BiggerPockets

Investing in the Sacramento Real Estate Market in the $100k price range

Monday, January 09

Are you looking to invest in the Sacramento Real Estate Market?

This weekend I did inspections with one of my clients! I took some time while I was waiting for the inspection to shoot some video. I wanted to share with you a great little neighborhood in Sacramento I sell homes in.

When I am working with an investor who needs to keep their price range in the $100k range,  I prepare my clients for a rough road.

There are a couple reasons...

1.  This is a very competitive price range!

2. Inventory is down... Making getting an offer more of a challenge!

3.  It's tough to find a decent area in this price range you would feel safe in at night!

4. Will the condition of the home allow you to get a mortgage for it?
That only matters if you are not a cash buyer.

Watch this video and get some insight to the challenges investors and first time home buyers are having in this price range. See homes that I sold in the neighborhood and find out why I sell so many home here.

http://youtu.be/NnUElbc0yh8 

Interested in discussing what kind of return you can get here in the Sacramento Market? Call me and we can talk about the possibilities!

Do you get a better deal on a Sacramento REO, short sale, or private party sale?

Wednesday, June 30

So what is the answer? Does a Sacramento Investor get a better deal on a bank owned home, short sale, or private party sale?

This month, I thought I would break down Sacramento into three categories and report to you what is going on in each. The three types of homes for sale right now in Sacramento. They are... --------------------->

 

My clients often ask which category provides the best deal in our market! I thought I would take some time and break down each type of investment opportunity available and show you which one is a better deal. Just a quick lesson for those of you who do not completely understand the three categories... let's review them for a minute.

Sacramento Short sale: These transactions involve a sellers who owes their bank more than their home is worth. The buyer makes an offer to the seller, then the seller has to obtain a short sale approval from their bank. This means the bank agrees to release the lien (mortgage) on the home, even though they will not be paid back in full.

Sacramento Bank Owned Home: These homes have been foreclosed on and are now owed by the bank and are more than likely vacant.

Private party sale or Other: These are homes that are NOT bank owned or short sales. They are private party sales, probate sales, bankruptcy sales and other non bank owned or short sale transactions.

Now that we are all on the same page... Let's look at some numbers! First off lets look at Sacramento Real Estate Market as a whole.

As you can see, we have 4365 active listings for single family homes for sale in the Sacramento market. Of those listings, 2454 of them are new listings and 2217 are pending sale. In the month of May 2010, 1668 single family homes sold out of the 4365 homes for same in Sacramento.

Here are some statistics to help you compare what is going on with bank owned homes, short sales, and private party/other sales:

The first item we are going to look at is how long on average bank owned homes, short sales, and private party sales stay on the market before they are sold.

 

 

 

It makes sense that short sales lead the pack having the most average days on the market (DOM) of 146.

The short sale process can take months to get an approval back from the bank. This makes sense that short sales take much longer to closes escrow than the other two categories.

Sacramento Bank owned homes are in 2nd place at at 47 days on the market and private party sales are at 46. This is because these homes are ready to sell today as opposed to a short sale.

 

 

 

Next... let's look at average cost per square foot for Sacramento homes that have been sold.

If you compare on average the cost per square foot of a bank owned home, short sale listing, or private party sale... the best deals on average is the Sacramento bank owned home.

As you can see, you can get the cheapest square foot cost for a bank homes home. Normally there are issues with the condition or maintenance of these homes... which provides a discount in price.

Sacramento Private party sellers are selling their homes as quickly as banks, but are netting over 3 times as much! That is great news for those looking to sell a Sacramento home or investment property.

 

 

 

Finally... let's look at how many months of inventory we have left in the Sacramento Real Estate Market.

If you look at all the single family homes currently on the market, it would take us an average 2.6 months to sell every last house currently for sale in Sacramento County.

I thought it would be fun to check the absorption rates for each of our three categories (bank owned, short sale and private party sale).

