Sacramento is a city where short-term rentals can work, but only with the right paperwork. The city requires a permit and tax registration, and the markets many Sacramento investors really want, at Lake Tahoe and in the foothills, have rules of their own that can be stricter than the city's.
In short: LendingStreet finances Sacramento-area short-term rentals with DSCR loans that, on some programs, qualify on projected nightly revenue instead of a long-term lease. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, the minimum credit score is 620 and LLC borrowers are standard. Before relying on STR income, confirm the property can get a City of Sacramento STR permit, or the county or town permit where it sits, and register for transient occupancy tax.
The City of Sacramento regulates short-term rentals through a permit program and requires hosts to collect and remit transient occupancy tax, the local hotel tax. The rules treat hosted stays, where someone lives on site, differently from whole-home rentals with no host present, and they can limit how a property is used. Check the city's current STR ordinance and permit requirements before you write an offer.
Unincorporated Sacramento County, Elk Grove, Rancho Cordova, Citrus Heights, Folsom and the Placer County suburbs such as Roseville and Rocklin each set their own rules. A home a mile from the city line may sit under a different code, so confirm the jurisdiction on the parcel record, not the mailing address.
Sacramento's nightly demand is steady more than seasonal. State government, the legislature and lobbying draw business travelers during the session. Golden 1 Center brings concerts and Kings games, the convention center hosts events downtown, and UC Davis Health and the Sutter and Kaiser campuses bring medical travelers and visiting families.
Guests who come for those reasons tend to book in Midtown, Downtown, East Sacramento, Land Park and Curtis Park, where they can walk or take a short ride to the core. Homes near Sacramento State and along the American River Parkway also see weekend demand from families and visitors.
Many Sacramento investors look east. South Lake Tahoe voters limited vacation rentals in residential neighborhoods in 2018, so new whole-home STRs there are largely restricted to certain areas. El Dorado County and Placer County regulate Tahoe-area STRs through permit systems, and Placer County has set a cap on permits in its Tahoe region. Read the current rules for the exact parcel before you buy.
In the Gold Country, towns such as Placerville, Auburn, Sutter Creek and Murphys draw wine-tasting and weekend visitors, and county rules vary from permissive to tightly limited. Folsom Lake and the American River canyons also attract summer stays. Wherever you look, the permit question comes first and the financing second.
This example is illustrative and not a quote. An investor buys a three-bedroom Land Park home for $535,000 and obtains the required city permit. A third-party projection estimates $55,200 a year, about $4,600 a month. Under Prop 13 the tax bill resets to the purchase price, budgeted here at about $513 a month, and STR insurance is $210.
At 70% LTV the loan is $374,500, estimated principal and interest is about $2,555 and the total payment is about $3,278. The DSCR is about 1.40x on the full projection and about 1.12x if you cut it by 20%. At 80% LTV, the reduced-revenue case falls to about 1.01x, which is why many Sacramento STR buyers choose lower leverage.
| Item | 70% LTV, full projection | 70% LTV, projection cut 20% | 80% LTV, projection cut 20% |
|---|---|---|---|
| Loan amount | $374,500 | $374,500 | $428,000 |
| Monthly revenue used | $4,600 | $3,680 | $3,680 |
| Estimated principal and interest | $2,555 | $2,555 | $2,920 |
| Taxes and insurance | $723 | $723 | $723 |
| Total monthly payment | $3,278 | $3,278 | $3,643 |
| DSCR | About 1.40x | About 1.12x | About 1.01x |
Under Proposition 13, California property taxes are based on a 1% base levy on assessed value plus local voter-approved bonds and assessments, and the assessed value resets to the purchase price when a property changes hands. The seller's bill, based on what they paid years ago, is not a guide to yours.
Many newer subdivisions in Natomas, Elk Grove, Folsom Ranch and Roseville also carry Mello-Roos special taxes, which can add meaningfully to the bill. Check the county tax record for any special assessments and include them in the payment.
California's homeowners insurance market has tightened, and some carriers limit new policies, especially in wildfire areas in the foothills and around Tahoe. STR use adds another layer, because a standard landlord policy may not cover nightly guests. Get a quote that names short-term rental use early in escrow.
Parts of Sacramento sit behind levees along the Sacramento and American rivers, and some areas such as Natomas and the Pocket fall in mapped flood zones. Check the flood determination, and remember that a pool and strong air conditioning are close to essential for summer guests in a city that regularly tops 100 degrees.
Compare the projection with real listings near the property that have similar bedrooms, permits and amenities. In Sacramento, weekday business demand and weekend leisure demand are different guests, so look at both. If the estimate is lower than you expected, our guide to low projections explains your options.
A home that also works as a 30-day furnished rental for traveling nurses or legislative staff gives you a fallback if nightly rules or demand change.
Send the address, price, permit status, projected revenue and your operating plan. The team runs the ratio at a few loan amounts and on reduced revenue, and tells you which programs fit. Use the form below or call (877) 298-1001. Have the purchase contract, insurance quote, permit documents and LLC paperwork ready.
Yes, with the required city permit and transient occupancy tax registration. Rules differ for hosted and whole-home rentals, so confirm the current ordinance for your property.
On some programs, yes. The loan can qualify on a third-party revenue projection instead of a long-term lease.
The financing works the same way, but local rules are often stricter. South Lake Tahoe limits vacation rentals in residential areas, and Placer and El Dorado counties use permit systems.
Under Prop 13, assessed value resets to your purchase price when you buy. Budget on your price plus any Mello-Roos or special assessments.
Up to 80% LTV on a purchase, subject to the ratio. Many Sacramento STRs work better at 70% to 75% because of price levels.
Yes. Ask for a policy that covers short-term rental use. A standard landlord policy may not.
Yes. LLC borrowers are standard, and you sign for the loan personally.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.