Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
Hello BP,
As I continue to learn about REI, I have struggled with the B, C, and War Zone concepts when it comes to neigborhoods. Specificly Sacramento, Ca but also in general. For the Sacramento investors what would you say about the area between highway 50 down to 14th street and highway 99 over to Stockton blvd? Mid town and the fab fourties I believe to be "A" areas. While living in Chico, I lived in some questionable areas but only really knew they were questionable after living there for awhile and having friends say "you live where???". To me it wasnt that bad, rent was cheap and it allowed me to save money. So how does one feel out an area with out living there in order to make a judgment on what level of renter that might want to reside in your investment?
Real Estate Agent · Lincoln, CA · Member since 2014 · 225 posts · 43 votes
12y
My $.02, tryn to dumb it down in my mind: zone is you want to live there. B zone is you could live there. C zone people live there & for most part are good workers. Maybe some houses with small shain likn fences & maybe some houses with bars on windows & lmaybe some tagging. My thought here is i may not want to walk through at night. War zone. Really bad. Wouldnt even drive through. Tagging, homeless, crack heads walkn down the street during day, bars, pitbulls etc comparible home prices will give. You an idea
Real Estate Agent · Sacramento, CA · Member since 2012 · 111 posts · 26 votes
12y
I often hear properties being put into the different classes. I think it's a little harder to classify entire neighborhoods as B or C etc. The area you describe (between 50, 99, Stockton, and 14th Ave has some large variation in it). Broadway and 35th is pretty nice. Other areas not not so much.
Below is from @Will Bernard. It's difficult to put properties into these buckets because many older properties have amenities and command higher rents/higher prices, but this gives one an idea for comparison. Also think of the type of person who might occupy the property.
A Class = Most amenities, newer building, usually 10 years or newer, great area, top rents. (Think Luxury)
B Class = Good amenities, approx. 20 years old or less, good area. (Think white collar/some blue collar)
C Class = Little amenities, older buildings, usually 30 years old or so, not a good area (but not war zone) (mainly blue collar area or students/people just entering the job market)
D Class = No amenities, old building, usually with deferred maintenance, bad area (likely war zone)
I agree with @Jake Weir but I expand the age more. Most of the homes in the area you mentioned are more than 50 years old, many older. It is a batch of pockets that are good and bad. I see a lot of people remodeling/rebuilding around that area also.
I have a fourplex bordering that area off Broadway and Franklin that has done well over the past 14 years. Paid $92k for it and I had an appraisal a little over a year ago for $325k. I wouldn't plan on appreciation but as Curtis Park expands the appreciation will follow as long as people are upgrading their homes and flippers are looking for deals.
Our areas, which border each other, are mainly economy/older homes and apartments. That is until you go a block south and hit 2nd Ave. 2nd Ave used to be much worse and so did the area up to Broadway but it is quickly turning around as Curtis Park is expanding. Everything west of Highway 99 is rapidly appreciating as homes are bought, fixed up and sold for $400-$500k reasonably quick.
Even Oak Park, to the southeast, is turning around. If you go down Broadway you can see the revitalization happening all around. I think it's great for everyone. I don't think I'm quite ready to go far into that area but I applaud those who are down there now doing all that work.
You already know about mid-town and it's expansion and on the other side you have McKinley Park, which is very expensive.
Your area could end up doing very well over the next 10 years if you can get something in your area that can make you a few hundred a month I would do it. I don't think I would go into it without making a modest profit but you probably won't get a larger return unless you put a lot of money into it.
Let me know when you are going to go look around the area. I'll drive through it with you. I don't know that area great, but fairly well and two heads are better than one.
San Francisco, CA · Member since 2014 · 345 posts · 281 votes
12y
@Chris Vail I think you mean Highway 50 south to 14th Avenue (not 14th Street) and 99 to Stockton. This is Oak Park, not Curtis Park. I rate this a C neighborhood.
http://www.sacpd.org/crime/mapping/
More than anything else, you need to drive around in person and get a feel. If you stay close to Broadway and the medical center you will find some nice places that seem like they are gentrifying. Move further South and you will find lots of peeling paint and chained up pit bulls and rougher stock. If you try to landlord here, you should expect to have some challenging tenants. Your best cases will be seniors and folks on disability with limited means and limited choices.
On your visit, go to "T&R Taste of Texas" Barbeque at Broadway and 4th Avenue. Show up hungry and bring your Lipitor, but my god, the best barbecue in town.
Investor · Sacramento, CA · Member since 2012 · 144 posts · 65 votes
12y
@Chris Vail. This is general advise: Aviod Oak Park, Del Paso Heights, locations were there are multiple 4-plexes or duplexes make up the subdivision. But I will say this I will invest in all areas of Sacramento except the following: 1) an area in South Sacramento call "The G Parkway", they are getto condos. 2) I don't like the area between Broadway, Stockton Blvd., 8th Ave, MLK Jr. Blvd., 3) west & east Nichols off 14th Ave 4) triangle area at El Camino & Del Paso Blvd. -- that is the only real "war zones" that I know of in Sacto (we're lucky I guess). My experience has been that appreciation is like an ocean tide coming in & going out, everything goes up (or down) in value together. Also the "A" areas appreciate first and depreciate last and the "C/D" areas appreciate last (lag) and depreciate first (more volatile) but also the bad areas have HUGE price swings. When I first started I met a small devopler for coffee & told me that if I want to make money in California real estate then do this... BUY SOME. -- he was right. To be a Buy & Hold investor you don't need to be that smart just patient.
