Purchasing a property in SF bay area/ Sacramento region

Buying & Selling Real Estate
4yFollow

Purchasing a property in SF bay area/ Sacramento region

Patrick Thomas Dickinson
Investor · Sf Bay Area · Member since 2021 · 90 posts · 41 votes

Hey BP folks; 

Here's my situation. Me and Girlfriend are preapproved for 1,000,000 in loan together, I have 125,000$ to 140,000$ liquid cash to be used as down payment on whatever property we chose to purchase. Just looking for some fresh ideas and what you moves you make or  purchases you would make if you had similar finances. ( and to make this more clear, this is a long term play ( 20-30 year buy and hold): 

Ideas must be centered to sacramento/ bay area region: 

What cities to you feel are still the most undervalued in the bay area/ sac region:? vallejo, tracy, lodi, pittsburg, fairfield, vacaville , arden, carmicheal, citrus heights give me some more?

Options we have been playing around with:

1. Just buy a single family home in a well established area, put 20% down and rent it out from day one ( seems like a safe move but it probably wont cash flow for the first handful of years. ( appreciation play) 

2. FInd something with a sfh with maybe an adu on the property and rent out both or get creative. I know the recent passage of senate bill 9 we have more options as far as putting more propertys on lots once deemed for sfh only. 

3. Buy a property that is already multifamily and rent it out long term, we want to stay out high crime areas and that limits are choices to a few cities at least at our price point. IE sacramento, lodi im sure there's more but the options are few. 

I am really just looking for some fresh ideas that I might not have thought of. Thanks for any feed back everybody. Please try and justify why you would choose a particular option thanks. 

1Reply
47 views

Most Popular Reply

Chris Pasternak
Real Estate Broker · Pueblo, CO · Member since 2013 · 368 posts · 303 votes
4y

Don’t play house with a girlfriend. Get married or be prepared to own it with her parents.

4Reply
See this reply in the discussion

12 Replies

Jump to latestLatest
  • Vincent Vazquez
    Real Estate Agent · Sacramento · Member since 2017 · 26 posts · 8 votes
    4y

    Hi Patrick, I specialize in residential investment properties and I can help you find a multifamily property with acceptable margins. It seems like you have the right mind set to focus on long term growth and it can still be done in the greater Sacramento area. Shoot me a message and I can add you to my roster and start keeping an eye out for you. 

    0Reply
  • Patrick Thomas Dickinson
    OP
    Investor · Sf Bay Area · Member since 2021 · 90 posts · 41 votes
    4y

    thanks for the help @Vincent Vazquez but I have agents lined up in all areas that im looking for. I am really just looking for good sound advice based on my current financial situation. Thanks 

    0Reply
  • Sean Resavy
    Investor · Vallejo, CA · Member since 2020 · 28 posts · 23 votes
    4y

    If you're planning on building a portfolio don't buy it together. Just buy it in one person's name as long as you guys arent married. It's twice as many houses you can buy with conventional. Regarding our options I would crunch numbers on a few potential properties and go for the greatest coc return. Do not waste money doing a 20% down. Take advantage of a 3.5% or 5% down. Will increase your ROI. Happy hunting!

    0Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    If you already have agents lined up in those areas why aren't you utilizing the feedback they give you?

    0Reply
  • Patrick Thomas Dickinson
    OP
    Investor · Sf Bay Area · Member since 2021 · 90 posts · 41 votes
    4y

    I am , @Brian Garlington but the bigger pockets community is a little bigger than 4 agents opinions, especially 4 agents who have a vested interest in selling you properties in there service area, you never know where and when your going to learn something new so I thought I’d try my luck here as well

    0Reply
  • Chris Pasternak
    Real Estate Broker · Pueblo, CO · Member since 2013 · 368 posts · 303 votes
    4y

    Don’t play house with a girlfriend. Get married or be prepared to own it with her parents.

    4Reply
  • Julian Wyer
    Real Estate Agent · Sacramento Metropolitan Area · Member since 2022 · 19 posts · 8 votes
    4y

    I think all the options you laid out are fine. I'd pick the one that meets your lifestyle best. Maybe get one in a fun location and go for the Short term Rental and have a place to vacation to for cheap.

    But if you really wanted the "best" option, the Robert Kiyosaki's and Grant Cardone's of the world would say you should leverage your money out. You can get 1 property with 130k down, or you could get 13 properties with $10K down payments. Or half that with 20k down, or whatever price gets you the type of properties you would like to invest in.

