All Forum Posts by: Antonio Guerrera, Jr.

Seems like a go.  RE agent says residents pay water, sewer, garbage, which seems new to me, being from CA.  For those in this area, snow costs to consider? Anything I'm missing?

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*This link comes directly from our calculators, based on information input by the member who posted.

I agree with you Wes. If you are losing $4800 a year minimum because NOI doesn't cover the debt payments then you are not investing. You are banking (hoping) for appreciation. For a 350 k house appreciation has to be greater than 3% per year to cover those losses. Oh and if you have 1-2 months of vacancy then you need about 5 % appreciation. It's not fun. I was there in 2005. Glad I got out and was much better positioned for cash flow success in 2010.

Well you are confirming what I am experiencing in my duplex in north Sac. Up, up, and away. My 2010 purchase is really paying dividends now. Thanks for all the info and the background.

Buy and hold.

Hi Jackson, looks stunning and the hood is super easy on the eyes. Is that an electric stove or perhaps induction?  Message me if u are interested in collaborating in Sac. Well done and thanks for sharing. 

Thanks for sharing Jack. Great thinking to focus on the kitchen when your units are so close to culinary center. Do you mind sharing how much your down payment was for the property? Thank you, Anthony in Fairfield

Hi David, Forget about what the seller would accept, cap rate, and 2% rule. Cash flow is king in this discussion. If you have no cash flow then you are banking on appreciation and deductions and that can be dangerous in this frothy market. Actually, this is why cap rate is so low, because price is so high in this market. Bottom line is if you don't cash flow for all the risk, it is absolutely the right call to move on to assess the next property. Good luck and keep us informed, Anthony

Hi Wesley,

Thanks for your post about Sacramento Investing.  This is not the market of 2008-2011 where you could buy and hold and generate nice cash on cash returns with 20% down.  

There is so much truth in the responses to your post.  Sacramento, especially Midtown in particular is very likely at the frothy end of this multifamily market.  I have run the numbers over and over for midtown properties and for duplexes and fourplexes in North Highlands, Foothill Farms area, and Citrus Heights.  In Midtown, most duplexes are asking 500k and up.  Based on my numbers, and these numbers are real, obtained from my property manager and selling agents, you would have to put down 375k on a 550k property to generate positive cash on cash return.   You might as well put your down payment money in a cd as you could get the same with no risk.

You know what the monthly killer is?  Property taxes!  That's right.   With such elevated asking prices the property taxes are reset to such a high basis.  That 550k purchase results in a tax bill of 6875.  That's 593 a month.  Ouch!

The asking prices are lower in surrounding communities, but so are the rents.   I was fortunate enough to purchase in 2010.  Now, can't do it here unless you can connect with someone to buy below market and rehab.  For this time period I am on the sidelines for Sac and surrounding area and am actively making offers in Phoenix metro area.

Good luck and let us know what happens!

Welcome Raj.  Sacramento is very competitive right now.  Especially mid-town.  To invest in resale there you will have to move fast and be very close to the list price.  Unless you are highly leveraged and don't have much "skin in the game" as they say, your cash on cash return will be very low.  It's just very hard to justify the prices with the income coming in on these units.  But maybe there is another way:  foreclosure, wholesale, off-market.  Wish you success and let us know how you are doing.

Hi Zack,

As an ASU alum I am glad to see your post and read that you are successful.  I was investing in Sacramento, CA.  Mainly duplexes.  But price too high now for investors like us.  Now I am looking in Tempe, Chandler, and Gilbert.  How is your 4 plex hunt going?

Thank you,