All Forum Posts by: Jessica Sorensen

In order to learn more about the day to day of buy and hold investing, I've been assisting my former landlord over the last couple years with managing his 40+ units. This is a first... A new tenant moved into one of his 4-plex buildings about 3-4 months ago, and recently we have had several complaints from one of the other tenants that she has been extremely rude and disrespectful to him and his wife. She has apparently been cornering them in common areas, saying things like they aren't good enough for this neighborhood, and using racist insults. They also claim she is going out of her way to make noise in her apartment (they share a wall), slamming cabinets, stomping, allowing her friends to hang out in the shared hallway and talk loudly. (I believe them.) My contractor also mentioned that she was "incredibly unpleasant" to him while he was there making repairs for her.

We've talked to her about the noise, but directly insulting other tenants (especially based on race) is unacceptable. This woman still has another 6-7 months on the lease, but she is making our other tenants so uncomfortable that they are thinking about breaking their lease and finding a new place to live. They have been great, long term tenants, and I don't want this to drive them away. However, we don't have any actual proof besides the couple's word against hers. What can we do here? Can we evict based on this? 

@Gordon Cuffe Ok for a true "vacation" rental maybe not... but there are a lot of people that come through for government work. There are also medical students that do month-long interviews at UC Davis. And once the arena goes in there may be more activity from out-of-towners looking for an overnight stay? You have a point though, Sacramento isn't a hot vacation destination, and it's easier to find a regular renter.

@Rick Santasiere We're definitely planning on staying here for at least two years, so yes, we can avoid those capital gains when we finally do sell. I plan to stay here for some time though, since it's also a great primary residence, so the main purpose of renting it out is for that added income before we sell (whenever that may be). 

@Gordon Cuffe I don't mind someone living above me. I've lived in apartments for the last 10 years so I'm used to sharing walls. Especially if I get to choose the person up there. And you'rr right about doing a cash-out refi. My concern though is that the PITI would end up being too much to be covered by the rents. Based on current market rents, this property would gross at least $2800 (maybe more, but I'm going low for now). I feel like that would limit me to about $450,000 before I start losing money each month paying the mortgage. If it appraises higher than that, what's the best way to get the rest out? HELOC?

@Pat McGrath Haha, was it the real estate agent? I feel kind of bad. I was working with a great agent but when I found this deal the seller wanted to just do a handshake, as-is sale neighbor to neighbor without realtors. It was too good of a deal to turn him down so that's what we did!

@Chris Vail That's good to know, thanks. Right now I'm planning on staying in this property and using future equity to buy a second property as an investment, not a primary residence, but you never know what could happen...

@Erin N. The attic currently has no ceiling, but there's plenty of space to put 12' ceiling throughout most of the space, so I should be good there. ;)  Good point about the kitchenette. That's one of the reasons I'm thinking of making it a vacation rental vs a traditional rental. Vacationers don't necessarily expect a full kitchen, just a nice bed and clean bathroom. It's something I'm going to have to research a little more. And yes, "separate entrance" is what generally gets a building designated a duplex, so our plan is to create a sort of mudroom off the back door, where one exit leads you to the downstairs and one leads up. That way if we ever want to convert back to a fully-single-family, we just take down the mudroom wall and have it back to the way it is now. 

Last October I closed on my first purchase! A primary residence, single family in midtown Sacramento. We had been house hunting since March, focusing mainly in North Oak Park (since we thought we couldn't afford midtown), but hadn't been able to find anything that made sense as an investment. I'm glad I stuck to my numbers, because after an unsuccessful three month search, I came across this deal off-market and was able to close after a 3-month escrow! (Long story...)

We were able to purchase it at 8% less than the bank's appraised value. (Though it's difficult to find true comps in this area and I disagree with the houses they chose. I would say comps put it at about 15% more than we paid, but you gotta go with the bank!) But here's the main reason we bought it: It has a full-height basement AND an unfinished 850'sq second floor which is currently considered the "attic" despite the fact that it's huge, has a floor, windows, and an actual staircase leading up to it (not a ladder or a drop-down stair). We plan to finish the upstairs into a true second floor, making the house a 4 bed, 2.5 bath, 2,000'sq single family. ARV would be more than double our purchase price, and that's looking at current comps. In the next year the new arena will open less than 1.5 miles away, and in the next two years a new Whole Foods will open just a short walk away, plus new developments being announced what feels like every few weeks, so the area is appreciating fast.

After we renovate the upstairs, we plan to rent that space out (either as a traditional rental or a vacation rental is still TBD) effectively house-hacking the property and living for free! Then we plan to tap into that new equity to buy a second rental property. Sort of a house-hack/live-in-flip hybrid? (Is it a live-in flip if you plan to hold but leverage equity from forced appreciation?) 

