Property Management Blog

How to Diversify Your Real Estate Portfolio with Sacramento Rental Property

System - Wednesday, February 26, 2020
Property Management Blog

Every investor knows that diversifying a portfolio is a smart way to protect its assets and allow its value to grow. This includes your real estate portfolio. When you’re adding properties to your existing real estate investments, make sure you’re choosing different types of homes in various neighborhoods. This will limit your risk and provide new opportunities you may not have considered previously.

Sacramento Rental Homes: Single-Family and Multi-Family

Single-family homes are popular investments, and it’s possible your entire residential real estate portfolio contains these types of homes. With a single-family home, you will always have a large pool of prospective tenants, and you’ll be able to charge top rents, especially if the home is well-maintained and in a great neighborhood. These investments also appreciate quickly, and the value of your asset will increase steadily year after year.

To diversify your portfolio, consider investing multi-family properties as well. They will provide you with additional rental income and less vacancy risk. Instead of collecting one rental payment every month, you’ll collect two or three or four. If one unit is vacant, you still have income from the other units.

Lower risk and higher cash flow are excellent reason to invest in multi-family homes as well as single-family homes. The additional good news is this – both types of properties are plentiful in Sacramento, which means you won’t have trouble finding either type of investment.

Sacramento Neighborhoods: Where to Invest

If you’re early in your investment career, you may be most comfortable investing in Sacramento neighborhoods that you already know. Perhaps you want to buy a condo downtown or a single-family home in the area where you lived previously. Don’t be afraid to consider different locations throughout the metro area.

Right now, most investors are finding the best value in neighborhoods like Land Park and Elmhurst. Those are great areas to invest, but they’re also going to be competitive. As the largest city in California, Sacramento has a lot of options for real estate investors and potential rental property owners. Gardenland and West Tahoe Park offer some great opportunities for cash flow and appreciation. Check out areas where there’s new construction, particularly development of HOA communities and multi-family buildings.

Investors from outside of Sacramento will also want to consider diversifying their portfolios by considering rental homes in this area. If most of your investments are elsewhere, consider the attractive prices of Sacramento real estate and the fact that it has a growing economy and a flourishing population. The tenant pool is strong, and so is the potential for growth.

Investing in Sacramento Commercial Properties

Another way to diversify your Sacramento real estate portfolio is by considering commercial properties. This type of real estate may have more favorable lease terms for investors. You can also expect lower vacancy rates and higher rents, and less maintenance than with residential properties. Commercial properties can be anything from retail space to office buildings to industrial or warehouse spaces. You’ll need to be willing to learn a different set of legal obligations and best practices, but commercial properties can really help you boost your portfolio’s performance.

Real Estate InvestmentIf you’re thinking about diversifying your real estate portfolio to earn more, please contact us at Titan Property Management. We know this market well, and we’d love to tell you more about how to be a successful investor in Sacramento.