Is Stockton CA still a good location to invest?

Question

I am a newbie here, Is Stockton (CA) still a good area to invest?

All advices will be appreciated!

Wes Blackwell · Answer

@Tammy Ly

Ultimately, it's going to depend on your criteria and strategy, but I would say yes. There is a massive migration going on in California. The largest homebuyer segment is millennials under the age of 37, and they are moving out of the pricey Bay Area and into Stockton, Sacramento, Phoenix and Nevada.

As for Stockton, where else are you going to find a decent home for $250k? See map below:

Recently listed a home in Stockton and got 3 offers on the first weekend. Market is hot.

So, in my advice, yes. Stockton is a good place to invest. But it all depends on your strategy, experience, goals, etc. just like any other market.

If you have any more specific questions about Stockton just let me know, grew up there so I know it like the back of my hand.

Paul Choi · Answer

Stockton is block by block so anything south of hwy 4 is typically bad.  Downtown and north of it is class C. North Stockton near UOP is better.  Price per unit reflects the different areas and how "rough" it is.  You really have to drive around the whole afternoon to get a feel for it.  I live in the Bay Area but have driven around Stockton and Sacramento almost every weekend for months - up and down the street, block by block.

That duplex you mentioned - what are the comps telling you?  If the comps show $500k sales, then it might be a decent deal where there is value-add upside.  If they don't then probably not a good deal.  The 1% or 2% rule is just 1 metric.  You need to look at a bunch of factors - ARV, GRM, DSCR, Cap rate, EM, CoC ROI and so on.

Tammy Ly · Answer

@Mike D'Arrigo Thank you. I was told 95204 and 95207 are better areas, Can you tell which zip codes should watch out for?

Mike Gi · Answer

Wes,

I am considering selling my duplex in Kansas City MO and purchase similar property in Stockton area since I live in east bay. May be I should do 1031.  Let me know if you can help me on this

Mike

Wes Blackwell · Answer

For every market, you have to compare apples to apples. Numbers can vary wildly in just a two hour drive. What you have to do is compare the subject property to previously sold and currently available inventory and compare the averages. If the average % rule is 0.6% and you come across a deal that is 0.85%, then you've found a deal even though you didn't hit the 1% mark because the property offers greater returns than other comparable properties in the same area.

As Paul Choi said, Stockton is block by block, so best to at least spend an afternoon driving around the area you're considering investing in if you're not working with someone who's intimately familiar with the area and lived in the area for over 10 years...

Ahem... *COUGH*COUGH*WES BLACKWELL* COUGH* COUGH* ;-)

Tammy Ly · Answer

A trip to Stockton today, drove by a couple of areas where the few properties located. It seems nice town with a lot of lands. I went to the North part and East center part of the town.

Mike D'Arrigo · Answer

I don't know Stockton well but in looking at those zip codes on a map, the look pretty geographically broad and I suspect the neighborhoods will vary a lot within the zip codes. Zip codes are too large in most markets to be meaningful. You need to drill down further than that.

Mike D'Arrigo · Answer

@Tammy Ly there are some pretty rough areas of Stockton so you have to know the area well.

Brian Serina · Answer

Be careful of Stockton.  RE is very cyclical and Stockton is an area that gets hammered every down cycle.

Wes Blackwell · Answer

@Mike Gi

Sending you a message to see if this is the right move for you to make :-)

Is Stockton CA still a good location to invest?

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