All Forum Posts by: Justin Cecil

Does your property already have parking? If not, off street parking especially garage space is highly desirable. I was able to charge premium rent because my unit had rare garage parking in Orangevale.

It seems like you are calculating only appreciation. California is great because of appreciation but I don't think you are properly weighing the expenses of each option. Appreciation should be the icing on the cake when it comes to investment property. Personally I would be looking for cash flow now. Cash flowing properties will better equipt you for ups and downs of the market and the unexpected. Depending on how you buy the property the Bay Area can be difficult to cash flow especially if you are paying a sizable HOA.

With that being said, my first property was a condo next to Alamaden Lake in San Jose, purchased in 2013 for $280k, sold in 2015 for $350k. Used the profit to purchase SFR in Fair Oaks (Sac) at $295k it is now worth $428k.

Hi Anurag,

We would need more details to help you make an informed decision. Will you be purchasing with cash or utilizing a loan? If you are using a loan

Would you be purchasing owner-occupied or as pure rental?

Would you utilize a property manager?

I ask because if you are in the Bay Area and are able to utilize an owner occupied loan vs rental loan it is a dramatic difference in terms of capital you will need. In addition, long distance rental property takes more time and considerations.

I’ve lived in both the South Bay as well as currently in Sacramento area. Let me know if you need help finding property in either area.

Best,
Justin Cecil

Hi @Leonel Lerena,

Yes, I am in the Sacramento area.

Hi Matt, 

You are definitely in the right place for finding help. Let's narrow down what you might be nervous about. What are your goals? Does the property you are looking at fit into those goals? What are the risk? What is your exit strategy? The more specific you can be the better advise you will receive. 

Best,

Justin

Hi Gitit,

Congrats on purchasing California real estate! Sorry that plans are forcing you to pivot, which for most is the theme of 2020.

The Sacramento area rental market is very strong. Just like the sales market, there is low inventory with lots of tenants to choose from. I would suggest looking at comparable rental units on the market. You want to take in account size(sqftage), number of bedrooms, features (garage, pool, etc). Will you be allowing pets? Not many rentals do and lots of investors agree that pet owners typically stay longer because it is harder to find rentals which allow their pet. As far as resources, use multiple so you get a full picture. Sites like Zillow, Rent Cafe, and Rentometer should give you a good idea of the comps in the area. Lastly, you will have to be honest with yourself about your property and where it fits interns if location and condition with the other comp properties.

When it comes to asking for 5 times rent, I think you mean  making sure tenants have income 5 times above rent amount. I would say it is more common to ask for income to be closer to 3 times rent.  Combine that with a solid credit score and positive rental references and you should have a good tenant.

I’d be happy to help you find a property management company if you like. There are many out there. But if you decide you can do it on your own, there is a website called Cozy.co which has worked for me. It takes apps, runs background, sets up payment, can automatically charge late fees if lat3, etc.

In the event you need to sell the home, I am a local agent and I’d be happy to  help.

Sounds like you have done your research! Have you read the book Tax Free Wealth? If not I would recommend it. Key word is losses. I’m not a CPA but if you break even or make a profit you are not taking a loss. In addition, there is a minimum number of hours per year to qualify as a real estate professional. I’d say the quickest someone can get their CA RE license is about 6 weeks for the classes plus at least 8 weeks waiting for the state DRE to give you a testing date.

Again, I’m not a CPA but expedited depreciation schedule means you run out of tax advantage faster. You will want to consider the 1031 method as an exit strategy.

Hey guys, This is a timely discussion. I just came across the same concept. In talked with a new construction contractor who quoted me a ballpark Figure for $200/sqft new build. While the average resale home in the Sacramento area is closer to $250/sqft and above in some areas. Granted that’s not a fixer for cash it is a strategy to look into.

Different topic but same subject, I would recommend hiring a pool company to service the pool weekly. There are different levels of service, chemicals, filter cleaning, etc. but you want them to check and keep an eye on your equipment. This will help keep your investment property in good shape. Pool equipment is pricey and can burn through your CapX budget quickly.

You are looking for the Swimming Pool and Spa Safety Act of 2006. SEC. 2. Also, read SECTION 115922 of the Health and safety code.