Sacramento Market SFH Reconnaissance

[Alexander Price]

This weekend I took an adventure with my investing partners out to Sacramento to look at some SFH properties at $300k and less. It started with a list that we had crunched the numbers on that looked like they could be profitable. Some more than others, but we did not expect to buy our first time out. The initial list I sent our realtor had ten properties on it that we analyzed from the MLS. By the time the list got to him to review and back to us, only two were still on the market. (By the time we arrived in Sacramento, only one was on the market).

Getting our realtors response about most of the properties with detailed analysis being off market, I quickly went back to the MLS. I exported the most recent batch of listings to excel and ran some quick numbers on 23 properties. With conservative estimates, only one of the properties cash flowed on paper, and not well. We sorted them out by highest to lowest prospects based on our realtor's review.

The team met with our realtor and discussed our plans for the day. We looked at five properties and learned some interesting things. First, the competition for SFHs was high, and people were paying well above list price, likely above the value of the house. The competition was coming from families who wanted to live in the houses. Second thing we learned, is the DOM was often less than 5-10 days for any real deal. The market is moving quick, and us being new to the game, we are slow. Thirdly, driving all over Sacramento, while educational, is not the way for us to learn the market. We have decided to redouble our efforts to the Southern Sacramento area. 

After a grueling day looking at houses, and a meetup with @David Hutson, I concluded that maybe in Sacramento the SFH market cannot really be gotten into easily using solely the MLS. It may be easier if I was a a cash buyer. Considering that the team is going conventional with 20% down, we are also not going to be entertained as well when we offer lower than asking price.

We are now opening up to MFHs. Curious if others out there share in my experience, have guidance, a deal or comments.