There are a few properties I am watching in that area and will be making a trip down there to drive around either tommorrow or Sunday, and it sounds like I know where I will be eating lunch :). Figured that that area is close to the med center and close to a major freeway interchange allowing for a quick commute in almost any direction. I know the further south you go down into Oak park the more challenging it gets when it comes to the property rating. If what has transpired in Curtis park continues to make its way east then that area could see some really nice appreciation over the coming years.
Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
12y
Thank you @Dennis Lanni you got your post in between my follow up post. Thinking I might grab a map or pdf one and start highlighting and striking out some areas to help narrow my search areas.
Investor · Sacramento, CA · Member since 2012 · 144 posts · 65 votes
12y
That's called "Red Lining" (bankers term that is not allowed anymore). Look up Sam Zeil. Aka-- the "grave digger" he made his fortune(over a billion dillars) starting in the gettos of Chicago 70's and 80's (turning around apartment buildings).
Real Estate Agent · Sacramento/Placer ~ San Francisco Bay Area counties · Member since 2012 · 1k+ posts · 743 votes
12y
@Dennis Lanni Probate leads that Brett is working on. Anything "do-able?" Since Monday June 2nd of this week 19 new probate case filings published in "The Daily Journal". Still working on past filings. Have not checked Sac Bee, Elk Grove Citizen, Carmichael Times, Folsom Telegraph, Rio Linda News or Sacramento Gazette for this week..Any advice on how to structure filing system?? Just because there's a Starbuck's at 1429 Broadway necessarily doesn't mean it's a good area....
Investor · Bellingham, WA · Member since 2010 · 308 posts · 230 votes
12y
@Dennis Lanni Sam's last name is Zell and he runs Equity Group. He actually started out doing the opposite of red lining by buying in war zones and turning the properties around. He also sold his Equity Office REIT at the very peak of the market in 2007 to Blackstone for $39B. His is a pretty good story and if you're looking for a mentor, he'd be a much better choice than some late bootcamp 'guru'. Forbes did a lengthy piece on him here:
We went downtown to look at an apartment yesterday and decided to go drive around Oak Park just to get an impression for ourselves. It was nicer than I had expected based off what I had read. We made it down to about 14th ave before it got to the point that I wouldn't buy there. But even my wife mentioned she would feel mostly safe walking around, but not at night.
Investor · Sacramento, CA · Member since 2012 · 144 posts · 65 votes
12y
yep Zell that's right. It was late when I posted but that was my point to Chris about how Sam Zell DID buy in the getto. My take is Zell is a GREAT operator of property & he got lucky to connect with Merrill Lynch when REITs came into vogue. I dream of things like this all the time, if Zell can do it so can I.
Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
12y
@Dennis Lanni I did some reading on Sam last night, some interesting stuff. It makes sence if you can by low and sell high and have systems in place to not get burned or lose your mind on the journey up you stand tomake a significant profit over time.
Google is fantastic and and "Sam Zeil" was enough to get me pointed in the right direction :)
@Tom V. the sac crime map is pretty eye opening that you linked thank you for that.
Real Estate Agent · Sacramento, CA · Member since 2012 · 111 posts · 26 votes
12y
@Jason Flynn That is a very common reaction when people see Oak Park for themselves. That area still carries around a bad reputation earned from years ago when the whole area was pretty rough (so I hear). Now there are pockets where students and professionals are moving in.
@Giovanni Isaksen I had not heard of the Sam Zell story. Thanks for posting the Forbes article. Incredible!
I would think that Starbucks serves the Elmhurst residents (generally between 50 and the hospital) and those working/visiting UC Davis Hospital. Pretty nice area with a huge job center right next to you...but priced accordingly.
Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Chris Vail you can remotely determine the quality of an area any number of ways. Here are a couple:
- talk to property mgmt companies
- see how close the nearest Walmart and McDonald's is - then call them to see when they were built. That will give you an idea of how long ago those two corporations identified that area as an area of growth
- talk to people you know who live in the area - if you don't know someone then post on Facebook or BP or email some friends who are from that state - I guarantee that they will know someone who lives there
- research crime stats
- research income levels of the area and compare that to the state median income - is it higher, lower?
- call competing properties and see what kind of rental requirements they have for new residents
Real Estate Agent · Sacramento, CA · Member since 2013 · 62 posts · 15 votes
12y
- see how close the nearest Walmart and McDonald's is - then call them to see when they were built. That will give you an idea of how long ago those two corporations identified that area as an area of growth
Rental Property Investor · Fairfield, CA · Member since 2014 · 63 posts · 15 votes
11y
Hello All Some great Info on this thred, I am investor from Bay area. After searching. I could not get any good cash flowing deals in Bayarea so I turned to Sacramento. After looking for around 3-4 months. I found a ready to move in property in C class area and it is rented and cash flowing well. It isn't easy to get a house in C class areas. I have looked all over. But I like what @Al Williamson is doing in some of these C class areas. If you look hard enough, you can always find a good deal. also good stuff @Chris Vail and @Joe Fairless