North Highlands , CA Any Sacramento investors care to chime in?

Question

Looking at a investment property in North Highlands and just wanted to get the local crowds take. The property is a duplex located on Renick Way. This appears to be a C- neighborhood though the 80Watt movement is happening and may be a reason to be hopeful. Any local investors share to comment on the area?

https://80wattdistrict.com/

Gordon Cuffe · Answer

@Noel R.i can tell you what I experienced when I flipped a house in north highlands last year. I was there everyday for eight weeks and during that time I was never worried about being mugged, however, I had a few times where homeless people from watt ave.  broke in a stayed the evening. I found one lady one morning staying in the garage . If the numbers make sense in regards to price versus rents then buy it. You always will rent the unita to low income people . If the numbers don’t make sense then don’t count on watt ave redevelopment . If you drive up and down watt ave , you see many homeless people hanging out and closed business’s. It is going to take time and money to turn that around .good luck.

James D. · Answer

I own 2 props om Renick. Was bad, but County finally got involved and it is beginning to clean up slowly.

I have 2 others in he neighborhood behind Renick. They rent quick but I now avoid Section 8 because they no longer do inspection annually. They now do bi-annual inspections which could be a blessing to some, but became a nightmare for me. I am getting ready to raise my low rents.

Robert T. · Answer

Have you physically seen the property and driven down the street?

I’ve purchased in many areas in Nor Cal including the hood in Stockton and I have never felt as un safe as I did driving down Rennick a few years ago during the afternoon. There’s been a burnout on the street for several years. There are only a few areas of Sacramento that I won’t buy and Rennick is one of them. I’m guessing that if you looked at ownership records you would find the majority of owners in that street are out of town. Other than that North Highlands is like any other C class neighborhood.

Gordon Cuffe · Answer

@Noel R. I would walk around after the sun sets but not after midnight . Just don’t eat at the subway sandwich on watt ave. I got very sick one night after eating there for lunch . You might have to update the place in order to get the higher rental amounts. You should drive to north highlands to get a feel for the area and double check with a property manager and Zillow rents to see if you can get the higher rents

Noel R. · Answer

@Derek Jones I did think about requesting he initiate the 10% rent increase prior to closing. It is my understanding that in California there is a temporary bill which limits rent increases to 10% max every 12 months.

Derek Jones · Answer

I am familiar with N. Highlands.  It's not the best but also not the worst. Be sure to do your own homework on current rent vs market rent.  I'm seeing a lot of properties marketed with "below market rents" and my thoughts are always the same, why wouldn't the current owner just raise rents to "market rent" and sell the property for more?  If you do see something with below market rents it wouldn't hurt to put in the contract that owner must raise rent to market rent prior to close of escrow.

Noel R. · Answer

@Gordon Cuffe Appreciate your honesty and bluntness. Numbers are tight now with tenants paying below market rents. Hoping I can weather the storm and get them to market, which will have them cash flowing.

Noel R. · Answer

@Derek Jones Thank you for chiming in the property is a quick on or off from the 80. I personally wouldn't be walking the streets after the sun set. Do you have any knowledge or experience with the area?

@Reymon Hernandez Thank you for your insight on the local area. I have been working through the process and found a great PM whom I will be working with. His suggestion was to avoid the SHRA as their system is quite the hassle in his experience. Current tenants are not on section 8. I am hopeful for this unit.

@Wes Blackwell Thank you for the link to the crime site. Great advice. Walked this unit yesterday and spent some time outside on the street as well. From what I understand it has been cleaned up a bit and it appears I might be in the process of purchase a unit and helping the cause.

Wes Blackwell · Answer

@Noel R.

Head over to https://www.communitycrimemap.com/ to get the local crime records straight from the Sacramento Police Department. I would set the date range back 6 months and focus primarily on the violent crime in the area. Loitering and stolen license plates happen in every neighborhood... but assault with a deadly weapon, shooting on an occupied dwelling, etc. only happen in the worst neighborhoods.

BUT -- also take into consideration that this property is located directly next to a main street - Madison Ave - and main streets almost always have more crime than residential streets because there is more foot traffic, more loitering, more homeless, more stores, parking lots, etc. where lots of crime happens.

Ultimately, you want to see the property in person and drive the neighborhood, but if you can't do a "virtual driveby" on Google Maps and that will help you at least get a feel for the area.

Reymon Hernandez · Answer

@Noel R. I am a local Realtor in the Sacramento area, I live in Arden and have family in North Highlands. I am also very involved in the Investment Community Locally and just analyzed a commercial 6-Plex for a client in North Highlands.

I say all of that so that you know that my advice comes with a little bit of knowledge behind it.

Overall, I like North Highlands, but you have to be careful how you invest in North Highlands, are you going to be self-managing? How active do you plan to be with the everyday activity of managing the home? Are you considering allowing section 8 renters or partnering with SHRA (Sacramento Housing and Redevelopment Agency)  https://www.shra.org/ Are you aware that a lot of families in North Highlands are on section 8, receive SSI or are on some sort of government assistance for their income. Now not all, but per capita, the number is a lot larger than in most areas of Sacramento County. I say this not to deter you from buying but to make you aware as an investor of the what you can expect. I have several clients that have great tenants on SHRA assistant and their properties perform better than others. But this is something you need to seriously consider as a potential investor.

I would recommend that you speak with a property manager in the area and ask a lot of these questions.

As for the question on the PBID or the Watt District, yes there are a lot of plans to revitalize this area and we believe the improvements will dramatically impact things on the Watt/80 corridor, and I would still encourage you to invest with the now in mind and not the future. Unfortunately, we have seen a lot of redevelopment money, redirected and not being used for their original allocation purposes, being that we are the State's capital Sacramento sometimes suffers when there are shortages and investing in future expectations could be costly.

However, this is just my pennies worth, (I wouldn't even call my two cents) but make sure you do your due diligence before you invest and know that a lot of us local investors that are trying to stay on top of the curve are looking at the same areas you are looking at, you just need to be careful how you invest in those areas. I wish you the best of luck in your decision making.

-Reymon

North Highlands , CA Any Sacramento investors care to chime in?

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