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Sell or Rent
Hey everyone! I hope this is the right category for this post.
I currently own and have owned a home in Stockton, California since 2019. I have a 2.625% interest rate and the home is in a desirable, established neighborhood in the city and just a few minute walk to the University of Pacific. All in all, the home is older but that is standard for the neighborhood and I have a solid amount of equity in the home currently.
Recently, my dad said he is retiring and moving out of California. I told my dad I wanted to buy his house and he was absolutely on board for that. The home is in the Sacramento area and closer to the rest of my family and he would sell it to me for a little under market value.
Looking at my options, I could keep the Stockton home and rent it, along with having a new primary residence in the Sacramento area. Or, I sell the Stockton home and put the money made, along with my savings towards the Sacramento home and be mortgage free within the next few years.
My long term goals are to have cash flowing rental properties, but to also be financially and debt free. Any advice and suggestions would be greatly appreciated. Thank you, everyone!
Hey @Nicholas Fogal
It sounds like you’re at an interesting crossroads with both opportunities and decisions to make. Let look at your options considering the current real estate trends in Stockton and Sacramento.
Stockton Property Overview
You’ve been holding onto a gem of a property in Stockton, especially with a 2.625% interest rate. That’s almost unheard of these days! The Stockton market has been steady but not skyrocketing. As of mid-2024, the median sale price in Stockton is around $460,000, showing a modest increase of 3.4% year-over-year. Additionally, Stockton is currently experiencing a slight shift towards a buyer’s market, which could impact your decision to rent out versus sell. Homes are staying on the market a bit longer, giving buyers more leverage for negotiation
Sacramento Market Insights
Sacramento, where your dad’s house is located, is a different story. There’s been a net outflow from Stockton to Sacramento, making it a more attractive destination for many looking to stay in Northern California but still find value. If your goal is to move closer to family and you’re getting the house at a discount, it’s a strong personal and financial move.
Advice Based on Your Goals
Given your long-term goals of being debt-free while building a rental portfolio, it might make sense to hold onto the Stockton property. With such a low interest rate, you’re looking at a prime opportunity to generate positive cash flow once rented, even if the market dips slightly. On the other hand, if you sell the Stockton home now, you’ll be mortgage-free sooner on the Sacramento property and can start saving or reinvesting more aggressively.
If I were in your shoes (and as someone who’s seen the ups and downs of California real estate for over two decades), I’d lean towards keeping the Stockton property. That low interest rate is gold, and as rents in Stockton are still climbing, you could achieve positive cash flow relatively easily. Plus, having an income-generating property while living mortgage-free in Sacramento could offer the best of both worlds.
But hey, I get it-sometimes a debt-free life with no tenant hassles is hard to pass up. If peace of mind is your priority, there’s no harm in selling now, putting that equity towards Sacramento, and enjoying being closer to your family. Either way, it’s a win-win for you.
Hope that helps! If you want to run the numbers more closely, feel free to reach out.
Best, Pat
Jasper, the Pat Boukhaled investor team,
Turning investment visions into reality in Phoenix, AZ - ranked #1 for residential real estate growth and opportunity by PwC
Quote from @Nicholas Fogal:
Hey everyone! I hope this is the right category for this post.
I currently own and have owned a home in Stockton, California since 2019. I have a 2.625% interest rate and the home is in a desirable, established neighborhood in the city and just a few minute walk to the University of Pacific. All in all, the home is older but that is standard for the neighborhood and I have a solid amount of equity in the home currently.
Recently, my dad said he is retiring and moving out of California. I told my dad I wanted to buy his house and he was absolutely on board for that. The home is in the Sacramento area and closer to the rest of my family and he would sell it to me for a little under market value.
Looking at my options, I could keep the Stockton home and rent it, along with having a new primary residence in the Sacramento area. Or, I sell the Stockton home and put the money made, along with my savings towards the Sacramento home and be mortgage free within the next few years.
My long term goals are to have cash flowing rental properties, but to also be financially and debt free. Any advice and suggestions would be greatly appreciated. Thank you, everyone!
Hey Nicholas, with that low of an interest rate, would it cash flow? If so, you may want to consider holding onto it as a rental property. In terms of buying in Sacramento, what neighborhood is your dad's house? Be happy to jump on a call and talk strategy. I am an investor and investor-focused agent in Sacramento. DM me anytime.