How To Spot a Profitable Elk Grove Rental Investment

Over 25% of households in Elk Grove occupy leased housing. There is a reasonably high demand for rental houses and buildings in this city. If you’re looking to start a rental investment business or grow your property portfolio, you should definitely consider Elk Grove, California.

However, some areas are more likely to yield income than others. Certain factors dictate how appealing your property would be to prospective lessees. To ensure a return on investment and maximum profitability, due diligence is required. Read on to learn five tips on how to spot a profitable rental investment in Elk Grove.

1. Determine the Average Rental Rates

The rent you’ll be getting from tenants will be the lifeblood of your rental business. To figure out if your venture is profitable, look at the typical cost of rent in the community where your property is located. 

There has been a 5% decrease in the average amount of rent of bedroom apartments in Elk Grove compared to last year. Currently, the average monthly rent for a one- or two-bedroom apartment is $1,778 or 2,110 respectively. Meanwhile, studio apartments have seen an influx in price, now being rented for around $3,000.

These are general rates that you can use as benchmarks to determine the viability of your rental property business. Depending on your negotiation with the tenant, the rate may be slightly higher or lower. However, the rent must be enough to yield even a little profit, all while covering property expenses such as mortgage payment, insurance, and taxes.

2. Make a Projection of the Community’s Growth

A rental property business is a long-term investment. It’s fine to initially get low revenue from your leased properties as long as there’s a projection for higher returns in the future. Try to study the trajectory of the community. To get more in-depth and accurate data, you can partner with an Elk Grove property management company like Key Realty Center.

Elk Grove is currently the 26th most populated city in California, with a population exceeding 175,000. The median age of its residents is just under 40. Moreover, the median family income is $106,797. However, around 6% of the city’s households live in poverty.

You must analyze how pieces of information like these will evolve over time. Is the population expected to rise, increasing the demand for rental housing? Can households still afford your preferred rental rates five years down the line? Is there infrastructure being built that will make your property more accessible and desirable to tenants? 

By looking ahead, you can make an informed business decision in the present and avoid financial pitfalls in the future.

3. Look for Schools and Workplaces Near the Property

One of the primary considerations of tenants when choosing rental housing is its proximity to essential institutions like schools and workplaces. In the U.S., around eight million students need student housing near campus. Meanwhile, Elk Grove has over 80,000 employed residents. 

Your rental property should be located near these institutions to increase the chances of tenant retention. There are several good schools in or close to Elk Grove, such as:

• Elliott Ranch Elementary School
• Rio Valley Charter School
• Elk Grove High School
• Sacramento City College
• California State University, Sacramento

Moreover, the commercial industry in Elk Grove is robust, especially in the fields of healthcare, public administration, retail trade, company management, and mining and gas extraction. Purchase property near schools and commercial enterprises for higher rental value and demand.

4. Scout the Neighborhood and Its Amenities

The people in the neighborhood are just as important to tenants as the property rented. What is the culture in the community? Are the people conservative or progressive? Do they welcome people from different social classifications? Are there a lot of delinquents? Choosing the right neighborhood is essential since it can affect tenant retention and the overall rental rate of your property.

Neighborhood facilities are also important. A real estate property’s rental value is likely to rise if it’s situated in an amenity-packed neighborhood. 

Here are a few amenities that will increase your property’s value and generate tenant interest:

• Parking lots
• Fitness centers
• Grocery stores
• Restaurants
• Accessible public transportation
• Movie theaters and other recreational places

To get the best rental property and generate higher income, scout both the place and the people. If you need assistance in scouting the right community, get in touch with a professional Elk Grove property manager from Key Realty Center.

5. Look Into Weather Patterns

Extreme weather and other environmental disasters are real estate properties’ worst enemies. In a span of five years, weather-related property damage in the U.S. reached over $120 billion in costs. To avoid costs that would eat away at your profits, you should research the weather patterns in the place where you’ll build your rental property. 

Is the place prone to storms, hail, hurricanes, or tornadoes? How about earthquakes? Is it near fault lines? If so, take safety measures by reinforcing your property’s roofing and foundation. Getting home insurance is also wise. 

Fortunately, the weather in Elk Grove is usually warm and temperate. However, rainfall is common during the winter, and the city has had strong storms in the past. You should protect your property rental investment by looking into weather reports and taking necessary precautions.

Final Thoughts

From finding out the average rental rates to scouting the neighborhood and its amenities, you must consider several factors to ensure a profitable rental property investment. If you’re searching for a property management partner in Elk Grove, look no further than Key Realty Center.

We provide professional and personalized property management solutions and have helped many Elk Grove rental property investors. Contact our team to learn more and grow your investment portfolio.