Real Estate Agent · Rocklin, CA · Member since 2014 · 166 posts · 71 votes
Yardi published a September Rent Survey for multis and Sacramento leads year-over-year rental growth with 11.1%, followed by the Inland Empire and Seattle (both at 9.0%).
While rent growth keeps decreasing, multifamily fundamentals remain strong. Occupancy has remained unchanged since May and is staying near historic highs. The employment sector, while not as robust as it once was, has been creating jobs at a steady pace. Demand for multifamily housing is forecast to remain high, as Millennial household formation continues and Boomers seek to downsize and re-enter the rental market. Despite the deceleration trends, 26 of Yardi Matrix’s top 30 markets experienced year-over-year rent growth of 3% or better in September.
Investor · Member since 2016 · 54 posts · 21 votes
10y
Sophia,
Great information. It would be interesting how the Reno market just over the hill compares to Sacramento. Rents have increased here quite a bit but much less inventory from what I've researched. With mellinials under student debt it would be hard to purchase right now and boomers who didn't prep to retire renting. Sounds like a good news storm brewing for the rental market.
Lender · Roseville, CA · Member since 2011 · 205 posts · 86 votes
10y
@Paul Vang what is "still expensive": rents? properties for sale? Expensive relative to what? Both rents and property prices are still increasing, although the rate of increase seems to have slowed. A year from now, or 10 years from now, might you look back and think they were affordable? I recall back in '02/'03 so many Sacramento area clients were saying things had gotten expensive. But the Bay Area migration had barely begun...
What kind of properties are you looking for and what is your investment strategy?
Sacramento, CA · Member since 2015 · 60 posts · 12 votes
10y
@Carrianne Mucho I know what you mean. I'm just trying to do the math for duplexes and they are in the $250-$300. Renting them would probably yield 1500-2000 which may barely cover the expenses. The only way I see to cash flow is to put down a large deposit. Again I'm not expert but it's just what I see. Please let me know your thoughts. I'm still learning.
@Carrianne Mucho I know what you mean. I'm just trying to do the math for duplexes and they are in the $250-$300. Renting them would probably yield 1500-2000 which may barely cover the expenses. The only way I see to cash flow is to put down a large deposit. Again I'm not expert but it's just what I see. Please let me know your thoughts. I'm still learning.
Paul, I am by no means a rental expert so I'm hoping you will get more direction from those who have more experience analyzing cash flow. If you are including the cost of financing in your cash flow (sounds like you are), be sure at least that you aren't including principal payments as an expense since these go straight to equity. Have you used the Rental Property Calculator on this site?
There are different markets across this great nation which yield different types of returns. Some seem to give great cash flow, but don't expect to have much, if any, appreciation in these markets. California on the other hand is more of an appreciation play and if you can get cash flow on top of that = gravy. It is good that you are getting familiar with prices and neighborhoods; I think that familiarity with the neighborhood you are investing in is important! I know many have been successful investing out of their local area but I personally just can't find a comfort level with this...I'm too much of a control freak! LOL. If you have the skills, the best situation is to find a property that needs work, complete some value-add improvements, then you can raise rents. House hacking is also an awesome strategy in CA because you get to lock in low property tax rates and it is relatively easy to cash out the equity you build in a primary residence and use it to leverage your next property.
Sacramento, CA · Member since 2015 · 60 posts · 12 votes
9y
@Carrianne Mucho thank you for the input. I'm looking at a few and deciding. I have not used the rental property on this site but maybe I should. I've been using what I've found online at a guideline. Include X percent for repairs, when there's not renters, tax, insurance, etc. Still learning. I found a property that might cash flow so I'm hoping it may pan out. I still need some expert advice on this.
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
9y
Good discussion. Yes it's pricey. I'm renting until I can do a sizable (16 - 30 unit) house hack. I'm likely going to be on the sidelines for a year or so.
Sacramento, CA · Member since 2015 · 60 posts · 12 votes
9y
@Ciprian L. I own my current house but I'm looking for a duplex/triplex/fourplex to buy. Not sure how that would work out because I may have to do a 20% down. I'm looking for properties that need a little TLC but nothing too crazy. I'm still looking but they are limited.
@Al Williamson thats a good plan. I was thinking about selling my home an do the same thing.
Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
9y
@Account Closed -- I would highly suggest that you start working with an agent who can do all of the property analysis for you. We can also access every single deal on the market, as well as see what properties are currently renting for, have rented for, extra notes on properties only available to Realtors, etc.
I have a handful of properties currently available that will cash flow with as little as 5-10% down. The properties are certainly out there, but Zillow, Realtor.com, etc. aren't really meant for investors to use to analyze properties. That information is only available on the MLS and so you'll need to partner with an agent to help you access the information you need.
A knowledgeable one will also understand the market and neighborhood around the property, as well as understand what your goals are as an investor, and should have experience working with other investors like yourself in the past. And don't worry, the seller pays the commission on the transaction, so you basically can't lose by deciding to work with one. They can get you into properties, provide you with extra information to help you analyze the market, and act as a barrier in negotiations to help you get the best deal possible.
I'd love to meet with you sometime to see if I can help you find the right kind of property that you are looking for and better understand the local rental market.