Investor · San Francisco, CA · Member since 2016 · 77 posts · 41 votes
Hey all,
I'm going to head up to Sacramento this weekend to get a better grasp of the market. I've got the county mapped out and have highlighted areas that I know I want to visit and understand, but I wanted to get some recommendations from investors in that area.
I am looking in particular to employ a BRRR strategy as opposed to flipping. Would love to hear if there are certain town/cities within the county that I should make sure to visit.
Also, if anyone is up there and would like to grab a beer or coffee at some point, let me know, I'm buying.
The area of Sacramento offering the most opportunity to investors is the Oak Park area, which essentially everything East of 99, West of Stockton Blvd, South of 50 and North of Fruitridge Rd.
It's what you'd consider an "up and coming" neighborhood, meaning it really used to suck, and in some parts still really does suck, but they city is investing a lot into the neighborhood to try and gentrify the area and so investors are jumping on the bandwagon and flipping the hell out of that place.
Just Google "Oak Park Gentrification" and read all the news articles.
But buyer beware, it's sort of a street-by-street basis. Let someone else take the risk in the more 'shady' areas and try your BRRR strategy towards the north end just south of 50 or on a street where several other flips have taken place.
Some properties in there are going for way more than they should, which might allow you to get in and get a great cash-out number once the rehab is complete.
The rents will be higher on the northern side, and will take a dip as you head south into the heart of the Oak Park area. Be sure to drive this neighborhood thoroughly before pulling the trigger.
Another area to consider is the Del Paso Heights / Old North Sacramento area, basically all of the 95815 Zip code.
They are also trying to gentrify that area as well, but it's second in line to Oak Park, so you won't get as much help with the boost in property values down the road but you'll also face less competition from other investors and rehabbers.
Once again, it's a street by street basis in this area... For example, I found a remodeled duplex for $259,000 and rents over $1,000 per side that I was considering buying, but it's directly across the street from the grimiest apartment complex you've ever seen.
There are some very knowledge Sacramento investors on here, so hopefully they'll chime in with some other neighborhoods to consider or can expand on Oak Park and Del Paso Heights.
The area of Sacramento offering the most opportunity to investors is the Oak Park area, which essentially everything East of 99, West of Stockton Blvd, South of 50 and North of Fruitridge Rd.
It's what you'd consider an "up and coming" neighborhood, meaning it really used to suck, and in some parts still really does suck, but they city is investing a lot into the neighborhood to try and gentrify the area and so investors are jumping on the bandwagon and flipping the hell out of that place.
Just Google "Oak Park Gentrification" and read all the news articles.
But buyer beware, it's sort of a street-by-street basis. Let someone else take the risk in the more 'shady' areas and try your BRRR strategy towards the north end just south of 50 or on a street where several other flips have taken place.
Some properties in there are going for way more than they should, which might allow you to get in and get a great cash-out number once the rehab is complete.
The rents will be higher on the northern side, and will take a dip as you head south into the heart of the Oak Park area. Be sure to drive this neighborhood thoroughly before pulling the trigger.
Another area to consider is the Del Paso Heights / Old North Sacramento area, basically all of the 95815 Zip code.
They are also trying to gentrify that area as well, but it's second in line to Oak Park, so you won't get as much help with the boost in property values down the road but you'll also face less competition from other investors and rehabbers.
Once again, it's a street by street basis in this area... For example, I found a remodeled duplex for $259,000 and rents over $1,000 per side that I was considering buying, but it's directly across the street from the grimiest apartment complex you've ever seen.
There are some very knowledge Sacramento investors on here, so hopefully they'll chime in with some other neighborhoods to consider or can expand on Oak Park and Del Paso Heights.
Sacramento, CA · Member since 2015 · 35 posts · 13 votes
10y
Ditto on @Wes Blackwell comments. Oak Park is incredibly street by street.
The gentrification has started and is radiating out of the west end of Broadway. The area north of Broadway is the best section of Oak Park. Immediately south of Broadway is good. The further south of it you go the more sketchy areas are and the more selective you'll need to be. There's still much development to be done in this area so I'd say buy as close to this part of OP as
Much of Oak Park's resurgence stems directly and indirectly from Mayor Kevin Johnson's involvement in redevelopment. Since he won't be running for reelection (sex scandal) I could very well see him returning full time to community redevelopment in Oak Park. He has significant real estate holdings in the area and since he's dead politically it would make sense for him to parlay his political connections into more.
