All Forum Posts by: Priyanka B.

I went through similar exercise last year, sharing my experience.

Below criteria may assist in narrowing down options further:

-> Assumptions:

> Duration of ownership:

- short-term: is more appreciation a priority.

- long-term: is passive-income a priority.

> How easy/difficult it is to find tenants in growing, normal, and challenging economy.

> Mello-Roos, Supplemental-tax etc..

> Purpose: only investment Or, semi-investment (retirement)?

> places that would appreciate more.

- are there cities where property-values could double in next 10-15 years.

> places that would have more cash-flow.

> cities that did not go bankrupt during economic downturn.

> school-districts: are they a few miles away, or ~10+ miles away.

> which are the top-most neighborhoods in the nation to raise family.

> which cities have less probability of natural-calamities (wildfire/dam/flood/quake et..)

• Elevation from sea-level etc..

> would I be able to stay for 5 years in same property without change in current life-style. (movies, restaurant, medical facilities, malls..)

> public-commute, disturbance and other common criteria.

> Visit short-listed cities in person, at least twice.

> city population growth, future job growth.

> (if available) city's average salary, average house price, average rent (for 3/4 bedroom SFH..)

> is the city a prominent hub (tech/finance/ govt ..etc..), college-town, state-capital..

> Past data does not (always) translate to Future failure/success.

-> Accessibility:

Tracy is (relatively) closer to Bay Area, international airports, Fresno/Yosemite, LA

Sacramento is (relatively) closer to Oregon, Crater Lake, Reno/Tahoe, Death Valley, Fresno/Yosemite, LA, Bay Area.

-> Action:

I immediately changed my plan last year (2020), and switched to Sacramento, as previous city raised property tax (unjustified 1+ %) drastically.
BP forum valuable suggestions and above assumptions helped to narrow-down places-of-interest.

Decent population growth is also a positive signal.

I am slightly negatively cash-flow, but expect to be break-even (/+ve) next summer.

Appreciation: about 23%

> Disclaimer: 2022 cannot be compared to 2020.

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Applying above based on prevailing & year 2022 perspective may provide answer on cities that you are looking for.

Good Luck with your search.

@Priyanka B., you can even try exploring Manteca area if you'd like to. There's a lot of new constructions near Hwy 120 south side. We bought a rental propery house in Manteca recently with 20% down and able to break even without accounting vacancy n prop. mgmt fees. I self manage and the house got rented within 3 days of placing the listing. 

@Priyanka B.

Hi there! I’m an agent here in Sacramento, and know the area pretty well. This a market that generally won’t have cash flow (on year one) unless you are putting a lot more than 20% down. But it is definitely a market that has had lot of appreciation historically.

When we look at numbers, we look at how the property performs over its first three to five years. For those putting 20% down, it's pretty common to see negative monthly cash flow of about 150-200 on year one. That's with 5% vacancy, 5% for CapEx and about 6% for property management.

Right now the max rent increase is 6%. So if your property is charging market rents, it’s usually negative 150-200 the first year and then neutral to low cash flow in year two or three. If it’s already tenant occupied, they are rarely charging market rate, so the figures will be worse.

You still get all the tax benefits of depreciation, interest write offs, etc. and the value of the home likely increasing.

Usually when you see areas that have higher cash flow than that, they are the areas that tend to have more headaches or require more attention. So generally, we look at it like a spectrum: one side is more passive and less headaches, but has less cash flow. The other side requires more attention, but the ROI and cash flow are better.

If you want the less work and less cash flow option, I would look at areas like Folsom, Roseville, Rocklin and some neighborhoods in Sacramento.

The areas that are likely more work, but higher cash flow would be most of Citrus Heights, Antelope and some parts of Rancho Cordova and Sacramento.

Sorry this was long winded, but hopefully it helps. Good luck!