All Forum Posts by: Zach Thomas

My wife and I just went into escrow on our first property in Folsom, CA. I'm looking for recommendations for qualified home inspectors in the Folsom, CA area. Please respond or PM with your recommendations!

Anyone out there successfully use Sofi to purchase a duplex for a house hack??

If so, how was it? Would you recommend using them to fund a deal?

@Tobias Falzone thank you for flushing out your perspective. That is helpful. Given yours and others input, it doesn't sound like airbnb is advisable at this point immediately west of the bridge in SFRs. Sounds like the higher end developments could work if (big IF) the HOAs are accommodating.

You bring up another point I have been curious about, flood insurance. In doing some reading I saw that Sacramento is the second most vulnerable city in America to flooding (first is New Orleans). That being said, do you typically buy flood insurance in the flood zone protected by the levee system? If so, how much do you typically allocate in your cashflow calc for this insurance?  Obviously an insurance agent can get you a quote for a specific property, but do you have a rule of thumb you use to account for this when doing analysis on several properties?

The FEMA maps show areas that would be affected by flooding if the levee system was to fail- it is almost ALL of the downtown/midtown/W Sac areas ( http://arcg.is/011y0a ). The levee system was built, to my knowledge, to withstand a 1% event (one hundred year flood). Seems like this type of weather event is not too hard to imagine (Oroville dam scare last year).

Any other ways you mitigate this risk besides buying flood insurance?

Thanks @Tobias Falzone and @Account Closed can you expound on the lingering problems you see in W Sac? I have heard similar sentiments expressed by friends and family in the area.

City of Sacramento has very defined regulations surrounding the use of short-term vacation rentals ( airbnb ). 

https://www.airbnb.com/help/article/1248/sacrament...

However, these rules/regulations do not apply outside of the city limits. Does anyone have experience with airbnb in West Sacramento?

If so, are there any regulations to be aware of before doing so? I am considering using airbnb instead of long term tenants as part of a BRRRR strategy.

@Andrew Luong Thank you for your thoughts. That does help me put things in perspective. I think the key is finding a place we are happy living, and finding a job my wife would be excited about. 

@Matt K. I just learned I don't need to find a place by end of year. I do think that buying won't be too big of a risk as long my wife can make a similar income, plus if we house hack a duplex we will only be covering a portion of the mortgage every month. I do understand your point about finding a place we are happy with. I think we can accomplish this same out come by visiting several times over the next few months and talk to friends and family who live or have lived in the area. Part of me wanting to buy sooner rather than later is to lock in a place so I can take advantage of the rising rents. Those rising rents are going to push property values up eventually.

@Gordon Cuffe I did see that stat. Pretty incredible. Thanks for reaching out.

@Adam London Thanks for the validation. Did you move into a house-hack?

My wife and I currently live in San Francisco in Alamo Square. We both work solid jobs (her in tech, me in engineering) and are currently renting a 1 bedroom apartment in a nice area of the city. We have been saving up for a down payment for the last 2 years. At the beginning of this year I transitioned from a design focused job to one with the potential to switch over to a commissioned technical sales role. I am currently still on a salary and recently learned that you need 2 years of documented earnings once you switch from normal W2 salary to commissioned based compensation. At this point our choices are wait 2-4 years (takes time to build up commissions pipeline) and rent that whole time, or buy a place by the end of 2017. At this point we are able to comfortably qualify for $700k with 10% down and plenty in reserve. We learned this amount barely gets a 1 bedroom apartment in a less than ideal neighborhood in SF. I read Wes Blackwell's post yesterday and literally drove as fast as I could to Sacramento to checkout different neighborhoods (nice writing, Wes):

https://www.biggerpockets.com/forums/621/topics/39...

Luckily I am in a position where I can transfer my job fairly painlessly at this point in my career to our Sacramento office. My wife may need to find a new job, but she may be able to work remotely for a time. This remains a big question mark at this point, but is something I think we can deal with.

