All Forum Posts by: Dan Sundberg

Investment Info:

Townhouse buy & hold investment.

Purchase price: $450,000
Cash invested: $90,000

This was our first home purchase, bought as a primary residence in 2018. We lived in this home until May of 2023, when we bought a new primary residence and rented this one out. We did very little work to the property as it was newly built in 2016. It's currently rented for $2,800/mo to excellent tenants. After all expenses it cash flows about $450/mo.

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

We bought this property initially because the location was close to downtown where we wanted to live. It was only 2 years old and was very low maintenance, which was perfect for our lifestyle at the time. I also thought this area would be a good long term buy and hold, as there is a tremendous amount of investment in the nearby corridor to revitalize it, and it's adjacent to one of the best neighborhoods in the city.

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

MLS

How did you finance this deal?

Conventional 20% down.

How did you add value to the deal?

Very little done to add value to this one. Just kept it in good condition until it was time to rent it out, and made sure to refinance when rates bottomed out.

What was the outcome?

It's now produces about $450/mo in cash flow after all expenses, not including debt paydown. It's also extremely low maintenance, so I barely have to think about it.

Lessons learned? Challenges?

Would do again:
- New construction - low hassle and very little CapEx
- Buy a primary residence to fit lifestyle. There were options that would have made better investments, but the lifestyle this enabled fit perfectly.

Would reconsider in the future:
-20% down payment. Too much cash sitting idle
- Townhouse - appreciation has underperformed

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

Myself! I self represented on this one.

Congrats on getting into the game!  Sounds like you're on really solid footing to start. @Allan C. made a lot of good points...the ADU house hack opportunity in California is pretty huge.

my wife and I are in Sac, and have very similar situation to yours. We're almost done with our 2nd ADU project. It's definitely work, but there's positive cash flow and great appreciation. Plus having our rentals within a 30 minute drive is enormously beneficial.

Tons of great suggestions/advice in the previous comments. Roseville is a good area for MTR, as there are a lot of hospitals in that area for travel nurses. 

One more option that will reduce monthly expenses, and boost your rent a bit too is to buy a new home. All maintenance for the first year is covered under the builder warranty and everything is so new your CapEx will be super minimal for a long time. Plus renters are willing to pay a premium for brand new rentals too.

There are a ton of new home communities in Roseville in particular that are under $600k. Many of them are offering pretty good incentives too, I was just able to negotiate one down $30k this last week, so many of them are looking to cut deals now. 

Hey Todd, welcome to the area! I've completed one successful house hack and am in the middle of my second here in Sac. Also an active Realtor in the area. I'd be happy to talk about my experiences and the market here in general. Shoot me a DM. 

Dan

Hey @Dinesh Singh - $475k is going to be tough for Elk Grove new construction, however there is a large new construction development in Southeast Rancho Cordova that is in the Elk Grove School District. Prices are less than EG, but rents are still very good and you can get a new construction home in the $500s. 

@Nicole Masters - I'd actually really appreciate the recommendation. I've been keeping my eye out for a new cleaner. Thank you!

@Nicole Masters Thank you! Yeah I'm really happy with how it turned out. It's in the Med Center area near East Sac. Mid term rentals have been fantastic, and yeah I'm getting calls already for people wanting to book when it's next available at the end of Oct. It's only been a couple turns, so hopefully it keeps up, but so far so good!

@Richard Goore - I'd be happy to talk more about this - shoot me a DM and we can chat. 

@Colleen Chen - ah thank you for reminding me, I need to update this post! Yes, the project finished about 5 months ago and it went really well. I did the process as an owner-builder and so I worked directly with the planning and building department to get the plans signed off (first time doing this, it' wasn't too bad). I had my contractors though pull specific permits and meet with inspectors during construction. 

The only specialists I worked with were Housable.com who creates semi-custom ADU-specific plans. They were awesome and a bit part of the reason working with the city to get the project approved was so easy.

Your questions are all great ones...and it would probably be easier to talk through that on the phone...if you send me a DM I'd be happy to set up a call. 

Here's the link to the finished and furnished project. I'm really happy with how it turned out - https://www.furnishedfinder.co...

@Patrick McGinn - I don't have great insights into what you're trying to accomplish, other than the HELOC you're mentioning sounds like really good terms. What lender are you using? I'm trying to do something similar and the few banks I've talked to only like to do HELOCs on primary residences.

@Jessica Sorensen That's incredible - what a beautiful flat! And wow what great rental prices too!!Now you've got my head spinning with ideas for something like that too. There are lots of older homes in Sac with large unfinished basements or attic spaces that would be perfect for that!