Thoughts/Comments on Market for Newbie Investor - Sacramento, CA

[Art P.]

Hello BP community, I noticed there aren't too many forum posts regarding foreclosures and wanted to pick your brain a little regarding financial analysis for a first time investor. I'm currently searching my home county of Sacramento for potential Duplex/Triplex/Fourplex investments, but the current expensive market price and potentially reasonable offer will not create significant cash flows with residences available at this time. I can wait for a better time if needed. Any potential suggestions on being able to get over 1-1.5% Rent/Purchase Price? 

The other option I'm looking into are foreclosure properties. I plan on performing my due diligence on any potential property, but many appear to be condo's or single family residences and not too many 2-4 units. I understand some of the risk of going this route and would plan to use a hard money lender for initial financing then refinancing with a traditional residential mortgage or FHA if I qualify after bringing it up to livable conditions. The question is, without being able to physically inspect the property, what suggestions would you give me to look into or work on to land a good deal and not "get caught with my pants down"?

Background, I've gone through the starter videos through BP, am eager to jump in and begin figuring real estate out hands on, know how to perform financial analysis, but am inexperienced with Real Estate as a whole.

[Wes Blackwell]

Hi @Art P.! Great question!

First and foremost, are you working with a real estate agent? Or do you have direct access to the MLS? If not, you're completely missing out. Zillow, Trulia, Redfin, etc. were not designed with the real estate investor in mind, and are often missing the critical information you need to make a doo investment decision.

The reason I say that is that there are a TON of properties that will cash flow in this county. Of course, it's really going to depend on your financing terms, but I talk with multiple investors about 2-4 unit properties in this county every single day. Let's connect on here and I'll send you a list so you can see for yourself.

The reason there aren't that many foreclosures is because it's way too easy to simply list your home on the market and sell it for full price in less than a week if you get behind on the bills. The big foreclosure crisis happened when a ton of homes hit the market all at once, everybody was upside down, and few people could buy. But in the market today, you can unload a troublesome property in less than a week. And the reason so few of the are 2-4 units is because even if the owner runs into some financial trouble, they still have several tenants generating income, so they're a lot less likely to fall behind.