Sacramento, CA · Member since 2015 · 59 posts · 12 votes
Would it be a good idea to rent out this property?
3 Bed / 2 Bath / Family room / Living room / Dining Room / 2 car garage house Location: South Sacramento, CA Principle/Interest/Tax = $1100/month Water/Sewer = $85/month
Possible Rental amount = $1350-$1470
I know that if the loan amount was less, it would be better in terms of positive cash flow but this is where it's at right now. I know it doesn't meet the 50% rule but I'm looking for some ideas. Please help!
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
10y
Forget the 50% rule. Create your on hyper local X% rule. National averages are useless - they are just an example of a system you could implement for your area.
Now, regarding your question. It makes no since to buy negative cash flow unless you know of something that would change the situation... Like a high tech business opening up an office down the street.
If you don't have that type of an advantage, then keep your powder dry, wait for the right time to buy in the neighborhood that you know like the back of your hand.
Real Estate Agent · New Orleans, LA · Member since 2015 · 145 posts · 127 votes
10y
@Paul Vang Is that a 30 year amortization? I ask because if it is a 15 year or 20 year, I don't mind the numbers that tight. If you have to come out of pocket occasionally, then you know it is indirectly going to your principle. If it is a 30 year, then I would probably pass. If it is a 30 year, then not only do you not have good cash flow, but you are not hitting your principle hardly at all.
Investor · Sacramento, CA · Member since 2016 · 7 posts · 3 votes
10y
Paul - I am also in Sacramento and has been analyzing deals and your scenario is pretty typical of what I have encountered in the Sacramento area. So I have reached the conclusion that positive cash flow is probably not an achievable goal in Sacramento unless you have a really large down or full cash. So one is left with two options either look elsewhere which I personally find hard to do because real estate is such a local phenomenon. Or invest locally and bank on appreciation. I'm not sure if this is a smart strategy but that's where I'm at right now.
Investor · Tacoma, WA · Member since 2015 · 84 posts · 42 votes
10y
I always find this totally crazy.
People willing to drop tens of thousands of dollars on a bad investment close to home when you can get anywhere in the country for a weekend for $1000 or less.
If cashflow is what you're after... pick any city in the south or Midwest. Throw a dart at a map, it doesn't matter how you decide. Regardless of where you chose it's a better cash flow market than Sacramento or elsewhere in CA.
@Tyler Herman I've always wanted to invest in those area but I feel like I need to be close enough in case something happens.
@Meeta Lele so are you saying that despite the limited cash flow, you're still investing in Sacramento Homes. I think that it's easier to manage when it's closer.