and gain access to all the insights and real estate analytics to make wise investment decisions and invest your money in investment properties that are guaranteed to make you a profit.