Del Paso Heights would also be a good play. While you're getting less "help" in that area I think the portion closest to downtown/ midtown is a solid play.
TLDR: In either Oak Park of Del Paso the areas closest to downtown are most likely your best bets.
Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
10y
Oak Park, West Sac and South Natomas. There is also a pocket in South Sac that is zoned for the Elk Grove school district, those homes can be had at a fair price but command a premium rent (for South Sac).
I am not a fan of Del Paso Heights. It's not really in the path of progress and I don't see any political or community will to throw the resources at it necessary to turn it around. I know there is an investor on BP that is a homicide detective. We had lunch a few years ago and he said he will invest in South Sac and Oak Park but won't touch DPH no matter how cheap it looks.
Sacramento, CA · Member since 2016 · 2 posts · 0 votes
10y
Great info @Wes Blackwell. My wife and I are in the same situation as @Brad Cogswell, currently in the process of getting familiar with Sacramento area neighborhoods where BRRR makes sense toped with potential for appreciation over the next years.
@Frank Lienert do you know where to find more specific information on where exactly Kevin Johnson invested his own money in real estate properties? As the current mayor I wouldn't be surprised of those very areas would see above average appreciation over the next year(s).
Investor · Sacramento, CA · Member since 2012 · 289 posts · 151 votes
10y
Oak Park is getting extremely competitive right now, and going into Spring it's just getting worse. You're going to want to check out some other areas to have back up options.
What about Elk Grove. I know this is outside of Sacramento; however, what are peoples' thoughts on that area for BRRR?
In my humble opinion there are not deep enough discounts on the distressed homes in EG to make that plan viable. Most of the housing stock is fairly new and there is not much of a break off of retail for distressed homes. Retail home buyers will gladly take fixers to live there.
In your opinion does Elk Grove look like a good place to purchase a SFR or Duplex/Triplex (already in good shape... no rehab needed) as a rental investment?
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
10y
@Brad CogswellIf I wasn't going to Tahoe , I would have met up with for a beer. Joe knows the Oak Park area so drive around those streets so you can see the good ones and bad ones. The hard part will be finding a property at a discount since we have such a low inventory of homes for sale right now. Have you found a lender that will use the new appraised value of the property when you have owned it less than a year?
Specialist · Northern CA · Member since 2014 · 154 posts · 57 votes
10y
Isnt Oak Park in the low to mid 300s? Was that not peak market prices in 07? I thought he was driving out there looking for cashflow properties, did i mis understand the thread?
Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
10y
I did some market research and looked at homes in Sacramento proper a few weeks back. Competition with families and first time home buyers for SFRs is tough. Properties I went to view could not cash flow at asking price. Worse people were putting in offers above asking price. Prices were being inflated above what I thought I could pay and make money.
I forget who mentioned it to me, but try looking at distressed properties not in MLS. You may fare better. Try for preforclosures and foreclosures if you can.
Disclaimer, I am by no means an expert on Sacramento or buying foreclosures.
In your opinion does Elk Grove look like a good place to purchase a SFR or Duplex/Triplex (already in good shape... no rehab needed) as a rental investment?
The main thing Elk Grove has going for it is top notch school districts. Mostly 8's, 9's and 10's on GreatSchools.org.
A friend of mine who lives in the area claimssome parent will rent in a certain school district just to get the mailing address, but don't even live there! Talk about a low-maintenance tenant!!!
Because it is such a family oriented area with awesome schools, you get an extremely high level of owner occupied housing, 80%+.
In Sacramento on the other hand, there are plenty of zip codes with less than 50% owner occupancy, so there's simply way more renters which helps keep demand (and rents) high.
Another thing Elk Grove doesn't have is multifamily units. There are two (yes, only TWO) duplexes/triplexes for sale right now in ALL of Elk Grove.
There is a Duplex on La Nuez Dr offered at $315,000 with rent's of $985 each side, hardly passing the 0.60% test let alone the 1% test.
And there is a Triplex on Rancho Grande Ct offered for a whopping $520,000 with total rents of less than $2,800 and scores even lower on the 1% test.
Put simply, there are better rental markets out there amigo.
While you might be able to find a rental with no rehab needed in a great area, and possibly great tenants, the prices are simply too high and the inventory too low and due to most people living there wanting to own the home you may go awhile in-between renters when your high quality tenant saves up some cash and buys a house.
