All Forum Posts by: Wes Blackwell

@Lisa Meade

I work a lot with Bay Area transplants coming to Sacramento for it's more affordable housing. Here's what you need to know:

1) Talk To A Lender Now -- The challenge lenders have is can they get you a loan in 30 days. If they have 6 months, they'll definitely be able to get you a loan. Plus, they can work with you to improve your credit and get you a better loan product (lower interest rate, etc.) if they have some time upfront to work with you on this.

2) You Don't Need 30% Down For Conventional -- You only need 5% down. FHA is 3.5%. And there are some loan programs that offer down payment assistance. The median home price in Sacramento is $375k or so, which means you could do conventional with only $18,750 (plus money for appraisal, inspections, closing costs, etc.) That number obviously goes down with a lower priced home.

I would HIGHLY recommend doing conventional over FHA, if only for the fact that you'll have a much better chance of getting your offer accepted. Sacramento is a highly competitive seller's market, and every little thing you can do to make your offer seem stronger will help it stand out. That extra 1.5% down goes a lonnnnnng way towards making this happen.

3) Find a Local Expert -- Once you know what you'll qualify for in regards to a loan, it's a good time to team up with a local agent (particularly one who's investor-minded) and they can show you the lay of the land. Just like any city, there are good and bad areas and you'll probably want to stay out of some of the worse areas for you and your family. If your agent doesn't know how to pull up accurate crime data, you should probably be working with someone else.

Hope that helps you get started. If you have any more questions about the home buying process or the Sacramento market in general, feel free to reach out and I'll try to get you pointed in the right direction :-)

@Jean Marx

Sacramento and here's why:

https://www.biggerpockets.com/forums/621/topics/590913-rent-growth-in-sacramento-is-triple-the-national-average

@Kantrell Bland

Something everyone else left out about you locating to Phoenix is that you're going to be house-hacking, meaning you're going to be living in the property you invest in. 

That's a major consideration for multiple reasons:

Do you have a wife or girlfriend? Then she's certainly going to have an opinion on the area moreso than the ROI on paper

Do you have kids? School districts probably won't be the best in the areas you'll get the most ROI

Where do you work? Investing in Apache Junction is great, but if you'll be working in Surprise have fun commuting 2 hours a day.

A house-hacker is a special type of home buyer, because you have to find a deal where the numbers make sense AND it makes sense for your personal living situation. It's not like that for normal homeowners or typical investors. They only have to care about one of the other.

If you have some more information we might be able to help you narrow it down, but until we know about your personal living situation requirements we can't be of much help really.

@Nathan Story

I'm highly experienced in small multifamily (2-4) units in Sacramento and here would be my advice.

First, talk to a lender. You need to find out how much of a loan you'll qualify for, what your down payment will be, and your interest rate (approx.) That will help you determine the numbers part of the deal when it comes to expenses.

Second, when house-hacking a duplex, the goal isn't cashflow or living there for free, it's reducing your monthly obligation to the mortgage. By renting out the other side, you'll have far less to pay towards the mortgage every month.

This allows you to control a more expensive asset for less than it would otherwise.

For example, buying a single family home for $350k with a 10% down payment and a 5% interest rate would give you a PITI of roughly $2,321/mo.

If you bought a duplex with the same terms and rented out the other side for $1,000 month you'd be able to control a $350k property for only $1,321 per month, not $2,321.

Ultimately when you move out, you'll be able to rent the side you lived in and the property should at least pay for itself if not make you a little money every month.

Does that all make sense?

Once you've got the financing lined up, your agent should be able to help you determine the perfect area to find a duplex, analyze rents, crime, etc.

But beware, if your agent mostly deals in single family homes and has never worked with investment property like this before they may lead you astray as it'll be the blind leading the blind.

Feel free to reach out if you have any more questions about the Sacramento market or investing in general and we'll try to get you pointed in the right direction :-)

@Charles Chang

Perhaps this may change your mind about Sacramento:

https://www.biggerpockets.com/forums/621/topics/590913-rent-growth-in-sacramento-is-triple-the-national-average

@Andrew Schmitt

First, go here for Arizona forums:

https://www.biggerpockets.com/forums/546-arizona-real-estate-q-a-discussion-forum

Then, right below the page number navigator near the top, you'll see "Other Forums: Show 10 subforums"

Click there to see the hyperlocal subforums for Arizona.

But to be honest the only two worth posting in so you get some eyes on your post are either Phoenix or Tucson.

https://www.biggerpockets.com/forums/600-phoenix-real-estate-forum

The general path to get to any subforum is Education > Forums > Browse Forums > Local Real Estate Forums > State Forum > Local Sub Forum

@Charlene Chow

Don't assume that an REO is going to be sold for less than market value. Especially in hotter markets like Sacramento.

Back during the crash, banks were dying to get this inventory off their books and recoup what they could, and so you could buy them for pennies on the dollar.

But eventually banks got hip to the idea that the public started to think REO's were automatically a good deal, and combined with a booming housing market they're selling at full market value now. It's all about supply and demand, and currently there is way less supply than demand.

Further, if you end up buying one of these through Hubzu or something (quite common), be prepared to pay a 4.5% buyer premium on top of your purchase price. There goes all your savings. Plus, often you're at a HUGE risk buying these homes and have to waive all contingencies, make no request for repairs, etc. And because it's a foreclosure the banks don't have to disclose anything. The previous owner could've made an insurance claim for some major problem with the property and you'd never even know about it until it's too late.

Don't mean to scare you, but buyer beware. Do your diligence and make sure you're confident in moving forward before pulling the trigger.

@Mike Mollica

Hey Mike!

Yes, I've actually been thinking about making another post like that. Although, I'd have to do it differently this time and really just suggest places people look rather than places people should avoid. Stay tuned as I hope to have one out in the coming weeks.

@Account Closed

Maricopa County the last two years:

That's a nice upward trend for the Phoenix metro area. Here's Mesa's data alone:

@Charlene Chow

I'm an agent in Sacramento who works with lots of investors just like yourself, so believe me when I tell you that you're not alone. You want to get started in real estate investing, but you look around at the sky-high prices in the Bay Area and nothing seems to make sense... what's a beginning investor to do?

I would suggest staying in California if you can since you're new to this, because unless you have some boots on the ground in other states it might be pretty inconvenient to have to fly out there if needed for some property emergency (like the home catches on fire, flood, etc.)

With 25% down you can make the numbers work in Sacramento. No, you probably aren't going to be cashflowing out the wazoo to begin with, but with the rent growth and appreciation you'll likely make far more in the long run than buying in a place where the cashflow is high but the property sells for exactly what you bought it for 5-10 years from now.

For house hacking, it still may be plausible, but you should adjust your goal from making money to saving money. The idea is to get as close to mortgage-free as possible. Usually only achievable with fourplexes. That way you are able to control an expensive asset for far less than it would cost you monthly otherwise.

Feel free to ask more questions here and we'll try to get you pointed in the right direction :-)