Thinking about selling my duplex in Sac, Ca - Seeking advice on BRRR markets

Lender · Sacramento, CA · Member since 2023 · 6 posts · 7 votes

Hello BiggerPockets Community! I'm considering selling my duplex in Sacramento to liquidate some capital. I'm looking to shift my focus from the long game of rental appreciation to the BRRR method. Currently, this duplex isn't cash-flowing as I bought it as a primary home with less than 25% down. The long-term plan was to convert the garage to an ADU for future cash flow.

I'm seeking advice from fellow investors.

-Which markets would you recommend for the BRRR strategy with $100k to work with?

-Any tips for identifying promising BRRR strategies?

Ideally, I would start in Sacramento since I have built some contractor relationships. However, I would definitely need hard money in order to make that work. You won't be able to buy fixers out here all cash for $100k!

Thank you in advance!

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Scott ScovilleBusiness Member

Real Estate Agent · Sacramento, CA · Member since 2019 · 502 posts · 276 votes

Quote from @Nicholas J Mineo:

I'm seeking advice from fellow investors.

-Which markets would you recommend for the BRRR strategy with $100k to work with?

-Any tips for identifying promising BRRR strategies?

Thank you in advance!

Hey Nicholas, I've been mostly doing BRRR's and value add in Sacramento the last few years. Currently, I'm moving into off market seller finance deals, looking for more cash flow to offset the appreciation plays. I'd be happy to chat with you about both and the good/bad/ugly that I've experienced.

[email protected]415-933-2202

Scoville Realty & Investments LLC

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Becca F.
Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
2y
What is your interest rate on this duplex? Do you have a good amount of equity on this property? Can you raise the rent on the tenants? How much negative cash flow are you? Maybe MTR on one side and LTR other side (this is what I considered when I was looking at Sacramento).
Please read my recent post in the Starting Out forum "Takeaways from REI Conference to my California friends." I would personally stick with Sacramento or within a 2 hour drive if you're going to BRRRR where you could check up on the project. I will take CA appreciation anyday over buying cheap properties in another state.
I attempted offers to BRRRR in Indianapolis - huge stressors, renovation costs more than projected and ARVs not high enough (got out of those contracts). I wouldn't recommend BRRRR in random far away cities unless you're going to fly there and get to know the area really well and develop relationships with a trusted team (key word: trusted).
Are there any cities you visit frequently or have family or friends who could check up on the property? Even then if they don't know anything about real estate, that might not help much. Good luck.
2 Reply
Nicholas J Mineo
OP
Lender · Sacramento, CA · Member since 2023 · 6 posts · 7 votes
2y
Hi Becca, thank you for your reply! I'll take a look at your post. My interest rate is 4.99% on the duplex and I have about 15% equity in the property.
The property will be vacant soon, and I could potentially raise the rents a little bit. To be honest, I just don't love being a self-managed landlord, and if I hired a property management company, that would make me even more negative cash-flow. All-in, I am about $600 negative monthly cash-flow, and the principal balance paydown portion of the mortgage is about $750 per month.
To get this property to cash-flow, I would need to convert the garage into a studio and then I could rent that out for $1,000-$1,200. I would be around $150,000 to get that done last time I checked!
I'm originally from Buffalo, NY, and all my family is out there. That would be an interesting market to start off in for a BRRR property since I'll have eyes out there and have a decent grasp on the market in that area.
0 Reply
Samuel DioufBusiness Member
Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
2y
There are some great opportunities in the Ohio markets. Many investors from California are choosing to invest in the Midwest because of the low barrier to entry and yearly cash returns making more sense in these lower priced markets. Ohio markets show up 3 times in Zillow’s 2024 hottest markets, with Columbus and Cincinnati taking the top 2 and 3 spots. I moved from Florida to start investing in Columbus because of the same reason.

