The Best 5 Sacramento Neighborhoods to Invest In
It’s no secret that Sacramento is a booming real estate market. Property values have soared recently, and I’ve already discussed why going long on Sacramento is a great idea. Although the entire city is booming, some neighborhoods are especially ripe for the picking.
Before we go any further, I want to remind you that these neighborhoods are the best for investors. HomeSnacks recently put together a list of the Ten Best Neighborhoods to live in, but that doesn’t mean that these will necessarily be the most profitable. As an investor, you should look to buy properties in neighborhoods that are on the rise in order to ensure the best bang for your buck. Buying low in these neighborhoods will do wonders for your cash flow for years to come, as these homes will continue to appreciate at an impressive rate.
After looking at each neighborhood from both a qualitative and quantitative perspective, we’ve found the best places to invest in Sacramento.
1. South Land Park
South Land Park is at the top quite simply because of its potential. As SacMag points out, young people continue moving here in droves, driving property values up exponentially. In addition to being one of the safest neighborhoods in Sacramento, South Land Park offers plenty in the way of restaurants and entertainment.
Geographically, South Land Park is located less than five miles away from the heart of Downtown Sacramento, making it ideal for commuters. Generally, areas this safe and convenient do not rent for cheap, yet South Land Park somehow remains 34th out of 39 on the most expensive neighborhoods to rent in. Yet, as the graphic below shows, it ties for 4th in terms of rent increase.
Bottom line: A strong upward trend combined with enormous room for growth make South Land Park a must-buy for both cash flow and appreciation.
2. Rosemont
I’ll admit that, having tutored at Einstein Middle School for a number of years, I’m a bit biased. Rosemont hasn’t always had the best reputation, as we can see from this 2007 forum post. Yet, as an investor, your job isn’t to focus on the past — it’s to focus on the future, and Rosemont is trending up. Just 10 years ago, many people considered it a hotspot for crimes such as car theft. Today, it’s considered one of the safest neighborhoods in Sacramento, and it’s only getting safer.
When we take this into consideration, it makes perfect sense that Rosemont property values went up 14.9% last year, good for second out of all neighborhoods in Sacramento. What drove this turnaround? Perhaps it was the rising employment rate, which went up 1.31% in the last year, over half a point higher than Sacramento as a whole. It could be the diversity, which fosters a rich exchange of cultures and ideas. Maybe, just maybe, it’s the outstanding schools. More than likely, though, it’s a combination of these and many other factors.
Bottom line: Rosemont’s property values are shooting upwards due to increased safety and employment, and they don’t appear to be stopping anytime soon. The price of rent should follow suit.
3. North Natomas
Property values in the neighborhoods I’ve mentioned so far have only begun to increase recently. North Natomas prices, on the other hand, have more or less stabilized for now. In this sense, you won’t see the immediate payoffs you would in Rosemont or South Land Park. Make no mistake, though — North Natomas is a buyer’s market. In response to a recent middle class exodus, new homes have sprung up all over the region and filled up almost immediately, indicating high demand. Not long ago, a moratorium was imposed on building new homes in North Natomas due to concerns about flooding. When officials lifted the moratorium, the figurative floodgates of the housing boom were opened, and families began pouring in.
Due to its location near the Cal Expo and Sleep Train Arena, as well as its relative proximity to Downtown Sacramento, many middle class homebuyers and renters view North Natomas as a safe, convenient neighborhood. The more middle class families that buy houses, the more property values will continue to rise, and the more you can charge for rent.
Bottom line: Huge new developments in North Natomas indicate high demand. When they eventually have to stop building, demand (and therefore property values) will continue to rise. North Natomas is one of the safest long-run bets you can make in the Sacramento housing market, and there’s no better time to buy than right now.
4. Midtown
The only reason I don’t have Midtown higher is because of the competition and ubiquity of apartment complexes over individual properties. There’s no question that it’s one of the hottest neighborhoods anywhere in the region, but the housing market mostly consists of apartments and lofts, and finding a rental property to invest in could pose a Herculean task. If you do get a chance to invest in Midtown, do it.
Not only have rent prices soared almost 17% in the last year, 2% higher than any other Sacramento neighborhood, they’ve done so for an unusual reason: Boomers and early Gen Xers. Typically, we imagine folks moving from the city to the country once their children grow up and move out, but the data in Sacramento show exactly the opposite: Midtown’s median age is 11% higher than Sacramento’s as a whole, and its accessibility and entertainment options make it a prime area for empty nesters. These people have typically worked their way up the career ladder already and thus have more money to spare.
Bottom line: There aren’t too many single properties available in Midtown, but if you find an affordable one, jump on it. An influx of 50–65 year olds with sizable incomes is pushing property values up. Capitalize on that.
5. Garden of the Gods
Another safe but profitable investment, the Garden of the Gods neighborhood near Carmichael is one of the older developments in Sacramento, with most of the homes having been around since the 1950s. That they’ve maintained their value extremely well is a testament to the quality of the homes and neighborhood as a whole. Though the houses are old, the neighborhood is modern, with some of the best schools around and access to Sacramento’s only Whole Foods, which generally indicates higher property values.
Like North Natomas, Garden of the Gods is no secret among homebuyers and investors, who have long lauded it for its value. In fact, as one banker pointed out in SacMag’s article, many first time buyers buy homes in Garden of the Gods to live in, only using them as rental properties after they move.
Bottom line: This isn’t a place you’re going to strike it rich right away, but if you want a stable long-term investment with steady appreciation, Garden of the Gods is the place to be.
At the end of the day, you have to look at each individual property before investing in it. This list should serve as a guideline and is by no means comprehensive. Just being in one of these neighborhoods doesn’t automatically make a home a good buy. Make sure to do your own research and calculations before buying any property. All this is meant to do is tell you where to look — the rest is up to you. Once you do find the perfect property, Chalet can help you with the rental process every step of the way. Now get out there and start investing!
