Buying first investment property for rental

Sacramento, California
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Buying first investment property for rental

Nupur Kohli
Member since 2024 · 3 posts · 4 votes

Hi everyone,

I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

 Is this fair analysis? 

That makes it negative by 700$-800$ range per month. 

I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

Is this fair to assume ?

Any pointers to further reduce monthly cost would be appreciated! 

 Also any pointers on renting for first timers would be appreciated ! 

Thanks a lot ! 

3Reply
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Scott ScovilleBusiness Member
Real Estate Agent · Sacramento, CA · Member since 2019 · 497 posts · 272 votes
2y
Quote from @Nupur Kohli:

Hi everyone,

I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

 Is this fair analysis? 

That makes it negative by 700$-800$ range per month. 

I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

Is this fair to assume ?

Any pointers to further reduce monthly cost would be appreciated! 

 Also any pointers on renting for first timers would be appreciated ! 

Thanks a lot ! 

Hey Nupur, welcome to the investing world and to BP. @Noah Laker and I are with Hardin Realty & Property Management and are working with investors all over the region, including in the Sacramento, Antelope, and Roseville areas. We are investors ourselves, so our network is your network. Be happy to crunch some numbers with you and chat more about your goals for investing! Acquisition of a property is just the starting point, and we're here to help along the way. I'll follow up with a DM.

[email protected]415-933-2202
Scoville Realty & Investments LLC
WebsiteView Page
3Reply
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    House hack

    1Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    2y
    Quote from @Nupur Kohli:

    Hi everyone,

    I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

    Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

     Is this fair analysis? 

    That makes it negative by 700$-800$ range per month. 

    I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

    Is this fair to assume ?

    Any pointers to further reduce monthly cost would be appreciated! 

     Also any pointers on renting for first timers would be appreciated ! 

    Thanks a lot ! 


     Hi Nupur, I know the Sacramento is expensive so I would say don't limit yourself by buying deals that will not cashflow. Most California investors invest in the midwest in states like Ohio. 

    You want to find a market that has both cashflow and appreciation. Also, look to invest in areas with economic bases and that result in economic growth.

    I work with a lot of California investors and they love investing in cities like Columbus for the reasons I described above. 


    Happy to answer any questions you have. 

    [email protected]614-802-5698
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    1Reply
  • Ranjit Sandhu
    Real Estate Broker · Rocklin, CA · Member since 2020 · 221 posts · 82 votes
    2y

    @Nupur Kohli I’m from Rocklin and it will be little hard to find something in the range if $500-$550k which will generate $2800/month rent. You can find more into highs 500 in Roseville areas. You can find in Lincoln Antelope Citrus Heights areas for your price range but then rent won’t be that high for your price range. Let me know if I can assist you. 

    1Reply
  • David Liu
    San Francisco Bay Area · Member since 2018 · 33 posts · 31 votes
    2y

    "
    Any pointers to further reduce monthly cost would be appreciated!

    Also any pointers on renting for first timers would be appreciated !
    "

    To reduce monthly costs, you'll want to see what needs to be repaired or replaced prior to buying the property. See if the seller will give you a discount on the sale price based on those things that may break and cause your monthly cost to go up. Examples include: HVAC, the roof, etc... 

    These are things that will increase your cost of ownership if not properly maintained. 

    The monthly costs are unavoidable so take them as they are. What you can control is the monthly income. Some ideas would be, if there's a storage unit on the property and if not, put one in and charge a monthly fee to use it. You can also increase monthly income by doing medium term rentals for travelling nurses as an example. The rent is typically 1.5x that of long term rentals. 

    Hope that gives you some ideas. Good luck

    1Reply
  • Scott ScovilleBusiness Member
    Real Estate Agent · Sacramento, CA · Member since 2019 · 497 posts · 272 votes
    2y
    Quote from @Nupur Kohli:

    Hi everyone,

    I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

    Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

     Is this fair analysis? 

    That makes it negative by 700$-800$ range per month. 

    I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

    Is this fair to assume ?

    Any pointers to further reduce monthly cost would be appreciated! 

     Also any pointers on renting for first timers would be appreciated ! 

    Thanks a lot ! 

