Toronto ON, Canada · Member since 2016 · 96 posts · 26 votes
Hello,
I live in the Sf Bay Area and as a novice RE investor I feel I am priced out of this market. So I was looking around for better places where properties are still affordable and worth while investing within a 2 hr radius and I found Merced CA. I recently went on a tour of Merced CA, It looks like a University town and has a healthy amount of student population. I am wondering if any one out here has researched the place for investments and if any one has experience in investment properties in Merced?
Merced, CA · Member since 2013 · 9 posts · 8 votes
10y
@Account Closed
It's hard to carve Merced up by zip code but in general, I would stay away from most South Merced properties, that being south Highway 99. There are other pretty rough areas too that I would avoid. In general, anything east of G Street and North of Bear Creek would be a good B or better neighborhood, with a few exceptions. Also, west of G Street and north of the Black Rascal Bike Path that runs through town (check out google maps). These are very general but should give you an idea.
Then there is downtown. I'm personally looking for deals in pockets of downtown. The UC is going to build their administration building downtown and there will be 100's of new workers stationed there. I think it represents a good opportunity if you're looking to buy & hold as i am. These are just my opinions. Let me know if there is anything else I can help with.
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
10y
Merced was hit real hard and has been slowly recovering. Having property near a school is always a great situation. Has the school been around for awhile? Do you know of it financially sound? Of you think that your renter will be a student be sure to account for perhaps vacancy of 2 to 3 months and the wear and tear. I have not looked at the stats for Merced as far as unemployment and the types of jobs in the area. You should check into that too.
Toronto ON, Canada · Member since 2016 · 96 posts · 26 votes
10y
@Jo-Ann Lapin Thank you so much for your insights. I was looking around Bay Area for investment opportunities and since Merced happens to be 120 mi away felt I should check the city out. The University out there is part of the University of California system and was established in 2005. Currently the student population is close to 16K but the university is growing and I have read they plan to increase the student enrollment to over 25K.
As the University belongs to the UC system and is a public university I feel fairly confident about it. Also student housing appears to be a recession proof investment ( I think). Though the university has its own student housing on campus, its pretty expensive (about 14K/yr) compare that to (about 7K) for off campus. Almost 50% lower.
I have not yet verified about the crime statistics but based on what I saw the part of the town within 3-4 miles of the university seemed to be nicer with decent restaurants some shopping etc.
I know unemployment could be a big factor given the town is small and to think about if investing in rental properties. But as the demographic being targeted is student population I think that risk is mitigated. Yes what you say is true the vacancy with student rental is higher as compared to conventional tenants.
I sure would appreciate if you would like to add in any thing else.
Lender · Corona, CA · Member since 2016 · 47 posts · 10 votes
10y
I would say if the spread is right after crunching the numbers do the deal. It you are looking for returns on thru rental income then you should really study the area carefully.
Merced, CA · Member since 2013 · 9 posts · 8 votes
10y
Vamshi Ananth I live in Merced and would be happy to provide some insight. The info you found on enrollment at UC Merced is pretty inflated. Fall 2015 enrollment was 6,685 students. The campus does lack enough housing though so there is a pretty large demand for rentals. Make sure you research which neighborhoods the UC's bus system makes stops at as parking on campus is limited and the majority of students are not able to park there whether they have a car or not. Let me know if you need anything here in Merced and I'd be happy to help if I can.
Investor · San Jose, CA · Member since 2015 · 23 posts · 6 votes
10y
Brandon,
I'm also interested in making some student housing investments in Merced.
Which areas do you recommend I buy in? Is there a zip code or names of streets you could refer me to? Any local Realtor or Property Manager you could refer me to?
Merced, CA · Member since 2013 · 9 posts · 8 votes
10y
@Account Closed
It's hard to carve Merced up by zip code but in general, I would stay away from most South Merced properties, that being south Highway 99. There are other pretty rough areas too that I would avoid. In general, anything east of G Street and North of Bear Creek would be a good B or better neighborhood, with a few exceptions. Also, west of G Street and north of the Black Rascal Bike Path that runs through town (check out google maps). These are very general but should give you an idea.
Then there is downtown. I'm personally looking for deals in pockets of downtown. The UC is going to build their administration building downtown and there will be 100's of new workers stationed there. I think it represents a good opportunity if you're looking to buy & hold as i am. These are just my opinions. Let me know if there is anything else I can help with.
It's hard to carve Merced up by zip code but in general, I would stay away from most South Merced properties, that being south Highway 99. There are other pretty rough areas too that I would avoid. In general, anything east of G Street and North of Bear Creek would be a good B or better neighborhood, with a few exceptions. Also, west of G Street and north of the Black Rascal Bike Path that runs through town (check out google maps). These are very general but should give you an idea.
Then there is downtown. I'm personally looking for deals in pockets of downtown. The UC is going to build their administration building downtown and there will be 100's of new workers stationed there. I think it represents a good opportunity if you're looking to buy & hold as i am. These are just my opinions. Let me know if there is anything else I can help with.
I agree with Brandon. On my first visit to check your Merced last week I found the area around UC to be good. I still have to do my research on Merced but so far It looks good for investment if any one is targeting the student community and has the numbers right.
