All Forum Posts by: Hugo Luna

Hello BiggerPockets! 

I am looking for general feedback on REI success (within the next year) in the Sacramento vs San Diego region. Reason being, my partner and I are planning a big move from Silicon Valley to either Sacramento or San Diego. We have high paying professional careers, I am in Residential Real Estate Development, and he is a Teacher in a well paying district. Ideally, we would like to hold hold similar professional day jobs, but want to get more involved with REI. The big question is, which area will provide the best playground for our situation without taking significant salary cuts?

Currently, we own a duplex in the Sacramento region that is cashflow positive at about $1,500/month. This property was purchased earlier this year and has been performing above our expectations. This next time around, we would like to get involved with purchasing a primary residence with options to Airbnb, or flip and sell to help build cash reserves for buy and hold properties. 

If you are a BiggerPockets member in the Sacramento or San Diego region, we would love to hear from you!

Hi @Clarissa Hom

I was also very skeptical, but they kept me engaged by the money they offered....money talks right? lol

I started doing my own research and pretty much found negative comments online, but thought I should research elsewhere. I started by calling the state of California to confirm the legitimacy of the company and everything cleared. Next, I asked to meet the family that was in need of the home. During the meet and greet I learned a lot about the family and felt more confident that what I was getting involved with was legit. Of course, I was still concerned about the possibility of late or missed rent but luckily I worked out a deal with ALE where they paid me 2x the security deposit along with 3 months rent pre-paid. This made the decision a no brainer.

As of today, I haven't had any issues with the tenants or the insurance company. The account is always pre-paid for 3 months which gives me peace of mind. 

As long as you feel comfortable with the future tenants and negotiate a deal with little risk to you, I would say go for it. It is the easiest money I have ever made! This is definitely a lucrative niche in REI.

Let me know if you have any other questions!

@Wes Blackwell, I ended up looking into this a little more, took the risk and moved forward with the deal which turns out to be very lucrative.

Basically, family lost home to fire in Woodland 2 months ago. The family was insured by AAA and was placed at a Hotel temporarily while home undergoes repairs. Their Adjuster from ALE was searching for a more permanent and lower cost home, so they found me on zillow. Terms of lease are below.

-9 Month Lease with option for month-to-month

-2x Security Deposit

-3 Months pre-paid rent

-Payment letter of guarantee from ALE

-$800 premium paid monthly for accepting terms. Lease is $2,050/Month. Market Rent is $1,200.

Here's a link to news report on the fire. 

http://www.dailydemocrat.com/article/NI/20170204/N...

Hi BP,

I have a property listed for rent in Woodland, CA and received a call from an ale Solutions agent who claims to be relocating a family that lost their home to a fire. The agent is only looking for a 9 month lease with a month to month option and is offering to pay a premium (+$400/month) if I accommodate her request. It all sounds great, but I am hesitant because I have never worked with such agencies. Of course, I would still run a credit and background check on the prospective tenants.

Has anyone ever worked with ale Solutions?

Sorry guys! This was an old post that was saved as a draft on my phone and accidentally reposted. Thank you for the awesome feedback tho! Will continue searching for that multi-unit deal.

Hi @Jennifer Taves. Late to the post, but I was doing some research on Hubzu and thought you might be able to help. I am working with an agent who showed me a property listed by Hubzu and was ready to submit an offer, but so many fees came up and agent is recommending we avoid this. Do you know how the buyer premium works and if it is to be paid cash or added to financed amount? Of course, I've tried contacting Hubzu, but no one answers the phone.

Hi BP! I'm looking for some insight on The Iron Works Community in Sacramento - I'm interested in buying a rental unit. Listings for a 2 bedroom / 2.5 bath (1,320 SF) have been coming up on the MLS at a range of $390K-$410K. HOA dues are $100/month. With such close proximity to downtown and the new stadium, I anticipate appreciation. Does anyone have a solid idea of potential rent on these units? How about Airbnb?

@Pat McGrath The reason my search has narrowed down to Woodland is because I grew up there and became really familiar with the entire city as well as home values - I guess I started focusing too much on that area only. This home in particular I knew was way underpriced, so it caught my attention.

I've definitely been open to investing in other areas, but quite honestly haven't looked closely at areas surrounding Sacramento besides Natomas, Mid-Town, and Oak Park. I will have to check those areas out more closely. Thank you.

Thank you all for taking the time to provide valuable feedback. I truly appreciate it! Waiting on the sidelines has made me really impatient, but it's reassuring to see all of your responses. 

Update on the deal: It's been canceled and house is back on the market. 

@Gordon Cuffe @Wes BlackwellWhere in the Sacramento region have you seen deals like these? I definitely have seen a few pop up in rare occasions, but they are rapidly snatched by all cash investors. Any areas you recommend I pay attention to?

@Tom Cafarella With the current market conditions, are you actively investing/acquiring properties? 

@Kenneth Reimer As a broker, have you experienced a decrease in activity with this months interest rate hikes? 

Hello BP!

I wanted to share my recent experience and gather insight from other local investors in the Sacramento Region. 

I made an offer on a HUD home and after several counters, my offer was accepted at $295,000 (LP was $305,000) with $2,500 toward closing costs. My offer was submitted as owner occupied because my original lender only required the home to be owner occupied for 6 months prior to renting it out. After my offer was accepted by HUD, I was asked to sign a disclosure stating I would occupy the home for a minimum of 12 months. At that point, I had to back out of the deal, but was given the option to re-submit under investor terms which changes the whole scenario.

For an investment property, Wells Fargo has the following option:

Purchase Price: $295,000

Market Value: $335,000

Investor Down Payment (15%): $44,250

Investor Loan Amount: $250,750

Investor Rate: 30 Year Fixed 5.375 (APR 6.030%)

Principle & Interest Payment: $1,404.13

Property Taxes: $307.29

Monthly Mortgage Insurance: $127.46

Insurance: $72.43

Estimated Closing Costs (1 time): $5,689

Estimated Closing Costs (prepaid items): $2,070

Total Monthly Payments: $1,911.31

Monthly Rent: $1,650

Although this deal does not provide monthly cash flow under this scenario, there is potential for equity growth through appreciation and purchasing under market value. This would also get me started with my first real estate investment, which is why I am open to considering all options. The process on even getting an offer accepted has taken months, which makes me fear I won't find another deal for some time. 

What ratios are other investors in the Sacramento region looking at? What interest rates are being quoted to others? Any feedback would be great.

Thank you all!