    Hey Nupur, welcome to the investing world and to BP. @Noah Laker and I are with Hardin Realty & Property Management and are working with investors all over the region, including in the Sacramento, Antelope, and Roseville areas. We are investors ourselves, so our network is your network. Be happy to crunch some numbers with you and chat more about your goals for investing! Acquisition of a property is just the starting point, and we're here to help along the way. I'll follow up with a DM.

    [email protected]415-933-2202
    Scoville Realty & Investments LLC
    WebsiteView Page
    3Reply
  • Noah Laker
    Real Estate Broker · Sacramento, CA · Member since 2021 · 516 posts · 408 votes
    2y
    Quote from @Scott Scoville:
    Quote from @Nupur Kohli:

    Hi everyone,

    I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

    Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

     Is this fair analysis? 

    That makes it negative by 700$-800$ range per month. 

    I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

    Is this fair to assume ?

    Any pointers to further reduce monthly cost would be appreciated! 

     Also any pointers on renting for first timers would be appreciated ! 

    Thanks a lot ! 

    Hey Nupur, welcome to the investing world and to BP. @Noah Laker and I are with Hardin Realty & Property Management and are working with investors all over the region, including in the Sacramento, Antelope, and Roseville areas. We are investors ourselves, so our network is your network. Be happy to crunch some numbers with you and chat more about your goals for investing! Acquisition of a property is just the starting point, and we're here to help along the way. I'll follow up with a DM.


    Jumping in here - Scott, myself, and our team in Sacramento manages over 100 investment properties, primarily Short-Term Rentals. STR is a great way increase rental income and even access some substantial tax benefits.

    I personally invest in Sacramento STR to increase cashflow given the competitive environment.

    Whether you go for LTR or STR, Sacramento is a fundamentally strong economy and the surrounding areas - Roseville, Rocklin, Elk Grove, West Sac, etc - offer tons of opportunity for long term growth and appreciation.

    2Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Nupur Kohli:

    Hi everyone,

    I am new to investment . I am looking at buying investment properties in and around Sacramento, Antelope, Roseville  area. The idea is buy a property as a long term investment..

    Looking at houses in 500-550K range. Heard rental market is strong in Sacramento area.  Should be able to get rents in 2700-2800$ range. 

     Is this fair analysis? 

    That makes it negative by 700$-800$ range per month. 

    I don't plan to become net positive right away but if it balances out over next few years( 2-3 years) it would be great so it reduces my monthly costs..

    Is this fair to assume ?

    Any pointers to further reduce monthly cost would be appreciated! 

     Also any pointers on renting for first timers would be appreciated ! 

    Thanks a lot ! 

     Hey Nupur, 

    Do you currently own your primary? If not you may want to consider doing a house hack on a multifamily 2-4 unit. You will be able to put 5% down on a conventional 2-4 unit with no self-sufficiency requirement. 

    If you already own a primary and don't plan on moving out, you could explore conventional investment property loans, DSCR loans, and Hard Money loans. Be advised that these loans require a minimum of 15% to 30% down.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    2y

    @Nupur Kohli

    Sac is a great area, and I visit often. But, before I became an agent I decided to invest just over the hill in Reno, NV because of the low property taxes, landlord friendliness, steady increase in diversified job growth, land constraints, proximity to Lake Tahoe, and steady population growth. 

    There are deals like this in Reno currently. I know of an off-market duplex for around $500K that is currently grossing $3,200 in rent. If you're curious, send me a PM. If not, no worries at all.  

    415-233-1796
    2Reply
  • Cameron Masters
    Property Manager · Roseville, CA · Member since 2023 · 16 posts · 8 votes
    2y

    Hi @Nupur Kohli

    As everyone has said, I would expect a negative cashflow for a long term rental. I live in Roseville, invest here and my wife is an agent in Roseville. Some alternatives you could consider are Mid Term Rentals (nurses/insurance stays), Short Term Rentals, or a Rent by the Room strategy. We currently cashflow a home in Roseville with the rent by the room approach. One reason I'm bullish on Roseville RE over the next few years is the Bosch injection of $1.5 billion to build a new site which will bring many mid term construction workers into the are during the construction phase and then the new technicians and engineers that will move to Roseville to work. I host a local meetup in Roseville and happy to chat further if you'd like!

