24 with 100k on hand looking to invest in Sacramento area (Folsom

[John Collins]

I’m a 24 year old living in Folsom at my parents house. Because of this I have a monthly savings Tate of 85% on an 80k salary. I plan to live at my parents house for another year or two.

I now have 100k on hand and was thinking of buying a house in the Folsom area and renting it out.

Is this a good idea?

100k is a 20% down payment on a 500k house, and on Zillow a 500k house has a mortgage of 2.4k with a estimated renting price of 2.6k. Is it worth doing something like this for the appreciation and rent surplus?

Is somewhere like El Dorado area better to invest it?

[Deonta Dorrough]

Hello John,

It’s always a good idea to start thinking of ways to build long term wealth. PM me and let’s talk more about what about your investment goals. Talk to you soon!

Thanks,

Deonta

[Ley Nezifort]

@John Collins if I had $100K and lived at my parents house, I'd totally use that money to BRRRR with in a cheaper market. Reason is, when you BRRRR that same $100K can be recapture (the Refinance part) so you can then repeat the same process.

I'd do enough BRRRR until my total monthly cash flow exceeds my monthly income from my W2, and then I'd maybe think about parking that $100K by acquiring some properties (not one) with 20% Down.

PS: I’m 24 as well, and I’m strictly a cash flow investor, so you can definitely PM me if you want to bounce some ideas. 

[Joshua Durrin]

@John Collins you’re in a great position to get launched. You have a few points to consider. Best place to start is to continue to learn. Never stop. You could look at it as if it’s 20% on a $500k home or you could look at it as it’s a pool of money for a down payment on a few properties, perhaps even a multi family. Point is, you have options and it’s important to be aware of them to ensure your highest and best use of your capital. I love talking real estate. PM sometime and feel free to bounce ideas off me if you want. Full disclosure, I am a broker and would be happy to help you along the way too.

[Shaun Weekes]

Originally posted by @John Collins:

I’m a 24 year old living in Folsom at my parents house. Because of this I have a monthly savings Tate of 85% on an 80k salary. I plan to live at my parents house for another year or two.

I now have 100k on hand and was thinking of buying a house in the Folsom area and renting it out.

Is this a good idea?

100k is a 20% down payment on a 500k house, and on Zillow a 500k house has a mortgage of 2.4k with a estimated renting price of 2.6k. Is it worth doing something like this for the appreciation and rent surplus?

Is somewhere like El Dorado area better to invest it?

 I would look for a price point a bit smaller and also see if any 2 to 4 units are available.  

[Pratik P.]

I grew up in Folsom and my parents live there now. Your ROI is likely to be negative if your plan is to buy something there at market value and rent it out. Folsom, EDH, Granite Bay, etc are all high end areas and usually won't cash flow.

[John Collins]

@Pratik P. Yup, that's also what I gathered while doing my brief research. At best my renting ROI would go even.

So the question is will the house appreciation in the Folsom/El Dorado area be worth it for the negative or even rent ROI?

[Jermell Shavers]

@John Collins 100k 20% down. Me personally I'd look into investing out of state that doesn't make sense to me at least to get a 500k property to make roughly 2500$ and have a mortgage and everything else. Idk about where you live but where I live people don't really rent 500k houses if they can do that they own them. Go into a different market and get like 3 four places with 20% down way better ROI

[Bryan Lynch]

@John Collins I’m an Appraiser in the area. Feel free contact me about that market.

Prices are near or at 2005-2007 highs. I’m exploring out of state myself since the numbers just don’t work From a beginning allocation standpoint IMO. I just posted asking others what states they’ve had direct experience in.

[Logan S.]

Real estate prices look really high in EDH and Folsom right now, even though it appears they are constantly building new homes, especially south of Highway 50. 

I would say check out some other areas. Personally if I was in your situation I would check out the Vineyard area (95829) just above Elk Grove, where you can find a small home for 400k and rents are no less than 1900/month for most houses over there. In the past 6 years they've built a ton of homes off of Gerber and Bradshaw, you may want to check those out. If you want a little bit of an older property, just down off of Vintage Park and Bradshaw has some that aren't that much older.

[Ola Dantis]

@John Collins You seriously should consider some other options such as out of state investing if you are unable to get really good deals in CA. 

Now, if you are thinking of staying at your parents' for some time, then you can still build up your savings while you pick and learn about a few markets that are you like. 

Alternatively, you can also invest passively to get a decent return. Whatever you do make sure you choose the right partners to invest with. 

Remember, all you are trying to do is get your money working harder for you by placing it in the right deals! 

[Alexander Ball]

That's a terrible deal, you'd lose money every month.

[Ladè Baruwa]

^^^ Is this guy serious? Lol

@John Collins You should educate yourself more while you continue to build capital.

Network while doing this and gain some strong partners that can lead you in the right direction.

The time it took to save up 100k at home may not be so easy to save up again. Who knows what will happen next year....Life happens, and you can lose that $100k in the blink of an eye with the wrong choices.

[Pratik P.]

Originally posted by @John Collins:

@Pratik P. Yup, that's also what I gathered while doing my brief research. At best my renting ROI would go even.

So the question is will the house appreciation in the Folsom/El Dorado area be worth it for the negative or even rent ROI?

It's not worth it. Appreciation is just icing on the cake. If the numbers don't work as they are right now, then it's not a good deal. Also, they are building 10k homes right by Costco so I don't see existing home values going up much with the big increase in supply.