https://www.zillow.com/learn/hottest-housing-markets-2024/
Learn about the core-4 and how important it is to build a solid team when investing long-distance. I'll drop an article about it below.
https://www.biggerpockets.com/blog/core-four-real-estate-tea...
[email protected]614-662-1652
Reafco - Samuel Diouf528 Reviews
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Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
2y
I still have lots of questions, but we invest in Boise, ID and do BRRRRs all of the time here. Forced equity and cash flow vary quite a bit by the deal, but Idaho is the most landlord friendly state in the country- the state actually just passed a law making it illegal for cities to regulate rent rates or fees in any way.
Close to SAC too, so that's a plus.
Best of luck!
1 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
2y
Quote from @Nicholas J Mineo:

Hello BiggerPockets Community! I'm considering selling my duplex in Sacramento to liquidate some capital. I'm looking to shift my focus from the long game of rental appreciation to the BRRR method. Currently, this duplex isn't cash-flowing as I bought it as a primary home with less than 25% down. The long-term plan was to convert the garage to an ADU for future cash flow.
I'm seeking advice from fellow investors.
-Which markets would you recommend for the BRRR strategy with $100k to work with?
-Any tips for identifying promising BRRR strategies?

Ideally, I would start in Sacramento since I have built some contractor relationships. However, I would definitely need hard money in order to make that work. You won't be able to buy fixers out here all cash for $100k!
Thank you in advance!

There are a lot of markets in Ohio that I would recommend checking out
[email protected]614-541-8475 Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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Kenneth Reimer
Rental Property Investor · Sacramento, CA · Member since 2016 · 267 posts · 214 votes
2y
Hi Nicholas! If you don't love being a self-managed landlord, that's enough reason for me to sell something. At the end of the day, we invest in real estate for the money, but the money just buys us back our freedom and time. The freedom and time are to increase the quality of our life. So, if it's dragging on the quality of your life, it's time to go (with a well-thought out plan of course).
I'm a California investor through and through, so I wouldn't be able to comment on other markets as well as others who dabble, but a few things you may consider.. First, you could always sit on cash in a high yield savings waiting to pounce when the time is right. Second, you could convert the garage to an ADU if it was worth it prior to selling. And third, you could consider investing more passively in a syndication.

At the end of the day, it's my opinion that people should invest where they have an edge. You live in Sacramento, and you presumably work in Sacramento, so chances are that you have the best chance of finding an undervalued deal right here in Sacramento. Making 8% cash on cash in other states may be cool for some, and everyone loves to hate on California real estate investing, but I'd bet a lot of money you've come across clients who have made generation wealth right here. As a lender, I'm sure you know a million agents, but you may consider finding one who owns investments, and therefore understands not only the mathematical calculus of divesting from an investment, but the emotional ramifications as well.

Hope this helps brother. DM me if I can help you consider your next move!
2 Reply
Michael DiossaPro Member
Investor · RI · Member since 2023 · 192 posts · 163 votes
2y
Quote from @Corby Goade:

I still have lots of questions, but we invest in Boise, ID and do BRRRRs all of the time here. Forced equity and cash flow vary quite a bit by the deal, but Idaho is the most landlord friendly state in the country- the state actually just passed a law making it illegal for cities to regulate rent rates or fees in any way.
Close to SAC too, so that's a plus.
Best of luck!

Wow! thanks for that. I did not know about this law. Definitely will look into it!
2 Reply
Mya Toohey
Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes
2y
My market in Tampa Florida is a great place right now for BRRRR. It just depends on how much of a reno you want to do. Time, money and effort.
0 Reply
Ranjit Sandhu
Real Estate Broker · Rocklin, CA · Member since 2020 · 221 posts · 83 votes
2y
@Nicholas J Mineo Hi there! Don't you think instead selling maybe convert your garage into ADU. I think that will be better in short term or long term. If you absolutely want to sell then maybe look for off market properties and there are so many all around Sacramento are.
1 Reply
Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
2y
Quote from @Nicholas J Mineo:

Hello BiggerPockets Community! I'm considering selling my duplex in Sacramento to liquidate some capital. I'm looking to shift my focus from the long game of rental appreciation to the BRRR method. Currently, this duplex isn't cash-flowing as I bought it as a primary home with less than 25% down. The long-term plan was to convert the garage to an ADU for future cash flow.
I'm seeking advice from fellow investors.
-Which markets would you recommend for the BRRR strategy with $100k to work with?
-Any tips for identifying promising BRRR strategies?

