All Forum Posts by: Justin F.

Thanks for your replies!

@Dustin Allen.  Since you're in CA, you're aware of the high prices we need to deal with here.  Very difficult to cash flow unless you go into less desirable neighborhoods.  I know they say, multi-family is the way to go for cash flow but this being my first investment, we wanted to start off slow, someplace with a good school district.  I've also heard there's been a slowdown in the market so maybe it's best of hold off on buying anything now?

@Arlen Chou. I'm told 3bd/2ba SFR can rent for $2,000-$2,300 in Rocklin. It's an active landfill. Think it still has ~25 years before they close it. Even when they close it, it won't completely eliminate the smell throughout the year? I use to live Newark and would smell the odor from Milpitas. The values in Newark (and I'm sure Milpitas) continue to skyrocket (given proximity to Silicon Valley). That probably won't be the same for Rocklin since I'm not aware of any huge tech firms up there. I plan on calling local businesses and asking them about the smell. The homes they're selling in that area are $430K and up. Inexpensive by Bay Area standards but one could certainly buy 2 homes in another state. We actually considered Austin, TX but the tax rate is double CA.

@Jay Hinrichs. Please PM me your buddy's container home building company. Always interested in seeing other ADU options.

Hi,

Looking to purchase a SFR investment property in Rocklin, CA (near Sacramento). In looking over the disclosures, it says there's a landfill 2.5 miles away (west of property) and wastewater treatment facility 3 miles away (northwest of property). Also an active rail road track 0.5 miles away (west of property. All located across the 65 freeway in what seems to be more of an industrial area.

My major concern is the landfill.  Do you think 2.5 miles is too close in terms of odors?  It can get pretty hot in the area so I would expect the landfill to smell but I guess it all depends on the prevailing winds?  I'm in the Bay Area so a bit tough for me to hang out in the area for extensive period of time.  Maybe I try and call some local businesses there and ask?

Also, would 2.5 mile distance to landfill have negative impact to property value?  Since we won't be cash flowing, we'd hope value would appreciate in the future.

Thanks!

There's a new build in NW Rocklin, only to find out Thunder Valley is also 5 miles away.  Seems all these new builds are near the casino.  How many miles from a casino would be too close? Is 5 miles far enough? 

Thanks for everyone's input.  

@Wes - I'll take a look at the areas of Sacramento you suggested.

Hi All,

First time investor. I was looking at a new build SFR in southwestern Elk Grove, CA (near highway 5) as an investment property. Not expecting cash flow given California market so betting on appreciation. Turns out there are a plans to build a $400 million casino/resort about 5 miles away near Kammerer Rd and 99.

According to the Elk Grove development website, there's a bunch of other residential communities being planned in the same area and a shopping center.

What are people's thoughts on potential impact to property values given proximity of new casino?  

There seems to be more articles on negative impact than positive impact.

I was trying to look at property values near River Rock Casino and Cache Creek but those are pretty rural locations so not many homes to compare whereas the casino in Elk Grove would be surrounded by a bunch of SFRs.

Should I scratch Elk Grove off the list?  Was looking a cities with decent school districts in Sacramento area.  I know Roseville and Rocklin fall in that category so maybe I should look at those cities instead.

Currently living in Bay Area so wanted to be near first investment property (would consider multi-families in the future after getting some experience as a landlord).  Prefer to stay in CA since I have my RE license here.

Thanks in advance!

P.S. Seems like all these new developments have HOA and mello roos. Any developments <$400K in Sacramento that don't have mello roos? Do new homes in established neighborhoods still have mello roos? My understanding is that tax is to help pay for development of new infrastructure (i.e. schools, parks, etc...) but if new home is old neighborhood, is that still the case?

I'm looking to build an ADU in Castro Valley. We're limited to 640 sq ft. It would've been nice if I was able to go up to 800 sq ft.

I'm working with a design/build firm that takes care of everything  for the most part.  Design fees were about $10k in which they get everything ready to submit to the city for approval.  You'd  still need to pay for the permit fee.  

I'm in the process of getting my plans approved now. 

I don't  know if I'm allowed to list any company names on the post but PM me and I'll let you know who I'm working with.  You should check them out and see if that's something you're interested in.  ADUs are their specialty and they've got a active sites in the bay area that you might be able to visit.  They do prefab and stick builds.  I'm told general build time is about 3 months which is pretty quick.  They've got a Facebook page as well.

I considered acting as a project manager  but I'm no expert and didn't want to deal with the hassle of managing a bunch of contractors.   I also don't have a lot of time.

Goodluck and let us know what you decide.