    2Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    2y

    @Nupur Kohli - what if the market softens?  How long can you hold the property while losing money?  A $700-$800 loss per month is quite substantial.  Am I missing something?

    0Reply
  • Nirmal Dhillon
    Real Estate Investor · Elk Grove, CA · Member since 2016 · 12 posts · 5 votes
    2y

    Hello Nupur,

    I have been an Investor in this area since 2002. I own several properties in Sacramento region. It has gotten very hard to cashflow in this area and majority of California. I started investing out of state since 2021. Much better cashflow and Landlord friendly environment than California. I would stay away from negative cashflow unless you have enough reserves for at least 9 months.

    2Reply
  • Dan Sundberg
    Real Estate Agent · Sacramento, CA · Member since 2019 · 77 posts · 61 votes
    2y

    Tons of great suggestions/advice in the previous comments. Roseville is a good area for MTR, as there are a lot of hospitals in that area for travel nurses. 

    One more option that will reduce monthly expenses, and boost your rent a bit too is to buy a new home. All maintenance for the first year is covered under the builder warranty and everything is so new your CapEx will be super minimal for a long time. Plus renters are willing to pay a premium for brand new rentals too.

    There are a ton of new home communities in Roseville in particular that are under $600k. Many of them are offering pretty good incentives too, I was just able to negotiate one down $30k this last week, so many of them are looking to cut deals now. 

    1Reply
  • Jim Moore
    Investor · Member since 2024 · 16 posts · 10 votes
    2y

    Hi @Nupur Kohli

    Sacramento is a good market and your numbers are in line. It may be worth considering, at least running the numbers, on how another market outside of California compares. I'd be happy to share my experience with you if you wish to connect. 

    Best of luck. 

    1Reply
  • Mark McDonough
    Real Estate Agent · Sacramento · Member since 2024 · 6 posts · 5 votes
    2y

    Hey Nupur, 

    My team works with investors looking to buy in the same areas, and the same price range.

    Have you looked into more savvy strategies, like a Sober Living ?

    These pay by the bed , with multiple beds to a room.

    I can recommend a few other places around our investors are buying in the 500k-550k, 

    such as Citrus Heights and Rosemont that would be a great area for a Sober Living. 

    We also have a local property manager that verifies the rent rates for each property we analyze. 

    I'd love to talk more , and answer any questions. 

    1Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    This is typical cashflow issue with Class A and other high value properties.

    Rents do NOT increase linearly with property values.

    Logical Property Management4.9446 Reviews
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  • Nupur Kohli
    OP
    Member since 2024 · 3 posts · 4 votes
    2y
    Quote from @Michael Smythe:

    This is typical cashflow issue with Class A and other high value properties.

    Rents do NOT increase linearly with property values.


     Thank you for sharing your thoughts!

    1Reply
  • Mike PaolucciBusiness Member
    Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 492 posts · 550 votes
    2y

    Hey Nupur. I know the feeling. I'm born and raised in San Francisco and found it pretty hard to find deals that the number and landlord laws made sense. 

    I ended up choosing to do that and haven't looked back. I'm not a big believer in running a negative for investment properties. If it doesn't make money, it doesn't make sense. Think about out of state. I ultimately chose the Ohio markets and have been pretty happy with my decision to do so. So much, in fact, that I decided to move to the state. 

    Good luck on your investment property search! Happy to answer any questions you might have. 

     

    [email protected]614-892-9184
    Reafco - Mike Paolucci 512 Reviews
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    1Reply
  • Joseph Bui
    Lender · Nationwide · Member since 2023 · 362 posts · 237 votes
    2y

    personally, not a fan of losing money every month in the “hopes” that you will make up for it in the long run. Add in a large maintenance issue and you will be in a large hole. Why not invest in markets that cash flow from day 1?

    1Reply
  • Nikki Banj
    Member since 2024 · 4 posts · 0 votes
    2y

    Hello everyone,

    I am new to real estate investing and have two rentals. I want to put the rentals under an LLC for protection against liability. Any recommendations(contact) for an affordable real estate attorney and type of corporation to form? Located in Texas. Thanks!

    0Reply
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