    But if you're not ready to go big like that, Just pick one of your options that fit's your lifestyle the best. A Short term rental. Maybe a TERRIBLE house in a WONDERFUL neighbor hood if you ever wanted to try out the flip thing. 

    2Reply
  • Sebastian MarroquinPro Member
    Real Estate Agent · Pasadena, CA · Member since 2015 · 477 posts · 263 votes
    4y

    I would: 

    1. Look for a fixer home in an area you like: buy with 5% down : fix the home and add the ADU:

    Refinance and pull some of your investment out. Then you could add sq footage and increase value more and then choose to refinance again or not... up to you. of course, look at the rates and do it when beneficial. Start with about 1000 to 1200 sq ft (ADU about 400 sq ft garage) and add 500 to 700 sq ft master. for about $200 per sq ft and the value added will be around $400 to $700 per sq ft (depending on location and prices). Can't beat that.

    2. Buy a home with a bigger lot: fixer or not... and I have a company that will help you divide the lot and build a home on it with their funds. (say the area is selling 1200 sq ft for $800k ) so when you divide the back of the lot and build a home: you will be around $300k for 1000 sq ft 3 bed 2 bath open concept home, and sell that for about $650k to $700k (you will share profit with the company 80/20)  and net around $150k to $200k 

    So your $800k home will effectively be ($800k minus $200k : or $600k) and you can use the profit to improve the main front home: add ADU and make it bigger if need be and if the market supports a higher value. Or just the ADU and once you rent it out you will net about $1k per month. and move on to the next purchase.

    3. You could buy a fixer 2 unit or 3 or 4 unit property : 5% down and still add ADUs if city permits it. A lot of counties allow it on multi unit properties. Cash flow and move on the next one. 

    (if you don't have much experience buying or building. Maybe your first move could be to buy an SFR and then later add the ADU. Things will always come up and over extending yourself could be stressful on both you and your GF).

    * I do get why other realtors on here are asking you to lean on your current realtors : bc if you bring these strategies to them (knowing that they did not proposed anything like this) they won't have the teams to suggest to you (ie contractors, architects, drafters, and navigating the permit process with building and safety with the city). 

    Each one of the people mentioned for the teams could F***** up your first purchase. So be careful who you work with. 

    I have worked with many investors flipping property and buying rental property (10 years of experience) and we had some set backs with our first purchase and we did buy a fixer condo lol 

    so, theory will always be different from practice. We learned a lot from buying, renovating and renting that condo. and Now we moved to a SFH: renovated everything except foundation and framing and adding an ADU.

    After this one: we will buy another SFH or multi unit (kinda using the stack method): I think we are ready now financially and mentally for a bigger property. :)

    Good luck 

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    Get married first, or start a legit partnership with her.

    0Reply
  • Kyle Smith
    Investor · Vacaville Ca · Member since 2021 · 30 posts · 16 votes
    4y

    I would look in Vacaville. I think it's kept up nice. I don't notice as much riff raff as Vallejo or Fairfield. Plus less trash on the streets and the homeless are less visible. A lot of Cops and Firefighters live in Vacaville. Theres a reason they choose to live in certain areas.We also have Travis Air Force base which provide good tenants. The people in the Air Force usually look for places to live in Vacaville first, before Fairfield.  If your looking in Vacaville, Browns Valley and North Vacaville are hot spots to own. I would also look at Dixon. It's a smaller city that is just up the road and growing. It's also clean compared to Fairfield and Vallejo. I can't speak to the other cities you listed as I don't spend much time there. This is perspective from someone who has lived in the area for 40yrs. Hopefully this helps have a good day.

    0Reply
  • Patrick Thomas Dickinson
    OP
    Investor · Sf Bay Area · Member since 2021 · 90 posts · 41 votes
    4y

    @Kyle Smith that’s funny I currently live in Vacaville we have contemplated the area 

    0Reply
  • Kyle Smith
    Investor · Vacaville Ca · Member since 2021 · 30 posts · 16 votes
    4y

    My buddy just bought a second home in Vacaville, Browns Valley area. He's going to rent his original as a rental. Its's also in Browns Valley. He had no problem finding renters from the base. If you end up purchasing in the area. Let me know, I can get the contact list he used to reach out to the Air Force Personnel.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free