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 considering rental property investments, many focus solely on income potential. However, true profit comes from what remains after expenses are paid. As veteran property specialists with over 30 years of experience in Sacramento, we understand these costs intimately. Here are 4 costs associated with rental property in Sacramento that every investor should carefully consider…
4 Costs Associated With Rental Property In Sacramento
#1. Taxes And Fees
Property taxes represent a significant ongoing expense that increases as your property appreciates. In Sacramento, home values typically rise about 3% annually, and the county frequently reassesses properties to generate revenue. Beyond property tax, be prepared for school taxes, municipal taxes, waste and recycling fees, HOA dues, and potential income tax on your rental revenue. Depending on location, you may also be responsible for sewer and water expenses. While exact amounts vary based on multiple factors, understanding your tax obligations is crucial for accurate financial planning.
#2. Insurance
Protecting your investment is non-negotiable. You’ll need comprehensive insurance covering the property and structure against damage (such as fire), plus liability insurance in case a tenant or visitor sustains an injury on your property. Your tenant should maintain separate insurance for their personal belongings. Remember that as your property value increases, so will your insurance premiums—they’re directly correlated. This is especially important for older homes built in the 1950s and 1960s, which are common in areas like Florin, South Sacramento, and Oak Park.
#3. Upkeep
Maintenance costs can be challenging to estimate in advance but are essential for preserving your investment. These expenses include maintaining and repairing furnaces, water heaters, roofing, plumbing, and electrical systems. Regular upkeep ensures your rental remains desirable and habitable. Don’t overlook landscaping expenses—in Sacramento, professional landscapers command respectable rates for their valuable services. For vintage homes in neighborhoods like Del Paso Heights, Citrus Heights, and North Highlands, maintenance requirements may be more frequent and potentially costly.
#4. Time
This often-overlooked cost is significant: the time investment required to manage rental properties. You’ll spend hours finding tenants, conducting background checks, collecting rent, addressing maintenance issues, and periodically inspecting the property. As the saying goes, “time is money,” and this represents a real cost to you as an owner. This burden can be reduced by investing in quality properties and hiring competent property management, but it never disappears entirely. Additionally, vacancy periods directly impact your bottom line with zero income during these gaps.
Summary
Don’t let these costs discourage you—remember that all investments carry expenses, whether they’re transaction fees from stockbrokers or the 4 costs associated with rental property in Sacramento. What matters is determining whether the benefits outweigh these costs. From our three decades of property experience in Sacramento, we believe they typically do.
However, landlord fatigue is real. After years of managing properties, dealing with difficult tenants, or navigating evictions, many reach a breaking point. Whether you’re experiencing landlord burnout or considering passing properties to heirs, timing and execution matter. Without proper planning, inherited rental properties can become legal nightmares for your beneficiaries.
Be aware of AB2801, a new law taking effect in April 2025 that significantly changes how security deposits are handled. In essence, you’ll no longer be able to arbitrarily deduct repair costs during move-outs. This legislation requires thorough documentation of property conditions at both move-in and move-out, potentially adding another expense if you’re not properly prepared. Here is a link to AB 2801
Starting April 1, 2025, California introduces new security deposit protocols. AB 2801 requires landlords to document property conditions with photographs at four specific intervals and prohibits mandatory cleaning charges—adding complexity to property management.
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 tenant response time to unlawful detainer actions from five court days to ten court days after service, further complicating the eviction process for landlords dealing with problematic tenants.
SPECIALIZE IN BUYING SQUATTER AND TENANT OCCUPIED, FIXERS, MOBILE HOMES AND HOMEOWNERS EXPERIENCING DISTRESS & STRESS. PRIMARY AREAS ARE: SACRAMENTO, S. SAC, OAK PARK, FLORIN AREA, DEL PASO HTS, NORTH HIGHLANDS, CARMICHAEL, CITRUS HEIGHTS AND ORANGEVALE.
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