Are 'tiny' downtown apartments worth the $600 price?

In recent years, Sacramento has been one of the top destinations for people, especially Millennials who are leaving the Bay Area. (April 27, 2017)

A downtown Sacramento hotel owner is upgrading rooms into mini apartments to provide affordable housing.

The 150-square-foot apartments would come fully furnished with a daybed, small table and chairs and a few other amenities but won't have a kitchen. 

Bathrooms would be shared outside of the apartment, down the hall with three other residents.

The upside to living in a tiny room?

The price of the converted rooms at the Golden Hotel would go for about $550 to $600 a month, according to the owner, Lynard Khan.

The average rental price for a downtown Sacramento apartment is $1,747, according to an April Yardi Matrix report. Apartments in Midtown are the most expensive rentals in the Sacramento region averaging $2,008 a month.

The hotel rooms are already rented out as a single room occupancy (SRO) but the building is in need of a facelift, according to Khan.

The idea is to remodel about 26 rooms with new decoration, furniture, heating and air conditioning and new flooring. Khan said, he also plans on freshening up the hallways with artwork and wants to spruce up the patio with tables and a bike rack. The set-up would include Wi-Fi and a laundry room in the building.

"I'm basically trying to utilize a small space and make it really cool," Khan said.

Khan explained, he realized there was "an acute need for housing" downtown, especially for people struggling to keep up with the rising rent.

"This is helpful to someone making basic wages who needs an affordable, nice place to live," Khan said. 

He said he hopes to attract people working in the neighborhood.

While $600 in rent for a downtown apartment sounds like a steal compared to the average price, is the low price worth the tiny space?

A 150-square-foot apartment at $600 a month breaks down to paying $4 per-square-foot.

A studio in Midtown/Downtown Sacramento cost $2.30 per-square-foot in April 2017 while a one bedroom apartment in the same area cost $2.27 per-square-foot, according to Yardi Matrix data.

The average studio in Midtown/Downtown is 573 square-feet. The average size of a one bedroom apartment in the area is 727 square-feet.

So not only are the average studio and one-bedroom units in the Midtown/Downtown significantly larger than the tiny apartments, they are also nearly half the cost per-square.

A tiny apartment can be the right fit for the right person who is just looking to pay a total low price for the bare bones. However, a person seeking more privacy and space is getting the better price-per-square-foot, likely with more amenities, even though the total price is much higher than the rental price of the tiny apartment.

Will the Sacramento rental market slow down in the near future?

The short answer is no.

The Sacramento region is seeing a spike in rent prices due to many factors, but mainly because of supply and demand. Sacramento is California's fastest growing city and is currently experiencing a population boom. Many Bay Area residents are moving to Sacramento in search of more affordable housing and the city is also seeing transplants from other metros with high living costs, such as Seattle.

The problem is, there are many new people coming to live in Sacramento but there aren't enough housing units available to keep up the demand.

Yardi Matrix data shows, there are only 347 units under construction in the Midtown/Downtown area that are expected to be complete by January of 2018.

There are currently a total of 4,234 units in Midtown/Downtown Sacramento but only about 36 percent are considered to be fully affordable.

Rent is only expected to rise in the area over the next two to five years. It's forecasted to slow down in about 10 years but will still continue to spike, just at a slower rate.

So depending on your future plans, a tiny apartment may be a good option if you're looking to avoid paying high rent and don't need much to live. The scaled-down home may also work well for a person working nearby who doesn't own a car.

The apartments at the Golden Hotel are expected to be ready to rent by Sept. 1, 2017. The tiny rooms are not low income housing and there's no limit on how much a person makes to qualify for a room.

© 2017 KXTV-TV


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