Looking at almost all of the multi unit (2-4) places yesterday in the Midtown and East Sacramento areas I got really excited about house hacking. We can afford a turnkey 2 unit, day one, in a great location, where I would be stoked to live. As my uncle (we have family in the area) and I drove around Midtown yesterday, I was surprised to learn just how much energy and money is rushing into the Midtown/Downtown areas with plans for big developments, such as:

1. Rail Yard Development https://www.cityofsacramento.org/Community-Develop...

2. River Front Development https://www.cityofsacramento.org/Community-Develop... and http://www.riverfrontstreetcar.com/

3. R Street Redevelopment http://www.sacbee.com/news/local/news-columns-blog...

Some other pluses: 

Midtown is laid out on a grid system with much of the restaurants, microbrews, art studios, yoga classes, coffee shops located on the center main streets (J,K,L), which means all of the surrounding residences have phenomenal walk scores. 

There is a light rail system that can take people to the airport is in the works: http://www.greenline2airport.com/

I think it may be tough to find a 2,3, or 4 unit place in Midtown that will cashflow day one. But considering my alternative is burning $36k/ year in rent, I think I would rather jump in and break even on cashflow and take the risk on rents rising and appreciation in the long run. I plan on house hacking for 2-4 years to save up for another down payment and establish my sales commissions before going out and getting another property. Ideally I would love to find a side-by-side duplex, each unit w/ 2beds/1bath, with one side in need of some work, and the other side move-in-ready that can rent for at least $1,800/month. I would live in the side that needs repairs and either fix it up over time or try to wrap the repair cost into the loan with a 203(k).

Would love to hear input from those of you who live in Sacramento. How does it feel that people are pouring in from the Bay Area? I spoke to a woman who worked at Beers Books and told her what I was doing, and she mentioned how rents were going up like crazy, but that it was nice to have so many new people coming to the area. I think communities going through changes like this are going to have growing pains, and I want to be sensitive to my outsider perspective. I personally am really excited to get involved in the community when we move there. Investing where I live and work is exciting for many reasons, financially of course, but also relationally, spiritually, and psychologically to be rooted and invested in a place and to actively promote the well being of that place. 

I will be traveling to Sacramento many times over the next 4 months as we try to find a deal to close on. I would also love to connect with the BP community there. Please reach out if you would like to connect or have any potential deals, advice, or are in the same boat and are considering a similar move.

Mike, thank you for your response. I missed your post some how. Listing was removed from the market, interested in watching who bought it and what they do with it.

Here's the address for anyone else interested:

1327 Wildwood Ave, South Lake Tahoe, CA

Check out this bank owned foreclosure that came up yesterday. Considering it as a flip opportunity.

https://www.redfin.com/CA/South-Lake-Tahoe/1327-Wi...

The good:

The price, location, size. Listed at $156,000 the price is obviously discounted. Similar sized homes in the area sell for $400-600k. It is located half a mile from Heavenly Mountain Resort. The house is a little over 2,000 square feet.

The bad:

I drove by the property today and it's in terrible condition. It looks a Frankenstein house with holes through exterior walls, interior walls are gutted and bare to the studs. I spoke to the city building inspector about the property as they were posting a red tag notice. The previous owner made several significant modifications without pulling permits. The inspector walked the property this morning and noted several major issues. The electrical needs to be completely ripped out and redone, the HVAC ducts are completely missing, the foundation is compromised (a few of the footings crumbling), the plumbing needs to be redone and brought up to code, the lighting needs to be brought up to Title 24, the lot coverage appears to be above the 25% maximum for Tahoe Regional Planning Administration. The inspector guessed it would take $200k to get it up to code.

Conclusion: $175k down (bidding war is underway), $200k to bring it up to code, $75k for finishes. If it sells for $600k it would be a profit of $100k+.

Would love some input from investors in Tahoe area on this property on the viability of this property. I have heard that working with the city of South Lake Tahoe is very difficult to work with.