Ideally, I would start in Sacramento since I have built some contractor relationships. However, I would definitely need hard money in order to make that work. You won't be able to buy fixers out here all cash for $100k!
Thank you in advance!
Hi Nicholas, I would strongly look into investing in the Columbus Ohio market. I am originally from Portland, Oregon and was priced out of my market and there was no positive cash flow anymore. because of that, I moved to Columbus to start BRRRRing and flipping houses. With that $100k capital, you can get very far and buy multiple properties here. I really like this market because you can still find tons of positive cash flow, the 1% rule, and you have amazing appreciation (look at population growth, job growth, and how many companies are moving here!). Anything you buy here will be a goldmine within the next few years! Also look at Intel headquarters, Ohio State University, Google, FB, Amazon, Nationwide, Honda, etc. Happy to connect and answer any questions you have!
[email protected]614-300-7535
Jimmy Lieu, Red 1 Realty4.9122 Reviews
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1 Reply
Sean O'KeefePro Member
CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 871 votes
2y
Following - I'm based in California
[email protected]628-241-0888
2 Reply
Scott ScovilleBusiness Member
Real Estate Agent · Sacramento, CA · Member since 2019 · 502 posts · 276 votes
2y
Quote from @Nicholas J Mineo:

Hello BiggerPockets Community! I'm considering selling my duplex in Sacramento to liquidate some capital. I'm looking to shift my focus from the long game of rental appreciation to the BRRR method. Currently, this duplex isn't cash-flowing as I bought it as a primary home with less than 25% down. The long-term plan was to convert the garage to an ADU for future cash flow.
I'm seeking advice from fellow investors.
-Which markets would you recommend for the BRRR strategy with $100k to work with?
-Any tips for identifying promising BRRR strategies?

Ideally, I would start in Sacramento since I have built some contractor relationships. However, I would definitely need hard money in order to make that work. You won't be able to buy fixers out here all cash for $100k!
Thank you in advance!

Hey Nicholas, I've been mostly doing BRRR's and value add in Sacramento the last few years. Currently, I'm moving into off market seller finance deals, looking for more cash flow to offset the appreciation plays. I'd be happy to chat with you about both and the good/bad/ugly that I've experienced.
[email protected]415-933-2202
Scoville Realty & Investments LLC
Website View Page
3 Reply
Noah Laker
Real Estate Broker · Sacramento, CA · Member since 2021 · 518 posts · 410 votes
2y
Hey Nicholas, I'm a local broker and investor here in Sacramento. We primarily work on STR / Airbnb properties but some of my agents work on more value adds, BRRRR's, and Fix N Flips. Whichever direction you go, there are plenty of experienced investors in the community (and here on BP) to guide you!
Good luck!
1 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Nicholas J Mineo
hello. out of state BRRRR is very difficult. having market knowledge and boots on the ground in Buffalo as you noted is definitely a plus, but there is just so much competition right now, even for the most distressed assets. being hands-on is really what makes a BRRRR work - if you're paying for absolutely everything it just puts more pressure on your deal.
1 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Hey Nicholas, I love doing BRRRR's in Detroit. That's where I've built my portfolio's foundation and it's a solid market if you have a strong team there (I do).
I have to ask though, if the plan was to put an ADU in... have you done that? If not, why?
I'm finishing up my ADU here at my primary in California and we'll operate it as a STR. We expect it to gross $4,000 - $5,000/mo which would cover my entire PITI.
What's stopping you from adding that ADU?
1 Reply
Nicholas J Mineo
OP
Lender · Sacramento, CA · Member since 2023 · 6 posts · 7 votes
2y
Quote from @Samuel Diouf:

There are some great opportunities in the Ohio markets. Many investors from California are choosing to invest in the Midwest because of the low barrier to entry and yearly cash returns making more sense in these lower priced markets. Ohio markets show up 3 times in Zillow’s 2024 hottest markets, with Columbus and Cincinnati taking the top 2 and 3 spots. I moved from Florida to start investing in Columbus because of the same reason.

https://www.zillow.com/learn/hottest-housing-markets-2024/
Learn about the core-4 and how important it is to build a solid team when investing long-distance. I'll drop an article about it below.
https://www.biggerpockets.com/blog/core-four-real-estate-tea...