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
10y
@Account ClosedOak park is not in the low 300k range. It is much lower in price. You have that mistaken for some other parts of Sacramento. You can find homes in the nicer area of Tahoe Park for less than 300k.
The north side of North Oak park (areas close to the non defined area formally referred to as Med Center by people not wanting to own up to living in Oak Park before living in Oak Park was cool), has seen sale prices hit mid 300s recently. Anything North of Broadway is now pushing 300k asking price.
The exception to that would be poorly rehabbed < 1000sqft 2/1s. But these are tweeners that don't make sense for investors. I wouldn't be surprised if we don't see anything < 300k north of the Lubin Elementry school boundary by mid summer.
I was hoping to acquire another Oak Park property this year, but now I'm not sure I'll be able to stay north of 12/14 ave or not.
Toronto ON, Canada · Member since 2016 · 96 posts · 26 votes
10y
Extremely good insights! Any info on areas like Rancho Cordova, Fair Oaks, Gold River, Citrus Height, Orangeavale etc? I used to live in Folsom back in 2009 - 2012 really nice area but Folsom is way to expensive for investment options. I was curious to know any recommendations in the surrounding cities to Folsom.
The north side of North Oak park (areas close to the non defined area formally referred to as Med Center by people not wanting to own up to living in Oak Park before living in Oak Park was cool), has seen sale prices hit mid 300s recently. Anything North of Broadway is now pushing 300k asking price.
The exception to that would be poorly rehabbed < 1000sqft 2/1s. But these are tweeners that don't make sense for investors. I wouldn't be surprised if we don't see anything < 300k north of the Lubin Elementry school boundary by mid summer.
I was hoping to acquire another Oak Park property this year, but now I'm not sure I'll be able to stay north of 12/14 ave or not.
Come join me in Central Oak Park... Still finding distressed deals sub 6 figures that are renting for $1150-1250. Lots of great tenants getting pushed out of Elmhurst and N OP as landlords are selling.
Investor · Sacramento, CA · Member since 2012 · 289 posts · 151 votes
10y
@Joe Bertolino, What do you consider Central Oak Park? At one point people were labeling 5th Ave to 12/14th ave as "Central", I'm not sure if that's the case.
Specialist · Northern CA · Member since 2014 · 154 posts · 57 votes
10y
@Joe Bertolino I would love to come join you in Central park areas where I already own a few but I don't think that is considered the Oak park area is it @Derek Daun? I thought the North side of Oak park pushing 300k and Central pushing over 200k easy. All prices i was referring to was for a 3/2 SFR. Yes I have seen 2/1s for cheaper but are there areas around there that are under the 6 figure numbers. If so is it even considered Oak Park?
North, South or Central Oak park still have not seen anything under 6 figures as your talking about. Are you getting these off market deals @Joe Bertolino
@Gordon Cuffe Please send me anything you got 3/2 in tahoe park under 275k Ill take it along with Oak Park under 220k.
I just don't see where you guys are getting your info from? Please explain if I am way off base
Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
10y
I am getting them off market through direct mail and skip tracing vacants with pending code violations. Many of the owners picked them up for under $50k during the crash and are happy to get a nice return and not have to address the deferred maintenance issues.
For some reason I get a lot of 3/1's. I am experimenting with one renting by the room for $525 each. There is a lot of interest from the various bar/restaurant/coffee shop workers in midtown that can no longer afford to live there.
Investor · San Francisco, CA · Member since 2016 · 77 posts · 41 votes
10y
I apologize for the late response all, but I really appreciate the information. It looks like I'm actually going to be heading up the first half of the day Sunday, and based off everyone's comments will first focus on the Oak Park area and drive around to understand the boundaries that @Wes Blackwell, @Frank Lienert, @Joe Bertolino, and @Derek Daun were discussing.
@Alexander Price thanks for the tips on looking outside of the MLS. That's looking to be the plan as it seems there really isn't inventory in California at asking that will cash flow very well given the high land values/investor appetite for appreciation.
Investor · San Francisco, CA · Member since 2016 · 77 posts · 41 votes
10y
@Wes Blackwell I built my potential market within a 2 hour driving distance of San Francisco, which is why I tried I started looking up in the Sacramento area. I'm open to other markets, but I am trying to stay within California.