Investor · Bay Area, CA · Member since 2017 · 85 posts · 35 votes
New to Biggerport. I am in Bay Area and made some buys and holds in period of 2009-2013. Stop doing this in past 3-4 years as I cannot bit higher enough to get a good deal. So I decided to move to Sacramento area now. I know Sac is getting hotter. But I still believe it has room for a long term investment. But I don't know general area of Sac. Appreciated if somebody would give a general description of good/decent areas for SFH and bad areas I need to avoid. Is it possible for SFH $250K price with $1500/monthly rent?
Hi Jim! The scenario you described of $250k purchase price and $1,500 rent is definitely possible. Recently purchased my own house for $260k, 3/2 on a quarter acre with a pool, down the street from a park and in a good school district with low crime, and could definitely get $1,500 rent for it.
Although, at $250k purchase price, 25% down and a 5% interest rate (typical for investment properties) your monthly mortgage payment will be roughly $1,340 per month. By the time you add in some utilities and repairs, you probably won't cash flow much if at all.
Even at just 6% appreciation, you'll be adding another $15k or so in value per year, and then you could sell it at the peak of the market if you like and make your money then or 1031 exchange the equity into another investment property without paying capital gains on the profit.
One thing you might want to consider is looking at 2-4 unit multifamily properties (duplex, triplex, fourplex) as the lending is the same as other residential and it's much easier to get a return.
As far as neighborhoods go, it's really street by street, so you need to look at each property individually and can't just assume a neighborhood is good or bad based on the zip code.
BUT -- if you want a general suggestion of areas to look in where you may be more likely to find a good buy, I would try looking in Carmichael, Citrus Heights, Arden Arcade, North Oak Park, North City Farms, etc. I know of a few more hot spots but can't give away all my secrets in public hahah.
What's most important to you about this property? The cash flow? The neighborhood? The loooooong term potential (10+ year hold)? Let us know more and perhaps we can point you in the right direction to find what you're looking for.
Hi Jim! The scenario you described of $250k purchase price and $1,500 rent is definitely possible. Recently purchased my own house for $260k, 3/2 on a quarter acre with a pool, down the street from a park and in a good school district with low crime, and could definitely get $1,500 rent for it.
Although, at $250k purchase price, 25% down and a 5% interest rate (typical for investment properties) your monthly mortgage payment will be roughly $1,340 per month. By the time you add in some utilities and repairs, you probably won't cash flow much if at all.
Even at just 6% appreciation, you'll be adding another $15k or so in value per year, and then you could sell it at the peak of the market if you like and make your money then or 1031 exchange the equity into another investment property without paying capital gains on the profit.
One thing you might want to consider is looking at 2-4 unit multifamily properties (duplex, triplex, fourplex) as the lending is the same as other residential and it's much easier to get a return.
As far as neighborhoods go, it's really street by street, so you need to look at each property individually and can't just assume a neighborhood is good or bad based on the zip code.
BUT -- if you want a general suggestion of areas to look in where you may be more likely to find a good buy, I would try looking in Carmichael, Citrus Heights, Arden Arcade, North Oak Park, North City Farms, etc. I know of a few more hot spots but can't give away all my secrets in public hahah.
What's most important to you about this property? The cash flow? The neighborhood? The loooooong term potential (10+ year hold)? Let us know more and perhaps we can point you in the right direction to find what you're looking for.
Investor, Agent, CPA · West Sacramento, CA · Member since 2009 · 706 posts · 262 votes
9y
@Jim G., Sacramento definitely is getting hotter and it's very interesting to see everything that is happening here. As others have noted above, although looking at an area and zip code can give you a general idea of what to expect, you definitely need to look on a street by street basis. Sacramento has many pockets - you can have a great area with a really bad street that you probably want to avoid at night, and at the same time you can have what looks like an undesirable area with an awesome street and great residents.
This will be a major topic addressed at the Summit that @Al Williamson is organizing. Various areas of Sacramento will be covered and it's a great opportunity to meet local investors.
Davis, CA · Member since 2016 · 595 posts · 344 votes
9y
as was mentioned, hardest thing about sac... for me, is the very small analysis needed for neighborhoods. Some cities, you can just say X neighborhood. and be good or not. Here it is nope, turn right off of washington street, and you are toast. turn left, 100k more. really need a good realtor to run your comps. 1/4 mile zillow is worthless.
Realtor · Sacramento, CA · Member since 2015 · 70 posts · 34 votes
9y
Agree with all previous comments. These are regular posters on BP and know what's up. Working with clients right now looking at the exact same thing. It's still a bit of a challenge but they are succeeding.
I'd recommend taking a drive to check it Sacramento. It will give you a much better perspective as to what everyone is saying here.
Ive lived in Sac almost my whole life. Happy to answer questions and share info. Replying on my phone so single finger typing is just not productive. Msg me if interested.
If you are purchasing at $250K and renting at $1500 be aware this is a negative cash flow property. If you are speculating on appreciation that is a viable option but you will need to contribute cash out of pocket to the monthly income to sustain the purchase.
Investor · Bay Area, CA · Member since 2017 · 85 posts · 35 votes
9y
I have to call off to attending this summit in last minutes, for my son's band need me on Saturday. Is it going to be recorded the session, @Al Williamson? I feel these two sessions may be the most interesting:
1:00 PM
Insider's look at sweet spots in West Sacramento with Sergey Tkachev (3x3 Talk)
1:45 PM
An overview of Oak Park real estate with Sam Allen (3x3 Talk)