I've heard great things about Columbus. Thanks for the info and linking those articles!
1 Reply
Nicholas J Mineo
OP
Lender · Sacramento, CA · Member since 2023 · 6 posts · 7 votes
2y
Quote from @Corby Goade:

I still have lots of questions, but we invest in Boise, ID and do BRRRRs all of the time here. Forced equity and cash flow vary quite a bit by the deal, but Idaho is the most landlord friendly state in the country- the state actually just passed a law making it illegal for cities to regulate rent rates or fees in any way.
Close to SAC too, so that's a plus.
Best of luck!

Good to know! I own a duplex in Alameda County as well... most definitely not a landlord friendly county. I'll look into Boise. Thanks!
1 Reply
Nicholas J Mineo
OP
Lender · Sacramento, CA · Member since 2023 · 6 posts · 7 votes
2y
Quote from @Travis Biziorek:

Hey Nicholas, I love doing BRRRR's in Detroit. That's where I've built my portfolio's foundation and it's a solid market if you have a strong team there (I do).
I have to ask though, if the plan was to put an ADU in... have you done that? If not, why?
I'm finishing up my ADU here at my primary in California and we'll operate it as a STR. We expect it to gross $4,000 - $5,000/mo which would cover my entire PITI.
What's stopping you from adding that ADU?
Hi Travis! Thanks for the reply. The main reason at the moment is due to lack of liquid funds to get that converted. I reached out to an ADU company in the Sac area last year and was quoted north of $150k to convert a garage with was barely over 300 square feet. Crazy!
1 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Nicholas J Mineo:

Quote from @Travis Biziorek:

Hey Nicholas, I love doing BRRRR's in Detroit. That's where I've built my portfolio's foundation and it's a solid market if you have a strong team there (I do).
I have to ask though, if the plan was to put an ADU in... have you done that? If not, why?
I'm finishing up my ADU here at my primary in California and we'll operate it as a STR. We expect it to gross $4,000 - $5,000/mo which would cover my entire PITI.
What's stopping you from adding that ADU?
Hi Travis! Thanks for the reply. The main reason at the moment is due to lack of liquid funds to get that converted. I reached out to an ADU company in the Sac area last year and was quoted north of $150k to convert a garage with was barely over 300 square feet. Crazy!

Converting a garage is generally one of the most cost effective ways to add an ADU. I'd shop that quote around quite a bit.
You don't need an ADU company. You really just need some plans and a builder. Or you could self manage sub contractors yourself depending on your comfortability level with that.
0 Reply
Becca F.
Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
2y
@Nicholas J Mineo
As far as the ADU, I was considering that myself but if I do that my SFH is now considered a 2 unit and subject to rent control - San Francisco, Berkeley and Oakland are the worst with regulations. I asked a few experienced investors and if I do the ADU as an MTR or STR I can possibly get around that rent control issue, need to look into this. I was going to talk to a few contractors. I would think an ADU company would charge more. I'm assuming Sacramento might be a little more landlord/investor friendly and you wouldn't have the ADU issue and rent control with 2 units like I would.
As far as OOS investing you're going to get a lot of agents pitch their markets. We all have different financial situations, lifestyles, risk tolerances etc. I know a few CA investors that sold their properties and bought all OOS and are doing well. I personally wouldn't do that although I'm aware I would "cash flow" more on paper if I bought an apartment complex or multiple SFH/duplexes OOS vs keeping my Bay Area SFH rental. At this point I'm ok with preserving my assets and not losing anymore money and owning a few quaiity properties not acquiring more doors. Someone who is a very high W2 earner (e.g many of my younger tech friends) are fine with taking more risk, buying lots of OOS, scaling, etc.
There's no right answer for everyone, just be careful. Whoever contacts you on BP, agent, wholesaler, direct seller, anyone asking to partner with you, etc, please do your due diligence. Someone tried to scam me on here, asking to do business with him and lend him money in a double close.
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