All Forum Posts by: Jeremy Brown

It's tough to do that in the Sacramento area. Run down properties sell for high amounts and contractors and even handymen are expensive. So, it's difficult to do any value add on single family or small multi family and actually come out ahead. Buying at a 20% or greater discount so you get all your money out on a BRRR is going to be very hard.

A more practical approach might be a live-in flip of a duplex where you DIY as much as possible. Fix up one side while you rent the other. Then, switch and fix up the other side. When you’re done, rent out both sides for as much as you can. 
  

Awhile back, I went down to the assessor’s office and they gave me a cd with all owner info on it for next to nothing. You can call and get a couple over the phone. More info on their website:

https://assessor.saccounty.net...

Just a warning, we've had a hard time with appraisals in Sacramento in the last year. Count on being low. If you say comps are $250, do your math with more like $225. If you can get 75% LTV, that still gives you a good amount of cash back out.

Despite doing a bunch of refinances in the last year, I don’t have a good recommendation for who to try to do a cash-out with. We were chasing interest rates with low closing costs. 

Over the last several years, it seems a good return for something listed on MLS has been around 5.5%. That assumes you pay cash and get market rents and includes PM fee and set-asides for capex.

Needless to say, that’s pretty bad cash-on-cash. The ways to make money are improvements to raise rent, leverage, appreciation, and longer-term increases in rental rates.

With a combination of leverage and appreciation, we’ve made a killing the last few years. Way more than what we make in rent, though rent rates have done well, too.

All said, it’s a tough place to generate cashflow, if you want to live off that. I anticipate reallocating at some point in the future to shift into something that provides more cash. Deleveraging locally will not be the answer.

I have a challenging schedule, but will see if I can make it. After a bit of a break, we're back into an active mode on real estate investing this year.

It could work. One most important part would be talking through exit strategies. Write them down and agree. For example, if partner A wants to sell and B wants to keep it, B gets the right to buy out A’s half at $X. If A stops paying their half of the mortgage, then what? If A wants to move out and the B stays, does A act as property manager or does B? I’d talk through as many of these as possible and write them up. This isn’t all you need to worry about, but one thing you should definitely do. 

You’ve done good math. We own a house that falls into your 3rd category near the edge of Sacramento and Rancho Cordova, a duplex in Fair Oaks, and a triplex in Roseville. The numbers just don’t make sense to buy more of that at market prices. We’re considering selling because price to rent ratios are so out of whack. After debt service, we’re making like 3% cash return on our equity. The only way you make decent money is with leverage and continued appreciation. We’ve had loads of that the last few years, but that’s not cashflow and it’s riskier. 

Stephany has helped us with several mortgages, both primary residence and investment property. We shopped around a couple times, but she always had the best loan options for us. 
https://branches.guildmortgage...

Wow, this is a blast from the past. We got that unit filled almost 3 years ago and then later had another turnover where I fixed it up: scraped popcorn ceilings, new paint, and laminate floors. So, no more dog smell. Ever.

3 years ago, we raised rent up to $1,295 and now it’s at $1,550, so we lived happily ever after.

Vacant. That is a big selling point for an owner-occupant, who is the most-likely person to overpay. If I saw a listing with new tenants, I’d assume that they weren’t screened as carefully as I would since the seller doesn’t care if they go bad in a few months.