All Forum Posts by: Derek Daun

Just out of curiosity, how could things play out if there were two offers with escalation clauses submitted? For example say:

• Highest and best = 150k
• Offer B = 3k above highest and best, maximum of 170k
• Offer C = 5k above highest and best, maximum of 180k

What price does C get it for? 155, 158, 175?

@Dylan Grabowski, Oh, I see. You mean you'll live in the more expensive unit if you have too, but would prefer if you could get the other tenant out and switch if possible. I assume you can just not renew the lease if you'd like.

You need to be owner occupied in order to qualify for the FHA, so I'm not sure how the "if the tenant moves out" part of the plan works with the loan process. Maybe someone else can explain if there's a common way banks handle that on multi units.

I haven't done it, but I did work with a friend on penciling out a business plan for raising his high water bungalow midtown. He had a quote for $13k to do the actual raising and lower of the house. That's just for the company to put the beams in place, jack it up, and then come back later on to lower it onto the new foundation and remove the beams. 

We figured we could do the project for about $100k acting as our own general contractor, and doing some of the finish work ourselves. But take that estimate with a grain of salt.

Invest money in property.

Then sell the car and use money to invest in second property. No one is saying buy a junker. But the difference between a 45k car and 12k used car is negligible in the amount of utility and happiness it buys. Actually, the cheaper car makes me feel happier.

The thing about Orangeville is that it doesn't have the jobs of Roseville or Folsom. This generally makes it a second choice to those two cities based on prices. As someone who works in Folsom, I only know people who live there because it was cheaper to buy/rent. This will put price caps just below what ever those cities are running at. 1/1s might have a larger gap as renters are more likely pay a little more to live closer to work and amenities. I don't really follow the market over there though, so I could be off base.

Originally posted by @Bradley Ward:

.95% is quite close to the 1%, good job! The neighborhood surrounding this property is fair (Orangevale). There are a few particular locations around Sacramento that I have been avoiding, such as Del Paso Heights.

.95% was in 2015, which is ages ago in terms of market advancement. My 2016 project was .85%. I currently don't see anything better than .75% for 2017 unless I change my strategy.

Cross streets?

If your numbers are accurate, it seems like a good deal.

3k/month for a purchase + rehab cost of ~292k is close to a 1% rent/price ratio, which is better than the .85% and .95% I hit on my last two projects. Location in the city is going to make a big difference  though. If these are located in a rougher part of town, the rents might be more variable, with higher turnover costs, and less favorable appreciation. In that case, that 1% number would have much less meaning.

If we're talking classic rent control; where rent can't increase beyond a certain percentage for current residents, and can only be raised when the property is turned over; I don't see it happening. There's so much data showing how poorly this model works, and Sacramento is still so young from a development standpoint, there wouldn't be enough support for a plan like that. 

Like the article said, NIMBYism is becoming an issue. That problem might fix itself to some degree (at leas in midtown), as land prices continue to go up. Eventually the SFR owners won't be able to resist just selling out, and then they'll be ones arguing why the new condo development on their property is actually a great idea now.

Yes, minimum $800 tax fee is payable every year.