Invest in Sacramento

13 Replies

There aren't that many cash flow positive SFHs in Sacramento. Is it worth to invest in that area? 

Hello @Perry Z.

You're correct.  Sacramento does not have many good cash flow properties, nor does the bay area, nor does the west coast in general.  I've spent the last several months scouring CA for good cash flow towns but, ultimately, it was a futile effort.  You'll have to look to the midwest if you're interested in buy and hold. 

Chris NA

Thank you! How do you recommend I get started with out of state investing? Did you use turnkeys? How often do you visit the area? Are the $400 plane tickets worth it once every half year? What about San Antonio or Houston? (I've seen many cash flow positive properties there even with the property tax). 

Multi unit in Sacramento or SFR's in places like Yuba City. You are about 3 years too late to get cash flowing SFR's in Sac.

@Perry Z.

Do you have good friends or family in other parts of the western states or the US?

I think there is a tendency for investors in high-cost markets to pick places off the map and invest based on numbers and market reputation. I have definitely done this, and it can work. In the future, I would prefer to target markets where I already have a network.

Those plane tickets can have two purposes: visiting your friends/family and your investment. Your network can be a great resource to keep an eye on your investments or even partner with you. I would start by making a list of people you know, Facebook has a great feature that allows you to search for who know in different cities: https://www.facebook.com/help/community/question/?id=871110156249603

While you're visiting, make sure to let folks on BP know you're in town, they will give you a good local welcome.

@Trevor Ewen ,

Gotcha! Thank you!! I have definitely have a few close friends in Texas (Houston and San Antonio) - are they cash flow positive properties? I see a lot of great houses (3+/2) for $120k, but with property tax my cash flow is around $100-200. And I heard it's easy to have vacancies because of the level of supply. How about midwest or less hyped areas such as Milwaukee, Idaho, or Salt Lake City? What are the rental property markets you would invest in? :) 

I bet I can locate a cashflowING property in Sac.  What are your numbers (ex. 100k house purchase w/ 1k mth. Rent?).

@Perry Z.

To answer your question, yes, the $400 plane tickets are worth it if you're able to secure a nice cash flowing property. Remember, any out-of-pocket expense you accrue is tax deductible so long as you can show that the expense is related to your business (see LLC formation).

I am currently using turn-keys, though you have to do your homework on these types of businesses as there are plenty of turn-keys companies that can't wait to take full advantage of the next naive CA real estate investor.  However, after doing some networking, and relying on friends and family in my target area, I plan to make a purchase on my own without the help of a turn-key. 

San Antonio and Houston are super hot markets right now.  I have read that they are likely to continue to show appreciation for the foreseeable future, though not as strong as compared to the previous three years or so.  The problem with these markets is that word has gotten out about the lucrative RE opportunities there and they have become seller's markets.  In other words, if you don't have the resources to act fast (within hours, not days) on a potential deal you can forget about securing a property.  With that in mind, the idea of turn-keys once again pops up.  However, you have to remember that turn-keys are in the business to make money just like everyone else. You'll pay near or at full market value for a tk property. 

Lastly, regarding CA properties, even if I did find a cashflow property in CA I am hesitant to invest here due to the very friendly tenant laws this state has.  I've had a friend who spent thousands on an eviction which took on the order of 6 months.  During that time the tenant was getting a free stay and ultimately did not pay for past rent. Rent control is another major deterrent for my considerations as well. 

Chris NA

Thanks a lot! Sounds like you are investing mostly in the midwest now? Where do you think are good areas in the midwest? 

There's still plenty of cashflow to be had in San Antonio, especially if you're willing to rehab the property before you rent it.  Vacancy rate is about 6%, SFRs rent pretty quick.

$400 vs $5,000 in rental income. I can say the $400 is very much so worth it. I have invested across state lines and it still pays as long as i factor in my travel expenses inside of my cap rate. If the numbers work with all expenses considered I dont care where it is.

I have always loved the Mid-west and the South-East for cash flow. 

In the better neighborhoods of Sacramento it is very hard to find a cash flowing deal but patience is key I believe.

I am working with a friend who owns a number of SFH (I'm surrently managing them to help out and learn). We are now looking at aquiring 2-3 more. I'm doing the research for him and am having trouble finding anything that makes sense. Granted we're looking in nicer areas but things are selling at rediculous prices. Even being a cash buyer isnn't penciling out with the numbers. Any suggestions from other BP members on where to look for new deals?

I am working with a friend who owns a number of SFH (I'm surrently managing them to help out and learn). We are now looking at aquiring 2-3 more. I'm doing the research for him and am having trouble finding anything that makes sense. Granted we're looking in nicer areas but things are selling at rediculous prices. Even being a cash buyer isnn't penciling out with the numbers. Any suggestions from other BP members on where to look for new deals?

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