All Forum Posts by: Wes Blackwell

Hi @Andrew K.! Great question!

If your goal is to make $300k per year, your only option to is flip homes. 

Buy-and-rent is a long term wealth building strategy. You get a little cash every month, the tenants pay the mortgage down for you while the property appreciates in value. You're going to want to purchase multifamily properties (2-4 units) since those will give you more cash flow. Depending on your financing terms, you can probably expect to see $5-10k per year on of positive cash flow for the average multifamily property. 

Flipping homes is where you can make $20-40k per deal on a regular basis and have the potential of earning that much. The central valley (Sacramento to Modesto) offers you lots of options to flip homes. Although, it's a tough market for flippers right now because the market is so good for sellers it's hard to find a property priced at a discount. That being said, it happens every day, so perhaps you could team up with another more experienced investor and do a deal together. That way you have much less risk, someone watching the deal every day, etc.

If you can transition into a steady income through flips and do multiple deals per year, you can stay away some of those profits into buy-and-hold properties and start playing the wealth building game. Best of luck to you!

If you give a mouse a cookie, he will soon ask for a glass of milk.

Then he'll request a straw to drink the milk, and a mirror to help avoid a milk mustache.

Then he'll ask for a for a pair of scissors to trim his mustache in the mirror, and a broom to sweep up his mustache trimmings.

Next he'll want to take a nap, have a story read to him, draw a picture, and then hang the picture on the refrigerator. 

But looking at the refrigerator makes him thirsty, so the mouse asks for a glass of milk... 

The circle is complete when he wants a cookie to go with it.

Best children's book ever. Paying this small amount will set a bad precedent and your tenant may start to expect being comped every single time something inconveniences them. Don't do it.

Hi @Santosh P.!  Have you tried looking in Sacramento / Central Valley? It's the same drive for you or shorter, and good returns on your investment can also be found there. 

I've worked with a lot of other investors just like you coming from the Bay Area, and shown then how Sacramento is probably the best overall investment in both the short and long term. Here's my top 5 reasons why:

1. Named #4 Hottest Metro in the US by Realtor.com for 2017. Predicted appreciation of 7.2% next year
2. Rental rates continue to rise which will earn you a larger return on your investment
3. Sacramento is currently bringing over tech companies from the Bay Area, may see a future trend in prices due to the surge of job growth
4. For more job growth, Sacramento is a finalist for Nikola Motor Co. (electric 18-wheelers) to call home
5. Bay Area millennials will continue to move to Sacramento for the next 5 years to get a better quality of life due to affordability. More demand for housing & jobs = appreciation

For less than $300k you can find a multifamily property here with gross annual rents above $35,000. I've analyzed every available multifamily on the market, and would love to show you what's possible should you decide to come this way. Let me know if you have any further questions, and best of luck!

Hi @Kandis Pruitt! Welcome to Bigger Pockets!

The trick is to take it one day at a time, as cliche as that sounds. If you make it your goal to not invest in a property until 6 months from now, you'll be able to relax and give yourself plenty of time to educate yourself on the different strategies and the local market before making your move.

At that pace, all you have to do is spend maybe 30-60 minutes per day doing research and reading, participating on the forums, etc. and you'll be an expert in no time.

Here's a link to a ton of short, easy-to-consume videos that Bigger Pockets has created for beginners to get started with.

https://www.biggerpockets.com/courses/a-beginners-introduction-to-real-estate-investing

Start checking those out, and once you're finished you'll have an action plan laid all out in front of you to take your next step in the right direction. Best of luck!

@Mike David -- if you head to Sacramento or anywhere in the Central Valley, you're probably gonna be better off with purchasing two multifamily properties at $225-275k than one at 400k. You'll get a better return on your money for sure.

Another option would be to take that money, work with a private lender and do flips. You can get about $30k average per flip out here (more in Bay Area) and double your money in a couple years.

Then wait for the market to go back down, and buy at rock bottom. Play the long game and in 10-15 years start the whole process all over again. Rinse and repeat. Best of luck!

@Meredith L. -- Welcome to Bigger Pockets! Great first post!

I'm currently working with several other investors in the area who are in your same shoes and are currently looking to invest outside of the Bay Area, so I know exactly what you're trying to achieve.

I just watched California Association of Realtor's Year End Review for 2016 Presentation, An astronomical amount of people are moving out of the Bay Area and into the surrounding counties. Next year it is estimated that more than 18,000 people will move from the Bay Area into Sacramento alone!

I've written pretty extensively about the Sacramento Multifamily Market, and that because I believe it is simply the best option for investors looking to get started with house hacking. Property values are going up, and so are rents, and continued job growth is expected as more and more tech companies are drawn to the area. Here's some new articles and business journals to back up those claims:

1. Named #4 Hottest Metro in the US by Realtor.com for 2017. Predicted appreciation of 7.2% next year
2. Rental rates continue to rise which will earn you a larger return on your investment
3. Sacramento is currently bringing over tech companies from the Bay Area, may see a future trend in prices due to the surge of job growth
4. For more job growth, Sacramento is a finalist for Nikola Motor Co. (electric 18-wheelers) to call home
5. Bay Area millennials will continue to move to Sacramento for the next 5 years to get a better quality of life due to affordability. More demand for housing & jobs = appreciation

House hacking with 5-10% down won't give you any significant positive cash flow, but that really depends on what sort of neighborhood you're comfortable living in. But you can essentially live there for free as the income from other units will coverage the mortgage and expenses.