@Chizoh Uzegbu

Yes, cash flow would be nice which is why I'm leaning towards the ADU.The ADU should cost ~$200K finished.Additional property taxes would be based on additional value it adds but wouldn't be as much as a SFR. If I were to buy a SFR, expenses would be higher with not much additional rent and chances are I'd have to put a little money to update it.The real estate market in the Bay Area doesn't seem to be slowing down anytime soon.SFRs seems to have jumped $100K in the past year or 2.So I'm wondering if it makes sense to wait for prices to come down a bit (if it ever does).

How easy would it be to unload a MFH vs. a SFR?If I end up needing to sell, I would think a SFR would be easier to sell?

Long term goal would be to have a few properties with positive cash flow for retirement.I’m being more conservative now since I’ve got kids and all.

Is the MLS the typical way most investors locate MFH?

@Dustin Allen

Yes, the positive cash flow should help with borrowing power but if I use the $100K cash to build the ADU, it'd be hard to come up with more funds for the down payment of an investment SFR.

@Ben Howard

Not being familiar with the Sacramento area, I focused on school district rankings with the hope that should I need to sell, a house in a good school district would be easier to sell.Although the surrounding areas near Rocklin, CA (i.e. Roseville) have good rankings, Rocklin seems to have slightly better numbers.I’m open for suggestion of course.

@Jordan Moorhead

I agree.Investing out of state would be difficult to do now with kids.It’d be tough flying out to check out the properties and it would definitely require a property management company.

@Pat McGrath

Investment goals would be cash flow for retirement and conservative on risk tolerance since I've got kids.At minimum, we hope the rent would cover the expenses for property.With respects to down payment, I thought most lenders required 25% down for investment properties?I didn't include closing costs so that would be additional expense (which I wouldn't have with an ADU).

Yes, I think if we went with a SFR in Tracy or Sacramento area, it'd still be a buy and hope it appreciates (too bad I didn't have the funds to buy a few years sooner).Other concern I have is if I'm not able to find renters.With the ADU, monthly liability wouldn't be as much as a SFR.

As I mentioned to @Ben Howard, I focused on Rocklin based on school rankings.We applied for $100K HELOC (didn't want to refi because I'd have to start paying interest on larger loan amount from day 1 vs. paying interest only when I use the credit.

Sorry for the misspelling in the title.  I noticed it right after it posted but I don't see an option to edit it.

Hi,

First time potential investor here. Wanted to get some feedback on the following scenarios. I live in the SF Bay Area (Castro Valley) and deciding which is a better option. Have kids and don't plan on moving anytime soon. Let's assume we have access to $100K cash and $100K HELOC (prime rate). Here are my options:

1) Build a detached accessory dwelling unit (ADU) in my backyard. Will cost ~$200K for a 640 sq ft unit (small 2bd/1ba or standard 1bd/1ba). I was surprised how expensive it would cost but based on research, that's how much it would cost in my area. For now, I think I'd be able to get at least $1,500/mth if I rented it out. Should be able get some decent cash flow to go towards mortgage on main house. My elderly parents could also live there when the time comes. Cons would be loss of privacy and won't be able rent out main house and ADU separately should I ever move out. My understanding is that owner must occupy one of the units.

2) Buy a single family house (3bd/2ba) investment property somewhere in Tracy or even Rockin, CA (Sacramento Area) for $400-$450K with 25% down. Mortgage would probably be $1,700-$1800 and I'd probably be able to rent it out for $2K? My understanding is SFR rarely have cash flow given the higher prices. I'd probably end up paying out of pocket on a monthly basis if I factor in property tax and maintenance and/or property management fees (should I go that route). So this would be a buy/hold strategy. I've read multi-family units are the way to go for positive cash flow but I'm a bit weary of that because given my budget, it'd probably be in a neighborhood that isn't so good). I'm also not too keen on investing Out of State (Austin, TX?) since I'm a newbie at this and would like to stay within a couple hours drive.

With respects to ROI, the ADU seems like the right choice but how much value would it add to my property. I know it's difficult to assess. Also, it's on the same parcel of land so it's not like I'd be able to sell it in the future if I ever needed the cash. If I purchased an investment property, I'd be able to get rid of it if the need arises.

If I build the ADU first, I won't have any cash left and qualify for a loan to buy an investment property in the future. If I buy an investment property first, I was thinking maybe I'd be able to pull some cash out from it in the next year to build my ADU (but no guarantee since construction costs could've gone up by then given the demand for ADUs).

Thoughts?  Suggestions?

Thanks!

Hi, I stumbled across this forum and think it's really helpful. I live in Castro Valley and was considering building a detached ADU in my backyard. Does anyone have an idea what a 1bd 1ba unit would cost to build? We're allowed a maximum of 640 sq ft unit. From what I've read it can cost between $150-200k and up which seems pretty pricey. Are preconstructed modular units a lot less expensive vs. building on-site? Thx