Forcing equity into a 1940's Bungalow in Sacramento California

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Forcing equity into a 1940's Bungalow in Sacramento California

Christian Rozo
Member since 2020 · 26 posts · 13 votes

Hey everybody, 

My lady and I just moved to Sacramento CA (currently renting) to get boots on the ground to buy our first home within the next year. We're looking at older 2/1 Bungalows (1940's ish) throughout Oak Park, Curtis Park, Tahoe Park, Colonial Heights etc. We would like to force equity into it by adding a bed or bath (preferred bath if one over the other). Seems like we can pick them up for under $450,000, and some considerably cheaper depending on the class of neighborhood. 

I'd appreciate any advice on what we need to know and look for to facilitate this. 

-Referrals for real estate agents with investor mindsets in the area. I don't have a background in construction so I'll need someone with experience in this kind of house hunt to seek out homes that can fit the project.

-What financing options have you sought out for rehab costs if you can't lump them into your home mortgage?

--GC Referrals would be great too. I'm sure I can probably discuss all the construction questions with them. However, some questions at the top of my mind are:

-What are ballpark costs with construction per SF? I know they will depend largely on the layout of the house, the existing plumbing, amongst other things. What style layouts might be the easiest to contend with?

-Are there any issues unique to this type of older home in Sac I should be aware of?

Thanks in advance!

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  • Eduardo Aguilar
    Real Estate Agent · Sacramento, CA · Member since 2019 · 44 posts · 38 votes
    6y

    Hey Christian- welcome to Sacramento. I grew in this beautiful city and would love to be a resource for you. The neighborhoods that you flagged are definitely great areas that are seeing solid growth. Would love to set up an call or Zoom to get a better handle on what your goal is with the property and happy to connect you with my network of lenders and construction professions. Feel free to DM me. 

    - With regard to referrals, it seems self serving but definitely would raise my hand on for that. I'm a longtime BiggerPockets member and am actively advising several clients on the purchase of their first or next investment properties. My team also specializes in the areas that you're interested in and we have closed over 100 deals just this year alone and bring a strong experience with flipping and buy-and-hold investments. 

    - Depending on what you're wanting to do with the home, there are several traditional options that you can explore to incorporate your upgrades into your mortgage. This option exists for FHA, VA , and Conventional loan options. There of course are also private money lenders and the options of tapping into existing properties such as HELOCs and cash-out refinancing. As you can imagine, each comes with its own requirements and pluses and minuses. Ultimately, it would be good to assess your position with regard to your cash on hand and what the resulting financing will mean to your return on the investment.

    -For General Contractors, there are several folks that I'd be happy to connect you with. The key is thing to keep in mind at the moment is anyone that comes well recommended is booked for the next 2-4 months and so you'd need to factor that into your holding costs. You also want to determine what it is that your hoping that they take on and what you're willing to take on as part of the project. 

    -Costs will vary significantly based on finishes but the range that we've been sharing with folks is anywhere from $250/sqft on up. 

    -Depending on the state of the bungalow you could be dealing with a fairly straightforward roof replacement and repiping to having to invest in shoring up the foundation and repairing layers of DIY fixes and shawdy craftsmanship and significant wood rot. The real is that you won't fully know until you get the inspectors in their to start poking around to see what the state and condition of the house actually is. 

    All in all, there is definitely some great opportunity that exists it just depends on what your goal is with the property. There are also some excellent opportunities within the areas surrounding Central Sacramento that can be much more fruitful in yielding a stronger return while limiting the upfront investment. 

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  • Christian Rozo
    OP
    Member since 2020 · 26 posts · 13 votes
    6y

    @Eduardo Aguilar

    Pleasure to meet you! Thanks for all the intel. I can see from your page you’ve done the kind of deal I would love to execute. Taking a 2/1 to a 3/2 is impressive, I’d love to talk with you about your experience.

    I’ll dm you for more Info. 

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