That would allow you to pocket at least another $12,000 per year compared to where you're living now, probably even more. You can then save that to use towards your next property, and so on, and so on :-)

Fresno may be considered an alternative, but it won't be nearly as hot of a market as Sacramento will be... says so right here in the Fresno Bee. They will be the #43 hottest market, Sacramento will be #4... no comparison. Our increase in housing demand will cause your property to appreciate nicely over the next couple years and keep the rents high and always full. 

Plus, Sacramento is half as far away from Berkeley where you currently live so it's a shorter trip home, and you already have a couple friends in the area which would make it all the more easier to get settled in. I've ran the numbers for every single available multifamily property for my other investors already, so don't hesitate to reach out and connect if you want to see what kind of returns you can expect and what quality of properties and neighborhoods are available in your budget. Best of luck!

@Jeremie Cortez -- Welcome to Bigger Pockets! You'll find some great information here about being a landlord and managing your properties.

First and foremost, be sure to check out all of the free articles here on this site regarding being a landlord. They range from covering the basic strategies investors use in becoming a landlord, to tips and trick about certain policies like vacation rentals, tenants with pets, and more. Tons of free info that will quickly bring you up to speed.

Next, you'll want to check out the book Bigger Pockets wrote about managing your rental properties. It's absolutely INSANE how much information you'll get for how little cost, and this will easily place you in the top 10% when it comes to knowledge of managing a rental property.

And finally, if you're really serious about it you can always pursue education or certification options that will really cement your status as a property manager. The California Association of Realtors offers a Property Management Certification, the Rental Housing Association of Sacramento Valley offers a wide range of courses, the National Association of Residential Property Managers offers a Residential Management Professional certification, and the Institute of Real Estate Management has a local chapter and offers several education courses.

The last steps are probably overkill, and the free articles and $10 book should suffice for your needs, but this will show you what steps would be needed to take your education on the subject to the next level. Best of luck!

@Patrick Boutin -- Stockton may give a beginner a lot of trouble because a lot of the neighborhoods don't offer upside potential for distressed properties. Although, I do know some investors that can make it work, so if you decide to go out there get in touch with @Jake Leicht as he does a lot of investing in the area and perhaps guide you in the right direction and buy a deal from you.

But honestly, Alameda and Contra Costa county right where you are both have 200-250+ Notice of Defaults (preforeclosures) EACH every month. You've got 500 leads sitting right in your back yard... go get 'em! Avoid the trap of 'analysis paralysis' and just get out there and get to knocking! :-)

@Crystal Ng -- Welcome to Bigger Pockets! You've come to the right place!

What you're going to want in a real estate agent is someone who understands your investing goals and can talk the terminology. Most agents only work with single family homes and have no idea about what the terms cap rate, GRM, or capital expenditures mean.

You have to understand that nationally 50% of agents transact ZERO business for the year, and of the other 50% that do, only 25% of them conduct more than 4 transactions per year. Sadly, we're an industry of amateurs, so you've really got to be careful who you do business with so you don't waste time or money working with someone leading you nowhere.

Ultimately, you'll want an agent who has their finger on the pulse of the market... have they conducted research on all available rental properties in the area? Do they know what sorts of returns and rents you can expect as a return on your investment? Are they aware of current rates of job growth or other real estate related news in your city? Can they provide you with school ratings, crime statistics, area demographics and other important metrics for analyzing a neighborhood?

If your agent basically just pulls some listings for you and sends them to you without any analysis or recommendations and tells you to let them know if you want to go an look at anything, you're working with the wrong agent.

Basically, the agent you want to work with is the one who stands head and shoulders above the other ones you meet and makes you feel it in your gut that the person you're dealing with is a professional who can be trusted and that they understands that you're not just another commission check... you're a family with goals and dreams for your future and this decision to invest is a big one that can have a serious impact on your lives.

Don't go for the #1 big name agent in your city. They're going to shove you off of some member of their team who is a "buyer specialist." That's so they don't have to spend any time showing you properties and can instead focus on getting their face on more yard signs for sale. Work with the agent who's hungry for your business and is willing to go the extra mile to find you the perfect investment property.

I'm actually currently analyzing the Modesto rental market for another investor at the moment, so I'll be sure to share my findings with you once I'm complete. If you have any questions in the mean time, don't hesitate to reach out and message me or connect on here I'll see if I can help you. I'm not too far away and I'm originally from Stockton so I'm familiar with the area and definitely help you :-)

@Vamshi Ananth -- A total of 212 properties have sold this year in the 95824 Zip Code for a median price of $186,000. The average home for the neighborhood is about 1,150 sq ft and the average days on market is 24 which shows that properties move fast in this area.

The are is probably most well-known for it's crime, unfortunately. Although, there are a few little pockets in there that aren't that bad. It's sort of like Oak Park in that it's street by street as far as how nice the neighborhood is. Plus, you've got horrible school ratings (2-4 out of 10) and so that's gonna keep more affluent buyers from moving into the area.

The median household income for the area is about $31k per year, which is about $22k per year LESS than the rest of the county. It's also a younger neighborhood, with a lot of first time buyers and renters in it. The median age is 29.5 compared to 35 for the county.

That all being said, it has some great rental properties. I currently know of one available off-market that's one of the best performing rental properties in the county. I've ran the numbers already for about a dozen other investors, so I know that to be so and don't say it lightly. 

Ultimately, it's really going to come down to your comfort level with the neighborhood. Drive the neighborhood, look at the available properties for sale, and don't be afraid to even knock some doors on your future neighbors and ask them their thoughts on the area.

If you have a particular property in mind, let me know and I'll run the numbers on it and let you know my thoughts. Best of luck!