Sacramento, CA multi unit advice

[Kevin G.]

Hello everyone. I'm looking for some thoughts specifically for the downtown Sacramento market targeting either a two to four unit building or a 5 to 6 unit.

I'm hoping to get some opinions on:

Pros and cons of each (less than and more than 4 units).

Current rents you are seeing for a 1 bed and 2 Bed.

Buying in a good location with a building already and great shape or try to find a fixer.

Best locations/ neighborhoods to target.

Ideal cap rate and or cash on cash rate target, etc.

Current rates / down payment requirements for a >4 unit building.

It would appear to me that this market is more about appreciation of the asset than large cash flow.

I am not looking to house hack, flip etc. Looking to buy an income property in my local area.

I don't know where/how to start in other areas so open to feedback on this topic too.

Any guidance would be appreciated.

[Scott Scoville]

Quote from @Kevin G.:

Hello everyone. I'm looking for some thoughts specifically for the downtown Sacramento market targeting either a two to four unit building or a 5 to 6 unit.

I'm hoping to get some opinions on:

Pros and cons of each (less than and more than 4 units).

Current rents you are seeing for a 1 bed and 2 Bed.

Buying in a good location with a building already and great shape or try to find a fixer.

Best locations/ neighborhoods to target.

Ideal cap rate and or cash on cash rate target, etc.

Current rates / down payment requirements for a >4 unit building.

It would appear to me that this market is more about appreciation of the asset than large cash flow.

I am not looking to house hack, flip etc. Looking to buy an income property in my local area.

I don't know where/how to start in other areas so open to feedback on this topic too.

Any guidance would be appreciated.

Hey Kevin,

I'm an investor and agent in Sacramento. The downtown market has been hit hard since the pandemic, higher crime, vacancy, and homelessness. However, I believe wholeheartedly that downtown will come back in the long term. With that being said, the buying opportunity is now and over the next year or two, as there are lots of deals and motivated sellers in the downtown market. I'd suggest that you look for value add or distressed sellers, but make sure to have lots of reserves and runway to navigate this time. In 5-10 years, appreciation and rent growth will make the folks that stuck it out in the downtown look like geniuses. Just know that it's a longer time horizon. Let me know if you'd like to chat about this more.