If you’re thinking about investing in rental property, you’re probably doing your due diligence to make sure it’s right for you. Likely, one step in that due diligence is figuring out what expenses you’ll pay. Smart! To help you, we’ve created this list of 4 costs associated with rental property in Sacramento…
When it comes to investing in rental properties, it’s easy to think of the cash flowing income. But remember that your profit doesn’t come from the gross rent but what’s left over after your expenses. For that reason, here are 4 costs associated with rental property in Sacramento that you should be aware of…
4 Costs Associated With Rental Property In Sacramento
#1. Taxes And Fees
One of the costs you’ll have is the property tax you’ll pay, which could include property tax. This will increase over time as the property starts to appreciate in value. In Sacramento homes values usually increase about 3% annually. The county is aware of this so they reassess homes often. It is a method the Sacramento uses to generate revenue. Other expenses include but are not limited to are, school tax, municipal taxes, waste and recycling tax, HOA fees, as well as any potential income tax on your rental income. Depending on the location you may be responsible for sewer waste and water as well. We can’t give you an exact amount that you’ll pay (it depends on a number of factors) but you should be aware of what the taxes will be.
#2. Insurance
Rental property is an asset and you’ll want to make sure that you and your asset is protected. For that reason, you should insure it. Make sure you insure the property and structure against damage (such as fire), as well as have some liability insurance in case your tenant or a visitor hurts themselves. Your tenant should also have insurance on their belongings. As the value increases so will the insurance as they go hand in hand.
#3. Upkeep
Another cost, which may be harder to estimate ahead of time, is upkeep costs. This includes things like the costs to maintain and repair the furnace, hot water tank, roof, and the plumbing and electrical systems in the house. Upkeep costs would be incurred whether you live in the house or your rent it out, and they’re important to ensure that your rental property is a nice place to live. Landscaping cost should be considered. In Sacramento landscaper’s don’t work for cheap anymore and rightfully so.
#4. Time
This last cost might surprise you but it’s the cost of owning a rental and dealing with tenants. You’ll need to spend some time finding a tenant, doing a background check, making sure they pay their rent on time, and occasionally checking on the property. And, since “time is money”, there is a cost implication to you. It can be minimized, though, with an investment into a good property and a property management team. Along with time is association of vacancy. If it is vacant your losing money
Summary
Before you let this list scare you away, remember: every investment has costs… whether it’s the transaction fees or management fees charged by your stockbroker or mutual fund manager, or whether it’s these 4 costs associated with rental property in Sacramento. What’s important for you to decide is whether the benefits far outweigh the costs. And when it comes to rental property, we believe they do.
However, there comes a point and time where we all say I have had enough. You may have been a landlord for a long time and don’t want to do it anymore. We all either get to this point or leave it as an inheritance. Which if not done correctly could leave the inheritors into a legal nightmare.
A new law that’s come out it’s called AB2801. This new law starts right here in April of 2025 and it really has to do in a nutshell with the deposits. you’re no longer going to be able to just randomly just write off repairs for move outs anymore. This could be one more expense if your not documenting condition of the property on move in and move out. Here is a link to AB 2801
New laws starting 1 April, 2025 have a new method for dealing with rental deposits. AB 2801 Requires 4 Times Landlords Must Take Photos For Deposit Deductions (And Forbids Mandated Cleaning Charges)
April 2025 New Unlawful Detainer Laws that Every Landlord should Know
AB 2347 https://www.dre.ca.gov/files/pdf/reb/rebspring_25.pdf extends the time by which a tenant must respond to an unlawful detainer action from five court days to ten court days after being served.
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