Rentals: Is Sacramento - or even California - worth it?

[David Zocchi]

This is my first post on the forum, though I've read most of the threads and I attend most of the webinars and listen to the podcast. Trying to get my brain fully around the many options for REI, and there's a lot to learn!

My goal for getting into real estate is to generate passive income that will allow me to do less consulting work. I already "quit" my job - or more accurately bought it - so I can set my own schedule and all that good stuff. It pays well, but requires travel and I'd like to be able to spend more time at home and be more selective about the projects I take.

With that in mind, I've looked around a bit and I'm having trouble convincing myself that I should be looking locally for rental property. CA taxes, the Sacramento market's price/rent ratios and some of the CA tenant rights all have me a bit scared off and thinking about looking into other markets. 

So, is it worth looking for rental properties locally? Are Nevada/Oregon/Arizona potentially better options?

Interested in what the folks on this forum have to say. I appreciate it!

[Joe Bertolino]

There are still deals that cash flow from Day 1, have built in equity and are in solid locations. Here is the key... you have to be ready to perform when they fall in your lap. The reason these deals rarely go to new investors is because they are not ready to go. They are timid and second guess good opportunities when they do pop up. Good deals in Sacramento and surrounding areas, on and off market, get tied up in a matter of hours or days. You need cash or hard money (you can refi later) and you need to do direct marketing or an agent (usually also an investor) that is active with investment grade properties in your target area. Are they mailing, calling and door knocking NOD's, delinquent Taxes, Divorce, FSBO's, code violations... or are they sitting in their office and running a MLS search. When they lose a good deal on the initial offer do they stay in touch with the listing agent to see if it falls out or hits a bump?

I see deals every week as an investor and an agent.  If I can't take it down then I get other cash buyers I know involved.  I have tried to bring deals to new investors but they are rarely serious and in the position to pull the trigger.