Vamshi Ananth I live in Merced and would be happy to provide some insight. The info you found on enrollment at UC Merced is pretty inflated. Fall 2015 enrollment was 6,685 students. The campus does lack enough housing though so there is a pretty large demand for rentals. Make sure you research which neighborhoods the UC's bus system makes stops at as parking on campus is limited and the majority of students are not able to park there whether they have a car or not. Let me know if you need anything here in Merced and I'd be happy to help if I can.
Brandon, I plan to visit Merced again this weekend to check the town out again. I would be happy to meet you over a coffee if you have some free time.
In February, we closed on a multi-family apartment investment in Merced. You are correct, Merced has some attractive long-term trends working in its favor, mainly driven by the significant investment coming in over the next 10-15 years by the UC. Although it does have many of the early characteristics of a traditional remote college town investment thesis, I'd say we are still a few years out from the student population truly mitigating potential vacancy issues.
Merced and surrounding cities from Modesto to Fresno are still very much driven by an agricultural economy, with seasonal employment swings. However, manufacturing and public service jobs have also become more prevalent as sources of stable long-term employment. As a result, incomes tend to be lower, and thereby rental rates as well. In the near-term, rather than seeing Merced as a traditional college town supported by student rentals, we look at Merced investments as providing rental units for the employees of the growing economy. By 2020, over 8,000 new jobs are expected in the region as a direct result of UCM's growth. Keep in mind, there is still plenty of vacant land zoned for residential development near the University. Undoubtedly these developments will absorb capacity for student rentals as new units are added to the market. However, the growth in student body should outpace supply, which is why for the long-term, we see the student population eventually providing a stable rental base as the city moves more toward a traditional college town investment.
I agree with the insights shared by @Brandon Williams regarding areas to invest in. Our recent investment was in downtown, a few blocks from the new $46MM UC Merced Downtown Center, opening Fall 2017. The UC is undertaking a concerted effort to link the university to the downtown core, which is a positive step for the city as a whole.
Investing in Merced has the potential to piggyback on the future UC growth. I see every MFH property that comes on the market, and I would imagine most of the off-market opportunities as well. If it is helpful, here is a link to the press release which has some more data on the Merced market: BENA Capital Announces Multifamily Acquisition in Merced
Toronto ON, Canada · Member since 2016 · 96 posts · 26 votes
10y
@Yousif Abudra great piece of information and congratulations on your new acquisition. I share some of your thoughts about Merced as well and hope to find my first investment property soon.
Flipper/Rehabber · Turlock, CA · Member since 2015 · 94 posts · 30 votes
10y
@Brandon Williams You seem knowledgeable about the Merced market. I am from Fresno (currently moving to Madera) and work in Merced (Hilmar, CA). Brandon if you ever get a chance I would like to show you some deals I analyzed to get your feedback on... Let me know. I stay in Merced during the work week. I am mostly looking to get info on rating areas in Merced. I can print out a Google Earth Map and we can mark it up with a big phat RED PEN! let me know :)
Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes
10y
At Anmmar - If you have deals in Merced - I would be interested in seeing them - I am starting to look outside the Fresno area but have no feet on the ground in Merced. We should get together and talk about finding some deals there - I'm trying to expand out of Fresno
Flipper/Rehabber · Turlock, CA · Member since 2015 · 94 posts · 30 votes
10y
@Jay Orlauski Hey Jay I am willing to share notes with you and market info as always buddy :). I keep a close Eye on Merced and Madera. Just visited a couple properties on Friday in Madera. One was bank owned and went pending today. I was not able to find a buyer fast enough. It was listed by the bank for higher than I would have offered but I am going to see how much it sold for.
Merced, CA · Member since 2013 · 9 posts · 8 votes
10y
The City of Merced Police Dept participates in a pretty cool online tool called crimemapping.com. It could give some of you who are unfamiliar with the area an idea of areas you may want to avoid.
The City of Merced Police Dept participates in a pretty cool online tool called crimemapping.com. It could give some of you who are unfamiliar with the area an idea of areas you may want to avoid.
Investor · San Diego, CA · Member since 2014 · 592 posts · 765 votes
10y
Just FYI, maybe 75% of Merced sits on a flood plain and flood insurance is wickedly expensive. The areas closer to the University are not on a flood plain, so it might not matter for you, but it's something worth checking on.
Yes, good observation. For our investments, we have flood insurance to help mitigate that risk. The premiums can be significantly reduced by obtaining an elevation certificate for the property. Either way, that cost and risk should be baked into your pro forma numbers.
Yes, good observation. For our investments, we have flood insurance to help mitigate that risk. The premiums can be significantly reduced by obtaining an elevation certificate for the property. Either way, that cost and risk should be baked into your pro forma numbers.
How much does it cost for the surveyor? I've read as low as $350 on the internet but the only time I ever got a quote it was closer to $900.
Flipper/Rehabber · Turlock, CA · Member since 2015 · 94 posts · 30 votes
10y
If you want to find out whether a property is located within a special flood zone go to:
https://msc.fema.gov/portal and just enter the address you are looking at. If you need help let me know. I do this on a regular basis for Ag Properties in California.
Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes
10y
Originally posted by :
I was not able to find a buyer fast enough. It was listed by the bank for higher than I would have offered but I am going to see how much it sold for.
I did not get a phone call from you about this - you did not look for a buyer hard enough! call me next time- you know I got buyers on the sidelines looking for a good deal...
I just found a property in Merced that could be a good candidate -maybe you can look at it for me and see what you think about it .. I'll PM you the details