All Forum Posts by: Dan Sundberg

Welcome to the area @Nate McCarthy! I'd second what @Noah Laker said about Citrus Heights. We bought a single family up here last year and converted a garage to an ADU, which rented out really quickly to a great young couple. Not a full fledged house hack, but enough to take the sting out of the rate we got.

Not all of Citrus Heights is the same, but the area near Fair Oaks/Orangevale/Carmichael has a good balance of price and quality. I've sold several homes in this area for my real estate clients too, and they've all been happy up here. 

The short answer is yes, but it's much harder. For example the BRRRR strategy worked with many properties 10 years ago when the average mortgage was cheaper than the average rent. You can quickly see why looking at this graph - https://www.visualcapitalist.com/buying-vs-renting-house-in-...

You can see how in 2015 the average mortgage was cheaper than the average rent, so it was easier to make the math work with light value add and just buying single family homes. Now that's flipped, which makes profitability on a simple rental much harder. 

It's still possible to BRRRR now, but the deal has to be muuuccchhh better and those are just much harder to find.

People are still making it work in real estate though, primarily by getting more creative and often needing to add even more value to make the numbers work. I've had pretty good success the last couple years with a combination of house hacking and building Accessory Dwelling Units. Others are exploring different real estate asset classes all together.

Notice in that chart in the link above, today's trend isn't too different from how things looked basically until 2010.

@Sherry T. It's been great. We're now just about 3 years in and have had solid occupancy. We're now up to $1,900/mo and the current tenant wanted to sign a full year lease so it's a furnished long term rental for the moment. Previously though most of the MTRs stayed 3-6 months, so we've averaged about 3 turns per year, with about 1 week between tenants. 

Also, now ADUs are prohibited from being used as STRs, so it worked out well to target MTR. 

Are you looking into doing something like this too? 

Thanks! Will keep you posted.

@Aaron Provencal wow! You never know unless you ask.Congrats again. 

Thanks @Ezekiel Ayers that's really helpful. Am I doing my math right on this, annual property taxes for a rental are around 5%? 

Thanks for the details on the rental program too. That sounds pretty straightforward and we've got something similar here too and it's not bad. 

Hey BP!

I'm looking for some advice on investing in Michigan generally, and/or Grand Rapids, MI specifically. 

I've successfully completed a few house hacks in California, and am looking into branching out to the Midwest with small to mid multi-family to scale a bit faster. But I feel like I don't know what I don't know when it comes to running numbers in the midwest. 

What are costs associated with snow/harsh winters? Do property taxes fluctuate? What are insurance costs like (we've got a lot of local variability around fire insurance for ex.)? I've noticed a lot of multi-family buildings are pre-WWII housing inventory - are there restrictions or issues common with that (historic districts, crazy high utility costs, etc)?

Also, anyone local to Grand Rapids have any advice on investing there? I went to school in Michigan and worked in GR for several years, so I'm fairly familiar with the areas, but not as an investor. And that was more than 10 years ago.

Thanks!

Nice project! What part of Sac was this in? And how did you find the deal? 

Hi @Sergey Tkachev - could you send me the doc as well? Getting back out to the meetups is my 2025 resolution!

@Nate Jenks - @Andrew Postell did a great job clarifying the big challenge you'd run into pulling cash out with such a low down payment. 

The question to think about is - is that such a bad thing? BRRRRs are a useful tool for the right scenario, but it sounds like you have the opportunity to buy a house with basically no cash in, and with probably some of the cheapest financing available. If you can buy something habitable, and rehab it over time while you live there, that could be a home run of an investment when you look at your return on investment, especially if you house hack.

Sure you may leave cash in the deal, but if you buy right, it could still be an extremely profitable and low-barrier to entry way to get into real estate. I'm on my 3rd house doing just this, and it's been great. That said, I'm looking to BRRRR this upcoming year, but that's only because the first 3 properties allowed us to build up enough capital for this strategy to make sense.