All Forum Posts by: Wes Blackwell

@Tonya MacMillan

Welcome to BP Tonya! If you've got any questions about the Sacramento area feel free to reach out. Pretty good little community we've got going here if I must say so myself! :-)

@Ahmed Sublaban

On Metrolist, click the "Tax" link in the top menu bar, and then type in the address, and then the owner's tax billing address should be indicated on the property profile, which gives you their out of state mailing address.

If any non-agents in the Stockton or Sacramento don't have access to MLS and need help, just let me know.

A commercial multifamily property is any property that has 5 or more units. That's what classifies it as commercial. Any property with four units or less (fourplex, duplex, three homes on one lot, etc.) is considered residential.

The main way this will affect you as an investor is the financing. Two completely different animals. If you are a newer investor, I would recommend starting with residential multifamily properties until you get some more experience. Once your properties appreciate and you pay down the mortgages a bit, you can do a 1031 exchange into a larger multifamily property if that's what suits you.

Any other questions feel free to ask. Here to help :-)

@Scott Doyen

Here's the thing about the 2% Rule -- it's meant for $50-100k properties in much cheaper states than California. 

Tell me where you can find a $400k property to rent for even 1% ($4k), and I'll buy it in a hearbeat. Especially considering that if I bought that house with 5% down and a 5% interest rate, my PITI would only be $2,850... which kinda makes you wonder why someone would rent it for $1,000+ more in the first place.

Average/Median home values vary from city to city too, all over the state. So what seems like a deal in Sacramento may not be a deal in LA, and vice versa.

What you have to do is consider what the average rate of return is in the area you're considering, and then determine how much better the deal you're looking at needs to be compared to average in order for you to consider it.

Because if you're waiting for the 2% rule property to come around, you're going to be waiting for a reaaaaaal long time.

You might hit 1% every now and then, most likely on a fourplex, but that doesn't mean you want to live in that area if you're house hacking. So there are other considerations as well, not just the math.

Here's what I would do if I were you:

1) Consider how long you plan on being in California, and any other major life changes that may be coming your way soon. Girlfriend who wants to get married, promotion to a different city, parents retiring in another state, etc. If you're here for the next 4-5 foreseeable years without any big changes on the horizon, proceed.

2) Househacking is most assuredly your easiest way to get started, especially if you don't already own a property. Your goal is to lower your monthly obligation to the mortgage through the rent collected by your other tenants, and pay down your mortgage instead of someone else's that you would by renting.

3) If you're a first-timer, I would suggest avoiding out of state investing. Your just learning how to invest, so don't add in the added difficulty of analyzing economies and markets in far-away states you've never visited, only to get lied to by some broker or local wholesaler who tells you what you want to hear so you'll buy, only to have a fire started by the tenant and then need to take off work to fly 5 hours and waste a whole week trying to put things back together. Invest where you know.

4) Work with a local professional who is knowledgeable not only about the area, but about the investment strategy you are pursuing. Not all agents understand investment properties, they only pretend to. Then you can start looking at potential properties and "window shopping" while learning to run the numbers under the guidance of a pro who can double check them, and then pull the trigger when you're finally ready.

Hope this information helps. Please reply if you have any further questions I can help you answer :-)

@Alice Chau

I've done a ton of multifamily deals and have worked with dozens on Multifamily investors in the Bay Area looking at Sacramento and would be happy to help you get your questions answered. Feel to reach out if I can be of any service or help get you pointed in the right direction :-)

@Ken Tsai

Here's some general advice for out-of-state investing:

1) Do Your Homework -- Don't just trust what some turn-key operator says on here about some city being a great market. Read the local news. Read the reports. Get stats from the city government site about job growth, local economy, etc. 

2) Visit the Area -- Don't just buy something off loopnet because the numbers look good when you've never visited the area. Do some initial research for potential markets, choose 1-3, network with local professionals and investors in the area, look at all the potential deals in the area and history of deals if available, and then schedule a time to come and visit the area and look at potential deals in person before buying. Do this and you'll avoid 99% of the nightmare stories you read about on here. 

3) Don't Buy in Small Towns -- Not as a beginner at least. If you make a mistake and need to unload the property in a year or two, you're going to have a much easier time selling in a major metro than you are some small town on the outskirts of Tucson, Arizona. Try Phoenix instead.

