All Forum Posts by: Yaohua Li

@Vickie Johnson That's a good point!

I'm already house hacking in my house in the Bay area. It has a very small back yard. Maybe something can be built there but it would feel very compressed.

If my yard is bigger I would probably build ADU such that I can rent or let family live in. I really hope I had a bigger lot.

On the other hand, building adu with 300k is different than buying property with 300k. The later allows to use mortgage more easily. 20% down and 4.5% or 5% investment property mortgage. I haven't researched on ADU loan but would imagine it to be more expensive. It also takes multiple months to build.

@Embert Madison jr thanks for your reply. Could you elaborate on why Sacramento is better than Tracy?

Tracy's economy is relevant to Bay area. How does that play in the REI game?

@Saj Shah what I meant was "at least cash flow neutral", meaning I want to avoid negative cash flow (like properties in the Bay area). Property prices are so high now compared to before. If it's positive cash flow, that would be even better.

@Carlos Ptriawan thanks for the reply. I should have been more clear that this is for investment property, not primary residence. I mentioned distance to South Bay because I would need to go visit the place I invest in.

I found it hard to find a property that's cash flow positive, if I assume 50% of the rent goes to operational costs like maintenance. That's why I said I look for property that's at least cash flow neutral. If I only look at PITI, then Tracy's rent can also cover that.

One thing I thought about Tracy is that, since many people live there and work in the silicon valley (when economy is good and housing price in the valley is high), the next economic downturn may hit Tracy (valley becomes less expensive and people living in Tracy can than afford to live in valley).

Sacramento has its own economy. Maybe same thing for Stockton.

I am living in the Bay Area (South Bay). I have been researching Sacramento and even been there 2-3 times looking for houses.

Then I noticed that Tracy's rent to price is just a little bit worse than Sac, while being ~1 hour closer to Bay Area by car.

Thoughts on which one to choose? I am looking for something close to cashflow neutral.

Many people rent out rooms in their homes to help paying the mortgage. But it would be far from "living for free". In a regular house in south bay, if one lives in one BR and rents out the rest, the rent won't be close to covering the PITI.

Typically renting out the whole house to separate renters (room by room) won't cover PITI. If you need to live in one, the rent is less. And living with landlord often makes the rental offer less desirable to renters.

With ADU, you would be able to generate more rent. But building legal and code complying ADU isn't cheap (on top of buying a house, esp. in a good school district).

@Neil He Could you elaborate on what are potentially bad about (South) Natoma? I am interested in there but would love to know more.

I think I may know you personally when I was in Midwest.

I know someone who manages an AirBnB unit (SFH) in East San Jose and their are actually a short-term rental management company trying to run in the Bay Area. According to them, their unit got 90+% or 95+% (I forgot which one) occupancy rate. Their unit is a 5-BR rented out by rooms, each for $50-60 a day.

I also know someone who rents out a bedroom in his owner-occupied townhouse in Berryessa, but don't know how well it went.

But basically there's a shortage for hotels and the demand is good.

I would be happy to connect with those people. Just PM me.

Sacramento limits short-term rental to a number of days per year, unless the owner lives in the property.

So no way for investors to legally do AirBnB rental in Sacramento (unless you go outside of city limit)

Hi @Harvey Fang! Did you end up buying something in Sacramento?

I know that a few folks in the Bay Area with the same interest in Sacramento. Myself is looking to buying my first rental property in Sac. Maybe we should have an offline chat with a few of us.