New to bigger pockets & real estate investing.

10 Replies

Hi, I'm new to real estate investing, My background is in the Technology Industry. I'm currently living in Stockton, in the process of listing my property to start investing in rental properties.

Interested in, flipping multifamily homes (2-4 units) in the surrounding area. Please leave comments with any advice, I want to network with like minded investors, Invest in the Stockton area.

I'm willing to work with a partner, that has same interest in investing in flipping multifamily homes (2-4 units), Any guidance appreciated.

Thank you!

Welcome to BiggerPocket Family Alonzo! I recommend listening to the podcasts and there're a lot of resources (blogs, forums post) for you on flipping. I am currently in Sacramento, I am interested in buy and hold rental but if you want to network with other members in the area, let me know. =) good luck!

@Alonzo A.

I'm from Stockton and live in Sacramento, and work in both markets so I know them extremely well. Specifically 2-4 unit multifamily since that's where most of the Bay Area investor money is flowing to these days.

My advice would be to definitely research crime statistics ahead of time before purchasing the property, as that is something the investors will definitely be taking into consideration before making an offer (not always the case with SFR home buyers... they fall in love with the property, investors fall in love with the numbers).

Another thing I would consider is renting the property out with awesome month-to-month leases for the highest rents possible prior to listing the property. Any investor I work with gets all the details on rents and is able to run the ROI prior to purchase, and it'd be much nicer if you already had good tenants in place prior to listing the property. That way you'd make it as turn-key as possible, and Bay Area investors love turn-key properties.

This sort of goes in hand with the first point, but be sure not to over-improve for the area. Don't go wasting your rehab budget on marble counter tops and bamboo flooring if your property is located in the heart of Del Paso Heights (or off Kelley Dr since you're from Stockton hahah). You'll waste money you didn't need to.

Another last consideration is potentially doing a "slow flip" where you live in one of the units while you're rehabbing the property. You'll need a place to stay after you sell your current primary residence anyways, and it will allow you to qualify for owner occupied financing (lower interest rates and down payment) and you'll be able to sell the property capital gains exempt after living in it for 2 years. Surely not as sexy as flipping on the regular, but still a big money maker since you could potentially live in the property and have your mortgage paid for while you're renovating it.

All price ranges work up here in Sacramento, whether it's a $225k duplex in South Sac or a $600k duplex in Curtis Park. Either way they can sell.

Tell us more about your business plan and where you plan to invest in Sacramento and perhaps I can steer you in the right direction and away from the bad areas if you're unfamiliar with the area.

Oh, and one last thing... consider doing this in Stockton too. Investors are starting to catch wind that returns are better in Stockton (thanks in part to me lol) and so there's money to be made there too and you're already familiar with the area.

Hope this helps. Best of luck!

Wes Blackwell,

I'm planning to move back to my second property that I purchased in 2010. Only for few months, till I find the rite duplex, or fourplex to "slow-flip".

Will that allow me to qualify for owner occupied financing?

@Alonzo A. Welcome to BP

Stockton is a nice place to invest stop by the local Stockton forum for more information.

Stockton has a lot of bad areas so do your research.

@Alonzo A.

To qualify for owner-occupied financing, you'll need to live in the property you purchase and occupy at least one of the units. You'll need to live in it at least a year before selling it or moving out. If you live in it 2 years before selling you'll be capital gains exempt when you sell it. 

Obviously this is a much slower process than finding a property, fixing it up in 90 days and selling it, but it is still a viable and lucrative option for many investors. You'll want to get your financing lined up if you plan to do this that way you know what amount you can qualify for, the rate, payments, etc. and have those amounts estimated. 

Have you listed your other property yet? How much do you plan to gain when selling? Will you be using it all as a down payment or saving some for rehab budget?

@Wes Blackwell

Planning to list next month, planing to gain 60K.

Will be using for down payment, and  rehab budget.

@Taye N.

Yes, I will make sure I do my research.

I will check the Stockton local forum, thank you. 

Welcome to Bigger Pockets Alonzo.  I live and work in Stockton has well as a RE broker and investor.

Let me know if you want to connect and chat more about the market here.

Hi Alonzo - Word to the wise:) --> Flipping a multi family building makes no sens what so ever:).

Seriously flipping a Multi Family is the best way to spend $50K to make $10k:).

Flipping makes sense if you are rehabbing a single family that will be bought by a owner/occupant that buys the house based on emotion.

2-4 unit properties are bought by investors who only look at how many units they can buy per dollar. They do not care about the state the property is in as long as it is rentable.

I should admit that I have a history over over-rehabbing properties myself. :) You can basically spend $20k to get a $100 rent bump that you would have gotten over time anyway. And as far as resale value it does almost noting for you because you are selling to investors who basically will pay whatever the property across the street sold for... For this reason you will not be able to create enough of a spread to make it worth it. This is a fact, not an opinion:).

Anyway, don't mean to sound harsh. Just trying to save you money, and more importantly; time. There are many ways to make money in real estate but rehabbing Stockton multi-plexes in order to resell them is not one of those ways:).

Good luck!

Best Regards,

Chris

@Thanh Nguyen

I would like to compare notes, I have great team to keep up with the rental property maintenance.

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