All Forum Posts by: Derek Daun

Besides all the personal reasons; I can think of two reasons to sell by the number.

1) If your property appreciates every year, and if it's financed, your principle gets paid down, so that the amount 'invested' (the value of your asset) is higher each year. Depending on how fast your rents go up; your ROI might be going down every year. From that standpoint, you should sell; leverage your assets more, and get more appreciation, and more income.

2) If you buy properties at a discount, then a lot of the money you make is made day one. From a year over year ROI based on value of the previous year's equity, your best year might be your first or second one, so why not try to have more years like that?

I have extra rows on my spreadsheets to analyze this. (In addition to the typical ROIs calculated) For year over year ROI I look at the potential cash I could have if I sell one year (taking into account 7% for selling costs) as the investment. The net income, and appreciation of the next year make the return. I also calculate an 'average compound interest to return'. This represents the average year over year ROI that would equal the amount if I sold the property this year. This number trends down over time.

I can't answer your question, but I'm curious, what are the HOA litigation issues?

Hi Katie,

Like Joel Noel mentioned, if you have questions on posts, search more, and feel free to ask questions. Obviously not all topics apply to everyone, and that's okay. In some cases, they might not talk that much about the actual costs, because it might not be that important to the target audience. 

Perhaps a better title this post would have been 'How did BP members with average income, student, debt, an no options for private financing get started?' (HINT: for many members, it probably wasn't in their 20s) 

Here's how I would have answered that question (It looks like Chris Vail did the same):

I didn't really started earning income till I was about 25. (Long undergrad + grad school), and spent a number of years getting debt under control. In 2010, when I was 31, we moved from the rented town home in the trendy part of town to a not so good part of town where I bought a house. We thought the neighborhood was likely to improve. My mortgage was only a little more than half of what we had paid for rent, which allowed us to save money while my girlfriend (now wife), figured out how to turn that education (with student debt) into a career. She was underemployed at the time as a consequence of the recession. The house cost $115k; I think total out of pocket costs were about 12k. My wife drove a used 2000 Subaru, while I was living it up with a used 2004 VW golf. (Those are still our cars today) We lived there for four years. Total money invested in the house was about $20k (downpayment and minor improvements throughout the years, mainly new floors and a new water heater.) We also got married during that time. We paid cash. It helped that we asked for cash instead of gifts; the gift cash ALMOST covered the bar tab.

Four years later (2014), with my wife's career getting traction, we bought a second house in a much nicer part of town. The house cost $460k; it was a fixer upper. We paid the downpayment and rehab with money from saving those four years, and a 401k loan. The first renovation was to build a basement apartment in the house. It took most of our free time, and about 10k for the apartment, but we finished it in three months. Six months later, we refinanced the first house, and were able to pull out about $50k. With that money, we're in escrow on our third property right now. We hope to buy 1-3 properties in in 2016, depending on how much our equity appreciates and if we sell anything.

@David Hutson

Is it a straight forward process to have a copy of water bill sent to you?

Are any Sacramento landlords having the tenants pay for water for SFRs?

I've always considered Sacramento a 'landlord pays for water/sewer/garbage' city. I never paid it when I was a renter, and as such, I pay for it all on my rentals. I assume this could change as meters start being activated more.

I noticed not all craigslist ads mention it, so I thought I'd take an informal sampling on BP.

I put a tankless in my old house, which is now a rental.

Advantages are:

-infinite supply of hot water

-smaller footprint

-more efficient. The costs savings was about $10 a month relative to the old tank. 

If you don't have issues with the space taken up by the current system, or the amount of water available, the money saved is rather small compared to up front investment. If you're just looking at it from a financial standpoint, you'd be better off putting the money in a mutual fund.

Like Chris said, it would be a lot more if this was the Bay Area.

If you look around, midtown has similar amentities to any given neighborhood in the San Francisco. It's a bargain compared to there, and is only getting better. 

@Joe Bertolino Not to sidetrack this post too much, but where would recommend finding listings like 2220 L street? It's not listed for sale on any of the usual MLS sites I frequent. Also, according to the descriptions I can pull up, not all of the units in that place have bathrooms.

Sacramento's water/sewer/garbage is going to run a little higher than other central valley cities due to the fact that city is trying to pay for a massive overhaul of the sewer system.  Large antiquated swaths of the system need to be replaced across the city. I also imagine the leaf removal in fall and spring adds a little to the cost.

MFH are actually cheaper than SFH per unit. Obviously one would expect the total usage of a duplex to be greater than a SFH since it could be designed to hold more people. Current prices are set based on the number rooms in the house.

I expect the trend of landlords paying water could start to shift as meters are activated. In some cases, metered water bills could be cheaper than flat rate if the algorithm of flat rate doesn't fit the property.

@Jake Weir

 Good call on checking the room # on the bill. I'm not sure which rooms get counted towards the count; maybe someone else can lend insight into that

Like Joe said, Midtown rents are going up. I've heard from multiple friends that their fairly crappy apartments are going up. 700 to 1090 seems really high, unless the original amount is under market based on the quality of the apartment.

@Joe Bertolino

100k per unit in Midtown? I haven't seen anything that cheap in years. Am I missing out on something?

I think Sac County is mostly metered (compared to the city of Sacramento), so you might be metered.