I'd love to hear what more experienced investors (especially in the Sacramento area) think! Do you have experience on creating a rentable "apartment" in a single-family home? (Like an in-law unit, we don't want the house to be considered a duplex.) Any advice on aiming for a traditional rental vs AirBnB? Any tips for leveraging that equity once we've completed our renovations? Let me know!

Me! I still live in Midtown. We're buying in Midtown too. I'm happy to give you a little insight... My husband (then boyfriend) and I moved to midtown in 2011. We found a great little 1 bed/1bath/750'sq for $1145. At the time we made roughly $50k combined, so we were stretching our budget, but wanted to move to the area for the restaurants, nightlife, etc. We both work about 15 min outside of midtown. (Not a bad commute when you're going against the downtown/gov traffic each way.) Four years, a job change, and several raises later that $1145 is no problem at all. We're easily living BELOW our means and saving nearly 50% of our income. We're also both in our late 20s. 

There are a lot of young professionals in Midtown. I think $1500/month is a bit steep for, say, a college student, but a 20-something with a decent 9-to-5? Perfectly reasonable. And keep in mind that there are very few people living on their own in Midtown. Most apartments are rented by couples or people with roommates. So let's say a young professional is making $30k per year, and following conventional budgeting does not spend more than 30% of their income on housing. That means their monthly rent budget is maxed out around $750. But rent with a significant other/roommate making the same income, and now your budget is $1500/month. Living within their means, no mom & dad money required. ;)

@Chris Vail It's going well, thanks! We're in escrow, set to close in mid-Oct. I'll try to post an update once the whole process is completed.

@Chris Vail For the kind of work you're looking for, I'd go with Todd at Clean Cut Landscape out of Auburn. Tell him I referred you. ;)  Or Brett with BSLA. I have a few other great options for drainage/hardscape, but those two would be the most helpful with the plant selection/design elements. The busy season should be winding down so hopefully one of them can help you out. 

@David Hutson If you just need fence work, you don't really need a landscaper, just a carpenter. I'd recommend Valley Redwood for that. (Talk to Craig.) They'll give you a great deal on lumber and install. I also have a card on my desk for Jason with RJ Construction (specializes in decks, fences, etc) but I haven't had an opportunity to try him out yet. If anyone wants to give him a shot let me know how it goes! ;)

@Gordon Cuffe

 Sorry, I only just saw your question. It looks like it didn't tag me correctly. Yes, we did go through with the purchase. We're in escrow as of this morning! 

I thought I would post an update for anyone still following this... 

I met with the seller shortly after my last post (in June!) for another walk through of the property. Got a lot of info and a some great stories about the neighborhood... but no contract. He still didn't have a plan for moving his stuff out and wouldn't sign/agree to a closing date until he had that figured out. I left that meeting feeling pretty let down. I had already been after this deal for a month!

But we stayed on it. I called every week just to leave a "Hey, how's it going? Any updates on the basement?" message. My husband stopped by to chat with the owner's son when we saw him working on the landscape. We got the son's email and sent him a letter about how eager we were to buy the house (and even offering to help him move). After about four weeks and yet another voicemail, I finally got a call back from his wife! She said to pop on over and slip the unsigned contract under their door. She would make sure her husband looked it over and got it done. (Lesson: If you're dealing with a procrastinating seller, call the wife!)  NOW things were moving!

They asked that we push our proposed closing date back by another month, and I added in a clause that said they were welcome to leave any unwanted items in the basement at closing to make things a little easier. (There's some cool stuff down there! I might be able to use it.)  This morning I took the two-page, signed agreement down to the title company, plunked down our earnest money deposit, and we are officially in escrow!

We're set to close in mid-October, which leaves plenty of time for thorough inspections and walkthroughs with my contractors. I'm so excited! And nervous. But mostly excited. I think. So here we are... more than a month and a half after my first post, almost THREE months since my first call with the seller, with another two months of escrow on the horizon. My advice to other newbies: You'll never know if you don't ask. The worst that happens is you get a "no" and you just end up right back where you started. Who knows, you might get a "yes" and a deal! And if you know you have a deal, don't give up on it! No matter how long it takes. 

Hey @Dave Hall Welcome to the site! I grew up in Paradise (just up the hill from Chico), went to Chico State and rented around town the four years I was there. My parents and brother still live there. Definitely keep in mind that it is a college town and you will have all of the challenges that come along with it. Most tenants are young and on their own for the first time. Sure, parents may be co-signing but you won't have much to go on when screening the actual tenants! A lot of these kids are on their own for the first time and don't know how to take care of a house properly. Plus, there is a ton of turnover. (I lived in a different place almost every semester!)  Further out from the campus you'll get more families and more of the "better" students, but there will also be less demand. There are also certain areas/neighborhoods that you should stay away from, so be sure to ask the locals about the areas you plan to invest. Good luck!