Fair Oaks, CA Duplex brought up rents by +$500mo

[Nicholas Gilpin]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Fair Oaks.

Purchase price: $479,000

Duplex in suburban Sacramento, CA community of Fair Oaks. Each unit has 3bd 1.5bath with private backyard and enough parking on side of units for RV access. Occupying one unit currently and this has a detached two-car garage in the backyard which I am working on identifying if an ADU makes sense.

What made you interested in investing in this type of deal?

Sacramento, CA is a really hot rental market with many bay area transplants migrating to the area.

How did you find this deal and how did you negotiate it?

Found on MLS, worked with my former broker/boss to put the deal in contract and family friend structured FHA financing which won over an all-cash offer.

How did you finance this deal?

FHA, 3.5% down, 3.6% over 30 years

How did you add value to the deal?

New roof, new paint, painted cabinets, new light fixtures, New fencing, updated sprinkler system, included yard maintenance into the rental agreement, misc. updates to plumbing/fixtures.

What was the outcome?

The previous tenant was in place when the property was purchased and paying $1,250 per month rent. New tenants were identified by holding an open house (twice) and they are now paying $1,850. Duplexes in the area (same street) were renting at similar price points (1200-1400) for the same floorplan. Now, these same units are renting for between (1795-1950).....

Lessons learned? Challenges?

When identifying new tenants, hold an open house, spend the time to hold the house open and put out signs. If interested, make the application available (used Cozy) and help walkthrough with the prospect while they are there. If they enter crummy info then you just screened out much more quickly than doing individual showings.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Brian McMartin (Broker)
Wendy Challis (Lender)