Buy and Hold Cash Flow in Sacramento

[Alex Graebe]

I currently live in the Bay Area and am looking to invest in a "buy and hold" rental property.  Since home values have skyrocketed and properties don't cash flow in the Bay Area, I have looked to surrounding areas in California that I can drive to.  

My question is, from the research that other people have done in the area, is Sacramento a good "buy and hold" market to obtain a rental property?  My analysis indicates that a property here would only have a rent-to-home value ratio of 0.5-0.6% and be either break-even on cash flow or slightly negative.  This is of course not as ideal as other areas such as the midwest where home values are much lower and rent-to-home value ratios are considerably higher (1.5-2%).  However, being that it's my first property, I'm very hesitant about buying a property in an area I don't know across the country, sight unseen.  I envision a much greater growth and future appreciation in the Sacramento area, but am fearful of buying a property that is borderline cash flow negative.

[Ash Hussain]

Joe Bertolino I'm looking at the same angle but elsewhere in CA... the Accessory Dwelling Unit provision applies statewide! Where would be the best place to find out about prefab units for $50-60k? Thanks for your help!

[Sanj Kumar]

For the most part, i agree with all of the experiences and suggestions being posted here.  I was investing in Sac from Silicon Valley and realized the potential several years ago.  It took some personal sacrifice as i had to spend time away from my family, lots of saving (no $10/drinks at Santana Row with the boys), lots of hustling, weekend drives, self-management, investing in rough neighborhoods and a lot of failures for me to understand and appreciate where i am today.  I recently moved to the area and expanded my rental business while working full-time.  Sac has been an awesome place to work, live, play, invest and have great local craft beer!  I'm in this for the long haul and am looking forward to networking with Realtors who can connect me with wholesale properties, investors who want to grab a beer to network and buyers who are looking to partner on future potential deals.  Happy Hunting!