We’re property managers based in Redding, CA, and the laws here favor the tenants, making situations like this even trickier.

1st position available everywhere . 2nd position will be tough to find favorable terms 

As a general rule, I tend to vote against anything that favors rent control and will increase property taxes.

@Tove Fox - Residential Real Estate InvestingPros:Lower Entry Costs: Easier to get started with less capital required.High Demand: People always need homes, making demand relatively stable.Easier Financing: Mortgages are generally easier to secure with favorable terms.Simplicity: Easier to understand and manage, especially for beginners.Flexibility: You can use it as a personal residence or rent it out.Cons:Tenant Turnover: More frequent turnover leads to vacancy and more management.Lower Cash Flow: Income potential can be modest compared to commercial properties.Emotional Buyers: Residential prices can be influenced by emotions, leading to price volatility.Maintenance Burden: Landlords often deal with repairs and maintenance, which can be time-consuming.Commercial Real Estate InvestingPros:Higher Income Potential: Stronger cash flow and higher returns are common.Long-Term Leases: Tenants often sign longer leases (3-10 years), reducing vacancy risk.Professional Tenants: Business tenants tend to take better care of the property.Valuation Based on Income: Prices are based on the income the property generates, not market emotions.Shared Costs: Tenants often cover property expenses like taxes, insurance, and maintenance (via triple-net leases).Cons:High Entry Costs: Requires more capital or partnerships to get started.Complex Management: More expertise is needed; you may need a professional property manager.Economic Sensitivity: Commercial properties are more sensitive to economic conditions.Challenging Financing: Securing financing can be harder, with stricter terms and higher interest rates.Zoning and Legalities: More complex regulations compared to residential properties.Key Differences:Risk: Residential tends to be lower risk, while commercial offers higher rewards but with greater risk.Management: Residential is easier for DIY investors, while commercial properties usually require a team.Scalability: Commercial properties are easier to scale, offering more potential for significant cash flow increases.

If you have favorable terms on those first mortgages, you might find that a HELOC or a second-position loan is more cost-effective than doing a full refinance or a DSCR loan.

The Bayport Dr deal intrigued us due to its market-ready condition, favorable purchase price, and high potential for profit with minimal effort.

While the economics are not as favorable for you, raising $300-$400k to buy something like a 1.2mm property will be far easier than trying to raise $10mm to buy a 100 unit.  

If you're using the builder's contract form, rest assured it will be very one-sided in the builder's favor.3.

The Sacramento market seems like it’s working in your favor.

We took the reverse action and started lowering asking rents until they moved.I suspect the reason that one property of yours turned quickly is because your asking rent was very favorable vs. local competition.