Investing in the Greater Sacramento Area

[Chelsea Layton]

Hi all -- this is my first post here on BP!

I live in the San Francisco Bay Area and work at a software company in the East Bay. My fiancé and I are planning our current and future finances. We are in our mid-twenties and are looking to start our real estate investment portfolio. Our overall goal is to generate a portfolio that can generate passive income.

We are interested in single-family homes and multi-family properties, specifically in the Greater Sacramento area due to the rising cost of Bay Area housing. We are looking to buy and hold properties that generate passive income.

Between our combined incomes and savings we are confident that we can find our first investment home within the next year. We also both have good credit and manage to live within our means (no outstanding debts). We have done some basic reading in books and blogs about investing principles, so we're fairly new to rental investing, BUT we're eager to learn and hear what people think.

We have also spent time researching rental properties in the Sacramento area. Redfin has listed some multi-family properties at $180k-$400k but rent prices are around $1,200 for a 2 bed/1 bath unit. It seems that these types of properties would not meet the 1% rule (i.e. $1,000 in rental income for every $100,000 spent purchasing and fixing property) or have a great Cap Ratio. However, I understand that you can still have positive cash flow without meeting the 1% rule.

I am wondering if anyone cares to disclose their successes (or failures) and share some tips for achieving positive cash flow in an up market. To reiterate, I'm less concerned with affording the up-front costs of a property as much as I'm concerned with generating positive cash flow after the purchase. Please, let us know what you think.

Thanks in advance!

Cheers!