Hope this helps!

@Oron Subayi

Investor agent here in Phoenix. Let me see if I can help you get your questions answered:

1. Most important thing to consider about rent trends is population growth and jobs, which go hand in hand. AZ has all kinds of people moving here from California and is the #2 retirement destination in the US for Baby Boomers. #4 in both population growth and job creation. You're solid.

2. Best way to estimate the rent for a given area is have a local agent do a search for completed leases nearby in the past 6-12 months for comparable properties. There's another trick to get an even more accurate value for rent estimation, but won't share it publicly. Message for more info.

3. Totally depends on your investing experience and goals. You should pull the trigger when a deal meets your criteria for a rental property and is better than most of the other deals you're likely to come across if you were to continue searching. 

4. If you have a hard time running the numbers, work with an experienced agent, investor or lender who can help you. DO NOT MESS THIS UP!

5. Where did you read this? Totally going to depend from state to state, county to county, municipality to municipality. Not like it's going to go up overnight and kill the deal or make the property no longer cashflow. Wouldn't worry about that as much as the PITI, maintenance, HOA, etc.

6. Below are screenshots of the information you requested -- this is why you work with an agent :-) We're here to help and can get WAY more information than you can off Realtor.com to help you make a more informed investment decision.

Hope this information helps. Property is still available if you'd like me to get more information for you :-)

@Keith Torsen

Biggest thing to consider when buying an auction property in Sacramento is all the added terms put forth by the bank that's selling the property that usually put you at far more risk than you'd like, especially for an out-of-state investor.

1) Buyer Premiums: Has your agent indicated if there are any added buyer premiums that must be paid on top of the purchase price? Was looking at an auction duplex for a client the other day with a buyer premium of $25,000!!! Yours will likely be much less, but still need to factor it in to your acquisition costs.

2) Other crappy terms: Non-refundable deposit, only cash offers accepted, won't turn utilities for your inspection, no inspection or appraisal contingency, non-standard purchase contracts, and all sorts of other crap you won't like. Make sure you read the fine print. Buyer beware.

@Ashley Obasi

The problem I foresee with your scenario is how you're going to get financing on an investment property in the Phoenix area with only 15% down. Typically you're looking at 20-25% for non-owner occupied... have you already spoken with a lender and got preapproved for that down payment? That may be a big part of the reason why they numbers are tight or aren't working...

@Andrew Martherus

The challenge is you're trying to get the best of both worlds, which is sort of impossible with house-hacking. You'd like to have the nice clean neighborhoods and good schools that come with a newer SFH development in the suburbs, but still get the sweet returns of a old fourplex in a C class neighborhood in the city core. Won't happen.

Especially when you consider that most multifamily properties, in any city in any state, are going to be located near the city's central core... the "inner city" so to speak. See below for the Phoenix Metro Area:

That's where the population is most dense, and where most jobs are, which would suit a need for multifamily housing. The outer city is where new housing is typically built, and new housing is SFH 99% of the time. People want to escape the hustle and bustle of the inner city and move out to the suburbs with quiet neighborhoods and good schools. Not next to a fourplex with all kinds of cars parked in the driveway and kids out in the street.

Your goal as a house-hacker should be to control a more-expensive property for less than the amount it would normally cost you every month, reducing your monthly obligation to the expenses and winning on ROI with the appreciation on a pricier property.

With minimal down payment, even on a fourplex the best you can hope for really is to break even every month and essentially live rent free. It's just that you're probably going to have to live somewhere much lower quality than you would if it was a single family home.

I stress this difference to MFH investors all the time who can't decide if they want a duplex or a fourplex. I tell them that a fourplex at the same price will either be in a lower quality area or just lower quality in general (dated, fixer upper, etc.) because you're buying twice the units at the same price, so something has to give. 

As a family, you need to determine what's most important to you, what returns you wish to have, and what you're willing to sacrifice in order to get those returns. If the neighborhoods aren't nice enough in your price range, try sticking to duplexes or homes with a casita you can rent out. You'll have less returns but a nicer area or property.

If those returns won't work for you, go for a fourplex, but just be prepared for the stark contrast to the duplexes and SFH available at the same price.