One of the wisest investments that you can ever make for your overall financial health and wealth is buy-and-hold properties in a market like Sacramento. If you’re unfamiliar with the term, a buy-and-hold property is simply one that a real estate investor purchases with the intent of renting or leasing rather than selling for profit. However, just like there is a unique process to finding properties to flip there is one specific to finding the most valuable buy-and-hold properties for renting or leasing. In this addition of the Alpha Property Management blog, I’m sharing my favorite tips for finding the most lucrative buy-and-hold properties in Sacramento.
Hire A Pro
If you were not already aware, it does not cost you anything to work with a real estate agent and the buyer of the property. In fact, it is likely to cost you a fortune to try and navigate and negotiate through the process without a professional on your side. Therefore, the very first thing that you should be doing in your search for lucrative rental properties in Sacramento is to hire a Sacramento realtor that specializes in working with investors like yourself. Not only can they help you identify properties that stand the most potential but they can work through the process with you and answer your questions along the way.
Research The Neighborhoods
Everyone knows that location matters in real estate regardless of what you intend to use that real estate for. However, when you are investing in rental units it is particularly important to pay attention to the neighborhood because it will have a direct correlation on the profitability of the property. You need to look at key factors like the crime rate, employment rate, median income, etc.. It would also be wise to take note of other amenities in walking or short driving distance.
What Is The Average Rent?
The next thing you need to do is conduct some research into what the average rent is in the area. If you are buying a condo or a single unit in a building full of rentals this should be fairly easy to figure out. Otherwise, you can again rely on the help of your Sacramento realtor or trusted property manager to estimate what the average rent would be for the units that you are considering or even the general area. This will go a long way in helping you narrow your search.
Just because tenants are looking to rent a property rather than purchase one, does not mean that they do not care about the local schools and school district. If you are looking to purchase and rent out a unit that is at least 2 to 3 bedrooms, the odds are that you will be looking to attract families. Therefore, you want to ensure that the property you select to invest in will be within a good school district. Otherwise you will have a very hard time attracting quality, family-oriented tenants.
Local Job Market
The local job market is going to be one of the most key factors in the profitability of the property that you select. You need to take the time to do some research and find out what neighborhoods and general areas reflect the strongest numbers in terms of jobs. You should also consider the projections for the job market for the next 5 to 10 years to give you a clear indication of what you can expect on the road ahead.
Your property taxes as a Sacramento landlord will be one of the largest bills that you have to pay. Therefore, it is worth your while to take the time to consider what your property taxes will be for each investment property on your shortlist. This can make a huge difference in your bottom line at the end of the year so make sure that you are weighing the cost of your property taxes against your projected profits conservatively.
Always Run The Numbers More Than Once
It can be very easy to miscalculate what your projected costs and revenue for a new income property will be. Again, this is why you would be very wise to enlist the help of a professional Sacramento realtor and property manager to run the numbers with you multiple times and predict the most profitable property on your shortlist. Having the extra set of eyes on your projections will also help you to enter the transaction with more confidence so you can negotiate on price and terms from a position of strength.
for more information about how Alpha Property Management can turn you into an alpha real estate investor give us a call today.