All Forum Posts by: Christian Dowell

@Brian Gamido

Sounds like we share common interests I am interested in a similar criteria - multi family buy & hold with some renovation (but not major work, like foundation repairs), but I have been struggling to find anything in the Bay Area that is has any meat left on the bone. Since the Bay Area has been such a hot market, both for investors and for consumers, it's been challenging to find markets in the Bay Area that are strong. I have begun pushing my search out towards the Midwest in Kansas City & Indianapolis as a result.

@JaNae Anderson

Brian - First off welcome to BP, it looks like this is one of your first posts! Glad to have you hear, be sure to check out the podcast as well as a few of the literary resources, they are excellent for familiarizing yourself with the jargon & concepts frequently thrown around on BP Forums.

To get to the meat of your post, Vallejo definitely has crime issues, there is no doubt about it. Glen Cove & North/NorthEast Vallejo are much safer areas, but JaNae is correct, these are more expensive areas.

In my opinion, it depends on the type of investing you are interested in. I am primarily a Buy & Hold investor focusing on rental properties - for me Vallejo is a no-go for two reasons: high crime rate and little to no cash flow. 

For an investment that is focused on natural appreciation (as opposed to forced appreciation) of the residence, then Vallejo might be feasible as JaNae has indicated, as this is a city whose real estate market is getting bolstered by the strong SF economy and continues to grow. However, I don't choose to invest on natural appreciation, as I cannot predict the market, I cannot guarantee that my investment will increase, and I have little control that I will be able to increase the value of that home. 

That being said, if you can find a deal in which you can force the appreciation up quickly by via flipping the house, then there is definitely a market to do so in Vallejo. Nonetheless, I would be careful when running your numbers, be conservative in your comp estimates, and be sure you work with a realtor or someone who knows Vallejo real estate well.

What type of investing are you interested in?

Please reach out if you have any further questions on your real estate journey!

 Sacramento City itself? Or the suburbs? Are you investing for cash flow or appreciation?

@Matt Smith ignore my question I just posted on your forum Re. Vallejo. Just saw this!

@Matt Smith I can't say that I have looked much into Short Term Rentals like AirBnB in Solano County. Out of the three Solano County cities you mentioned - Vallejo, Fairfield, or Benicia - my gut feel is that Vallejo will cash flow best. but a a cost due to the challenges of crime & the economy there.

In general, the safest & nicest area of Vallejo is known as "Glen Cove" - if you look at google map, it is bordered on the North by 780, on the West by 80, on the East by Benicia State Park, and on the South by the Carquinez Strait. There are a few exceptions within Glen Cove, specifically on Magazine Street heading East, but in general this is your best bet.

I know there are condos that are for sale in that area that might be a good first bet for an AirBnB, but make sure the numbers work out. What made you want to do AirBnB in Solano County v. San Francisco, Berkeley, Oakland, San Rafael, or even Albany? Cost to enter the market?

Hey Matt,

I am a Vallejo native - Vallejo is a tough area. While the RE market is definitely picking up there, it's home to some of the most dangerous areas in all of California. What type of investing are you interested in? Flips? Buy & Hold? Short-Term Rentals (AirBnB)?

Hey @Lindsey Olson,

I have lived in Solano County for nearly my entire life. I agree with @Preston Tziouvaras assessment with the exception of Vallejo. There are a few small pockets that are good in Vallejo, but they are hard to find; in general, stay away, especially if you aren't super familiar with the area.

I think Wes Blackwell is right - buy and hold is challenging here since prices are very expensive, and the majority of them do not come close to 1% rule from what I have seen. Prices have dramatically risen since the crash and real estate is very expensive here.

Solano County is cheaper than the rest of the Bay Area (separated from East Bay by one bridge, from San Francisco by two bridges), but it's still being impacted by extremely high prices in San Francisco/San Jose/Oakland areas. Compared to OKC, it will be a bit of a shellshock.

I recommend sticking to your roots in Oklahoma and eschewing investing in Bay Area for now, unless you are willing to swing around some serious capital on flipping. Even a distressed house in Solano County is going to be selling for no less than $250-$300k - in the East Bay no less than $450k, unless you are focused on Condos which will sell for cheaper.

Feel free to reach out for more advice and welcome to Solano! I could put you in contact with an investor's realtor if you are still interested.

Also - move to Benicia! It's a great town!

Sharon,

A bet on appreciation is definitely a risky one. I definitely know that, within Benicia (especially at the condos), there were quite a few that were underwater in 2008. Only reason I know this is because I have friends and family who bought those as all-cash deals from a foreclosure on the home. This was before I knew about REI...missed the boat on that one!

Again, if you have any questions on Benicia area, just PM me. I currently live in that area and was born and raised there.

Hey Sharon,

Welcome to BP. Are you from Benicia? Is this one of the condos on Shirley? If this is a 2Bd/1Ba on Shirley, your rent might be able to go up.

Take a look at the return on your investment (ROI). You are putting $50,000 down on an investment property and getting $876 back annually. This is not even a 2% return on your investment - you'd be better off investing in a CD through Charles Schwab or Vanguard that has a guaranteed rate of return that is higher, not to mention no headaches on vacancy, property management, nor repairs.

Additionally, I think your numbers are optimistic. I know the property managers in the area, and 6% is too low for them. Most are 8-10%.  You will also need to account for Insurance.

Try to look at the history of the HOA payments - how significantly have they gone up in the past few years? If they are already climbing, they can quickly continue and dig into the minor profit margin you already have.

In my opinion, Benicia is a great town to invest in 5-7 years ago. Currently, prices are too high to incentivize investors to purchase rental properties. That is why there are a few multi-family units marketed at "investors" in the area that have sat for 6+ months.