All Forum Posts by: Chris Vail

Interesting discussions going on in this thread.  As someone that was born and raised in a desert valley community in So Cal and now lives up in Nor Cal I am confident that most of California residents won't be going any where because of water.  Water has always been a point of contention between Northern and Southern California and that will more than likely never change.  

Will water get more expensive? Yes.  

Will people living here find a way to cope / deal with this? Yes. 

Will there be a mass exodus out of California? No.

California will find a way to deal with the water supply issues just as they have done so in the past.  There is enough money and farming in California to force a solution at some point, until the next level of water crisis to which another solution will be found.  This cycle will continue to happen until the "big one" hits and California falls into the sea :).

Welcome to the site 

@Dave Boswell

Sounds like you will have a lot to offer on the site with your past experience.  I look forward to seeing you around.

Hello

@Rita Temple

Not sure if the linking function is working as it is acting funny but welcome to the site.  Set up a keyword search for "Sacramento" that way you get alerts when our area is being discussed.  My guess is we will have a meet up in the next month or two which will be a good time to meet some of the folks on here face to face.

Lessons learned: 

I have learned a ton through this process and I believe it will make the next one smother and faster.  

-Contractor can make or break your experience. Mine broke my experience but I am chalking it up to a lesson learned.

-Paper work, setting up all of the documents which I did not realize how long it would take but now that I have set up all of my documents to be ready made docs, I just need to change a couple of things on the next one to allow repeated use of them.  Upfront time spent for future ease of use.

-I really enjoy the transformation process and will be looking forward to the next rehab/design process.  After what I learned on this one I should be able to do it more seamlessly and for less money on the next one.

Thank you for the comments and encouragement from all of those that have posted here or on the site in general.  This is the basis of what makes this site great.

Update: (which is way over due)

House is rented with tenants moving in on Tuesday.  I have installed an brand new HVAC through the Ygrene program the City of Sac offers.  I was going to wait on this until the summer time but since the tenants were not moving in util the end of March it allowed me some time to get it completed and the Ygrene program only had me out of pocket around $700 and the rest of it gets paid through property tax which I will be able to take a tax deduction on.  I had the wall heater removed (which luckily I was able to return to Home Depot for a full refund, THANK you HD). Got the electrical panel replaced during the HVAC install, and I am currently finishing up the network drops for the bedrooms and living rooms this week, and have the house scheduled for a final professional cleaning on Monday, day before the renters move in.  I had over 40 people contact me inquiring about the rental and went through all of the weeding out criteria and found what I believe will be excellent tenants.  There have been some long sleepless nights over the last 3-4 months but I can safely say that it was worth it.

Recap of the numbers (Rounding for simplicity):

Purchase Price 125,000

Down payment  25,000

Closing costs 4,000

Rehab/Carrying costs 40,000

Rent: 1415 / 16,980

Vacancy: 8% (-113 /-1358)

Total income: 1,302  / 15,622

-Expenses-

Property Management: (10% even though I am managing it) -141.5 / -1698

Repairs and Maintenance: -100  / -1,200

CapEx: -122 / -1464 (even though everything is brand new in the house, based on average life spans of mechanical's and appliance's this should cover replacement costs when things happen. I am curious how other investors look at this, as I am thinking about once I get to 10,000 k reserves then moving the cash flow towards other investments, thoughts?)

Insurance: -52.33 / -628

Net Operating Income (NOI): 885.97 / 10,631.60

P.I.T.: -566.09 / -6,259.77

Net cash flow: 319.88 / 3,838.56

(note this does not take into account the Ygrene charges which will basically zero out my monthly cash flow for the first five years (the loan term I picked was 5 years at 5.99%) on an upfront operating cost but when taking into account the tax deduction I end up with a negative interest rate of around 2%.) then after year five it will be like the property gets an instant raise.

So I am into the project for about 69,000 (down payment, closing costs, rehab, and carrying costs) and the 100,000 loan for a total of 169,000.  

I believe that I could get the house re-appraised in a couple of months for 200,000-210,000 , possibly more based on what is for sale right now within a .5-1 mile radius.  Which I will think about doing so that I can pull out a majority of my invested capital pay off the Ygrene loan and then go start looking for the next one.  Doing this will bring  the cash flow to around 130 / 1,560 with around 15,000 of my initial investment still in the property.

Something that I don't think was mentioned is just be cause an investor is interested in your property doesn't mean they are interested at your listed price.  Have they given you a full price offer with little to no contingencies? until this happens interested might mean they want your property but they aren't willing to pay your price.  Of course I could be dead wrong but I know I have been interested in properties but not at the price the seller had, but that didn't stop me from coming by the house to take a look and see what "my" price would be for it since I was interested.  Just some food for thought @Eddie Sladek

@David C.

 I am not familiar with the Elk Grove area unfortunately so I can't steer you one way or another.  However I feel like I can be pretty confident in saying that all of Elk Grove is not "class A" it would be very rare a city as big as that is 100% the same.  There are going to be all ranges of areas across the city.  Ultimately you will need to look at what makes sense for you and you expectations, and that lens should be how you evaluate any property you look at.  

@Chris Adams thank you for sharing your story, it's been a great read.  Looking forward to the future updates.

@Derek Daun

I can speak from the recent experience of getting my first SFR up and running in Sacramento. It can be done you just have to find the right deal that will make sense for your criteria. Me, I found a SFH that I bought for 125 k I have put ~ 45 k into renovations and it has tenants moving in at 1,415 a month in rent. When I re appraise it in the summer I am hoping for a value in the 190-200 k range so I can pull out almost all of my invested capitol.

So it can be done you just need to find the right property to fit your goals.

@Gagan Johal

which city does the SFH reside? And congrats.