Sacramento is usually, at best, the fourth city people say when you ask them to name California cities. Los Angeles and San Francisco come first, usually followed by San Diego. After that you have Anaheim, San Jose, and that little town on the coast we stayed at on our trip out west. What was the name of it? The place with the fish? After they get through that, then they might get to Sacramento, which even as the seat of power, has taken a back-seat in public imagination. That is set to change though, thanks to a series of economic developments that are helping the city grow. As a residential rehab pro looking for a smart way to use your hard money loan from Socotra, understanding how Sacramento is changing is of enormous importance.
Sacramento and the New Gold Rush
The California capital was established as a Gold Rush locus, near where the Sutters had their first gold mill. The government of the state established itself in the city in the 1850s, partially due to the Sacramento River and its transportation and economic usefulness; it was named the permanent capital in 1879. Sacramento was a key city for the Pony Express and the Transcontinental Railroad. Location-wise, it seemed to have it all.
It was, of course, later surpassed by the huge coastal cities, and went into a decline, staying afloat thanks to state and county governance. The metaphorical gold rush seems to be back, though. In the last decade, Sacramento has once again become one of the state’s focal cities for economic development.
Healthcare industries and corporate headquarters are taking advantage of the still-undervalued commercial real estate market, as well as the proximity to power the capital city offers. With San Francisco so expensive, and Los Angeles a perennial budget-buster, Sacramento is an increasingly attractive location. Tech firms with young employees are coming in as well. The city has added 85,000 jobs since 2011, and expects to match that over the next half-decade. Construction projects downtown involving the old rail yards look to make Sacramento the next big dining and shopping hub in California. It’s a great time for the city.
The Crowded Sacramento Multifamily Market and Your Residential Rehab Business
Corporate headquarters and tech firms usually mean one thing: multifamily developments. These attract young employees looking to rent, or if they are looking to buy, to stay at the condo level. This isn’t universal, of course, but is a consistent real estate trend. The problem that Sacramento has is that it simply doesn’t have enough multifamily units. More are being built, but it is a crowded market.
Indeed, the Sacramento market added 900 units over the last year, but that didn’t put a dent into vacancy, which is still below 4%. That is essentially full as far as the real estate market is concerned. Even with the new units added, rents still went up 4%, as demand is outpacing supply. This is making a lot of business leaders worried that there will be a slowdown in growth because it will be harder to attract employees.
Still, though, workers will be coming in, and they will be looking for a place to live. This is where a residential rehab professional can find great work. There will be more of a market for people who were looking to buy upscale condos or rent upscale apartments but either couldn’t find them, or found them to be overpriced for the room they had. These people will either be looking to shift their attention toward home ownership, or home rental.
Purchasing a property and fixing it up with a buy and hold loan, with the intent of renting it (or selling it if the offer is right), could be a great way to compete in the crowded marketplace. New workers looking for a place to live, as well as established workers who don’t find living in a tight apartment market worth it anymore, will eye houses. If you use your loan correctly, and make the house eco-friendly, sustainable, and tech-enabled, you can appeal to this new influx of buyers and renters.
Sacramento was built thanks to wave after wave of people coming in looking for gold. Some found it, some went bust. The same thing is happening now, only with a more stable basis for the economy. People are coming because they have work, not because they are searching for it. What they will be panning for is a place to live. The crowded Sacramento multifamily market means that the market for homeownership or single-family rentals will have more attention. A hard money loan from Socotra Capital, California’s leading equity-based lender, can help you prepare houses to sell or rent. It’s the best way to get in on this new rush.