Need opinion on 95824 zip in Sacramento, California

9 Replies

Dear BPers,

I'm looking for your valuable opinion on an area in Sacramento, California - zip code is 95824 and the main cross streets are 47th and Franklin Blvd. I live in Pacifica, CA in the Bay Area(a couple of hours away), and I jumped on an opportunity to put an offer on an off-market fourplex. Prior to getting the chance to walk the property, my offer was accepted and am now in contract.

I took the time to drive around and walk the neighborhood. From preliminary research online, I was thinking it was a C, which turned more to be a C- after physically exploring. Conservatively, after 1 year, I'm projecting $500 in CF at a 6 Cap. My plans are to hold the property for at least 5+ years or longer.

I would appreciate any local Sac investors and other BPers point of views. Cheers!

its very very street specific but yeah C- is probably pretty accurate. If you are already willing to do long distance (Semi long from you) why not take the strategy out of state? you can get better neighborhood grades, cash flow, lower barrier to entry, with prop management in place  and achieve those cash flow numbers.

@DJ Dawson , thanks for the input! I'd like to scale up in Sacramento - leveraging, developing, and winning for the local team members I've connected with of RE agents, PM, contractors, etc. I believe this will be critical early in my investing career to know how to put together a system, first. Then I can repeat the process somewhere I will not be able to drive to if things go sideways. 

Originally posted by @Brian Fitzgerald :

Good Morning JR,

If you are interested in connecting we can discuss the subject property, rent potential and strategies to achieve your goals. 

Thanks for reaching out @Brian Fitzgerald! I am partnered with a very reliable and knowledgeable PM, but I would still love to connect even just to talk RE and learn from a local. DM me a time if you're interested. Cheers!

 

Hey JR. If you're already accessing off-market deal flow in California you have a huge advantage in the RE game. As you know (or will soon find out) CA investing is not always about cashflow so its hard to give an opinion on a particular property just based on those figures. 

A great many war of words have been fought on BP about cash flow vs mixed strategy investment. In Sacramento, 6% cap is usually a good starting point after factoring in 4-7% yearly appreciation for the next 5 years (my estimate based on being an agent here for 13 years/investor for 9). Mix in any value add opportunities and you've got yourself a great property baring any major issues. 

One thing you'll want to triple check with your agent are the comps, it's substantially more difficult to comp multi unit vs SFR properties. My thesis is you make your money on the purchase, not the sale meaning if you buy at the right price, its hard for a deal to go south. 

Best of luck with your investment!

Originally posted by @JR Silva :

@DJ Dawson, thanks for the input! I'd like to scale up in Sacramento - leveraging, developing, and winning for the local team members I've connected with of RE agents, PM, contractors, etc. I believe this will be critical early in my investing career to know how to put together a system, first. Then I can repeat the process somewhere I will not be able to drive to if things go sideways. 

 teamwork makes the dream work!!! let me know if you need any contacts out here id be happy to connect you w any of my guys!

Originally posted by @Michael C Williams :

Hey JR. If you're already accessing off-market deal flow in California you have a huge advantage in the RE game. As you know (or will soon find out) CA investing is not always about cashflow so its hard to give an opinion on a particular property just based on those figures. 

A great many war of words have been fought on BP about cash flow vs mixed strategy investment. In Sacramento, 6% cap is usually a good starting point after factoring in 4-7% yearly appreciation for the next 5 years (my estimate based on being an agent here for 13 years/investor for 9). Mix in any value add opportunities and you've got yourself a great property baring any major issues. 

One thing you'll want to triple check with your agent are the comps, it's substantially more difficult to comp multi unit vs SFR properties. My thesis is you make your money on the purchase, not the sale meaning if you buy at the right price, its hard for a deal to go south.

Best of luck with your investment!

Thank you, Michael! I very much appreciate your insight. I'd have to agree with you, specifically with how hot the Sacramento market has been as a whole - finding a homerun deal with amazing CoC and CF off the bat, I've found extremely difficult and may keep me on the sidelines for years if that's all I based a good deal on. My plan is to watch the grass grow and hold on to the property for at least 5 years. During that time, along with my PM, we plan to increase CF by increasing rents. I definitely account for appreciation when projecting total returns and assessing if a deal is worth my while. Since it is speculation, I try to be extremely conservative with appreciation - the market can crash tomorrow, next week, etc. Even if it does, time in the market beats timing the market every time!

Thank you for providing specific numbers! It is very valuable to know what you're seeing in terms of Cap and appreciation. It seems you've been doing it for a while so I'll definitely heed your input on this. During our due diligence, we are trying to make sure there aren't any major issues to surprise us, and I plan to put aside 10% of rents a month to add to reserves for any potential capital expenditures, repairs, and maintenance.

I agree 100% with your thesis. I've run my own comps on similar fourplexes within a one-mile radius and am in the process of requesting comps from my agent per your advice. If you'd like to offer your wisdom around this, too - I fully welcome it. Thanks again!

Originally posted by @DJ Dawson :
Originally posted by @JR Silva:

@DJ Dawson, thanks for the input! I'd like to scale up in Sacramento - leveraging, developing, and winning for the local team members I've connected with of RE agents, PM, contractors, etc. I believe this will be critical early in my investing career to know how to put together a system, first. Then I can repeat the process somewhere I will not be able to drive to if things go sideways. 

 teamwork makes the dream work!!! let me know if you need any contacts out here id be happy to connect you w any of my guys!

Thanks, DJ! I may take you up on that sooner than later!