 

 

 

What is the absorption rate? The absorption rate tells us out of the available homes for sale in Sacramento County, how many were absorbed (purchased) by buyers. Again the bank owned homes win again! Over 66% of the bank owned homes that were available to buy in May 2010 were sold. When you compare that to figure to a short sales at just over 27% and private party sales at 33%... Sacramento bank owned homes are certainly getting snapped up 2 times as much as short sales and private party sales. In conclusion, bank owned homes provide you on average the best price, but as you can see there is more competition for these homes based on the absorption rate. Be prepared to move quick when a new bank owned home comes up for sale... because other buyers will be. On another note... short sales don't provide you on average more of a discount than a bank owned home. Why not save yourself the hassle if you can and choose a bank owned home instead? Expect to pay more for Sacramento private party homes for sale, but remember they are often in much better condition than a short sale or bank owned home. Keep in mind these are averages and every neighborhood will reflect different numbers, but it will give you a indication of what is going on in our Sacramento Real Estate Market as a whole.

SacramentoRealEstateAdventures.com: Check out this Sacramento duplex

Tuesday, June 29

Check out my latest episode of Sacramento Real Estate Adventures! This week I previewed a duplex in Elk Grove for sale for my out of town investor.

Many Investors are coming from out-of-town to invest their dollars in our Elk Grove real estate market! Having a partner "in the streets" they can trust, will be imperative to making a good investment decision.

One of the ways I communicate with my out of town investors is with video. If I find an Elk Grove home or multi-family unit that meets my clients investment goals... I pop over to the property to preview it and shoot a quick video for my client. This video is going to do a better job at describing the units than I would over the phone.

In my latest episode of Sacramento Real Estate Adventures... I will share with you one of my preview videos of a duplex for sale in in Elk Grove.

 

 

 

If you are an out of town investor and would like to discuss investing your dollars in our Sacramento Real estate market, please contact me and we can get started getting you into some great cash flow deals.

How to market your Sacramento Rentals online for FREE!

Tuesday, June 29

Last night, I sponsored an spnsored an event that taught Sacramento rental owners how to market their cash flow properties online!

I realized after we polled the audience, that many landlords were not taking advantage of the Internet to market their rental properties.

Being a techie person... I just can't image NOT going to the Internet to market a vacant rental unit!

I thought it would be a good time to list the top reasons why a Sacramento rental owner would want to market their vacant rental unit online.

Drum roll please....

1. You can market your rental unit for FREE!
In our day and age, any dollar that can be saved should be! Why spend a lot of money on classified ads in a newspaper that many people no longer read.  The Internet offers a ton of places a rental owner can promote their vacant unit for FREE! 

Here is a great FREE resource:

www.Postlets.com 

This website allows you to upload photos and a description of your rental unit. The postlets website creates a professional online web page with it's own link that you can use to promote your unit online.

Postlets will also syndicate (send and post to other websites) your Postlet web page to several other websites like Craigslist.org, Facebook.com, Trulia.com, Twitter.com, Google, and more!

2. You get your vacant unit more exposure!
Think about it... Newspapers and magazines are closing their doors as most folks go to the Internet to get their information. If you place an ad in the newspaper, you will only expose your unit to a limited amount of people in the Sacramento area (those who have a subscription to that newspaper). If you go to the Internet, you get a ton more exposure and the reality is your ad is more likely to get in front of a perspective tenant.

3. Your tenant can tour your vacant unit virtually!
What if you didn't have to drive to your rental to show the unit? Ever made an appointment with a perspective tenant and they either never showed up or spent 3 minutes looking around before they decided it was not for them?

Another FREE tip.... YouTube.com! Take a video of the unit (here is a sample), then upload it to YouTube. When you get a call from someone who wants to look a your rental unit... now you can just send them to YouTube and have them view it online. If they still want to see it after they preview it online.... pre-qualify pre-qualify pre-qualify them over the phone before you go show them the unit.

Well those are my top three reasons why Sacramento rental owners should be marketing their vacant units online! If you are having difficult getting your rental tenanted... it's time to get creative and do a little Guerrilla Marketing!

Got questions or comments? ... post them below!