Vallejo or Sacramento?

[Rami Aweti]

Hello Everyone,

I've been looking at rental properties in Vallejo and Sacramento for over 6 months now and can't make a decision. Where do you think makes the most sense for the long-term?

In Vallejo, I can get a small single family home that would pay for itself and maybe cash flow a bit. In Sacramento, cash flow seems more likely as I can get more home for my money (and possibly a duplex). Vallejo seems better positioned to catch appreciation with its close proximity to the Bay Area market. I am cautious about Sacramento because I know the underlying land is not that expensive and any property I purchase is susceptible to being undercut by developers. This is my dilemna. I would love some clarity!

[Brian Burke]

@Rami Aweti I have dozens of SFRs in each of those markets. My Vallejo houses outperform the Sacramento houses on a portfolio basis. That doesn't mean that I dont have a few Sac houses that do better than Vallejo, but as a whole Vallejo has done better. I'm not convinced which has gone up in value more but all of them have done well.

When running your numbers keep in mind that it's customary in Sac for the landlord to pay water/sewer/garbage but in Vallejo you can get the tenants to pay that, so be sure to factor that in.  Also beware, especially on newer properties, that some Sac properties have Mello-Roos which is a serious hit to cash flow. Avoid those!

Sac or Vallejo?  I say either...or both.  But neighborhoods can be sketchy so buy carefully.