All Forum Posts by: Wes Blackwell

@Michael You -- Great question! I would say it really all depends on what you're looking for, as each area is going to offer you something completely different.

For example, if you're looking to sell real estate and your job & income is most important to you, I'd recommend the Bay Area. Higher prices means a higher commission, so for the same work invested you're making double the commission. That will easily cover the increased living expenses. If it ends with the bubble bursting you'll be in a prime position to capitalize when prices hit rock bottom.

If you're looking to buy a house on the other hand, I'd recommend avoiding the Bay Area... and look to Sacramento, Modesto, or even Stockton/Lodi/Tracy instead. No sense paying $600,000 for a 1950's crapshack, and the Bay Area has a 45-60% bubble risk, while Sacramento only has 40%. San Francisco has already surpassed it's 2006 peak, while Sacramento is at June 2004 levels (peak was in August of '05).

As far as development opportunities go, it really depends on what kind of development you're looking to make. Single family residential? Multifamily? Commercial? How long are you looking to hold it? Etc. If you tell us a little more about what you're looking for more experts will be able to chime in help you. Anyhoo, best of luck!

@Ali Samee -- Remember that pretty much everything is negotiable in regards to a leasing contract, and my best advice would be to follow what's fair and what's common sense in regards to splitting costs of utilities and other expenses with your tenants.

While some rentals may advertise that the owner pays waste, water and sewage... I know of a midsize apartment complex in that exact area that makes their tenants pay for all of it. Granted, you also get a pool, covered parking, and some nice updated appliances and kitchens, so it sort of balances out in the eyes of the renter.

Basically, if your rental is the exact same quality as the other rental, but the other rental doesn't charge for water or sewer and you do, then you won't be as competitive in the market. But if you've got a more recently updated unit available, you could charge the same or more and still be competitive. My advice is to ask for the moon at first, and if the phone doesn't ring you know to lower your price or alter the terms.

But truly, If the rent is $795 and the owner passes through a charge of $75. then that is really no different than rent that is $870 with the owner paying all utilities. Maybe it looks cheaper done this way. But it isn't. It's all the same.

Another large part of this is going to be based on what sort of tenants and leases you inherit with the property. If they didn't have to pay for some utilities before, they sure aren't going to like the idea of paying it now, but remember... it's YOUR property! You's da boss! And being that this is a long-term investment, you have to be willing to lose less-favored tenants in order to get more-favored ones that will cover those expenses or pay higher rent in the long run.

When structuring the lease, the reason I think most owners shoulder the cost of the water/sewage is because in most municipalities the water and sewage is owned by the city, not a private company. And if the bill goes unpaid, the city has the power to put a lien on your property, and the city don't play with matters like that. This is a way of making sure the bill gets paid because of the potential problems it may cause, but I'd say most owners really just do it because they've heard others do, but truly you really don't have to. There's no law stating who has to pay what, it's all a negotiation.

So for example, if you want to avoid the cost of individual metering and such, just have an addendum in your lease that states that you will get a bill for the utilities, and in turn send them one. Then you just make a copy of the bill and send it to them for their amount. For splitting, you could measure the building and break it up based on size or square footage. Water is usually 50/50, gas and electric can be based on sq. feet. One may get 60% the other 40%. Just make sure all tenants are aware of the plan before signing a part of the lease and if they don't pay it could be grounds for eviction.

And on that note, you may want to add another addendum in the lease contract that states that the security deposit will not be returned unless all utilities owed are paid, so you don't get left on the hook for their last month's worth of utilities.

@Ali Samee -- Great question! I actually used to live and work in the area, so here's my take:

The Arden-Arcade area of Sacramento is kind of a mixed bag... You can run the whole range from low income apartment complexes and rental all the way up to million dollar plus properties (that's high for Sacramento).

The good news is, you can kind of separate the area out by zip code.

95825 is on the most western side of the area, and contains lots and lots of large multifamily buildings and commercial properties. This is the area closest to the Arden Fair Mall and Sacramento State. Once you get a little further east towards Fulton Ave, that entire street is practically used car dealerships, especially north of Arden way all the way up to I-80.

Here you're going to get lots of millennial renters who are either going to Sac State or working their first jobs. Because of the lower incomes and increased foot traffic due to all the businesses, this is where you're going to find most of the crime for the area. The further you get away from Howe Avenue, generally the nicer it's going to be.

95864 is on the eastern side, starting at Fulton Ave and heading all the way over to the river. This is where you're going to find the higher priced properties, and lots of empty nesters who are approaching retirement, but in no means slowing down. Loehman's Plaza and Bandera's restaurant attract a lot of the affluent after work crowd, and that shopping center is currently undergoing a major renovation for lots of new business.  The properties in between Fulton and Watt are generally going to be fairly nice and most of the crime will stay over on the major streets. That's what you can probably consider to be the "heart" of Arden Manor.

95821 is somewhere in the middle of the two previous neighborhoods, and you're mostly going to find diverse young families with kids, half of them renting older townhouses and duplexes. But also people who are renting because they're close to retirement and don't have the funds to purchase. Most of the crime in this neighborhood is going to take place around Marconi avenue, especially as you get closer towards Fulton and I-80.

If crime is what worries you, I would recommend looking in either 95864 or 95821 and try to find a little pocket that's a couple streets back from the main roads like Marconi, Fulton, Howe or El Camino. If you stay south of El Camino and east of Morse you're pretty much golden. Best of luck!

@Nick Aderman -- When it comes to dog bites, generally speaking it is very rare for a landlord to be found liable for injuries inflicted by a tenant's dog. You'd only be liable if:

1. You knew the dog was dangerous and could have removed the dog, or...
2. You cared for or controlled the dog in some manner (dog sitting)

In court, they'd have to prove that you knew the dog was dangerous that you had the power to make the tenant get rid of the dog or move out. And that means you'd have to have known that the dog had bitten someone previously or threatened someone.

For example, if you know your tenant keeps their dog chained and barks at people, but has never bitten someone, you would not be held liable if the dog ever did.

But where it sort of gets into a gray area is that your insurance company said the dog was a potential threat, and you actually do have the power to remove the dog or tenant since they are on a month to month lease. And in a sue-happy state like California, that might just be grounds enough to make the claim you already knew the dog was dangerous and could have done something about it.

You might be able to mitigate the potential risk by fencing the front year, asking the tenant to keep the dog inside, or post your own warning signs on the property. That might help push the liability back on the tenant and the person who gets bit.

Before you make your decision, I would do everything I could to prevent the possibility of an injury caused by the dog in the meantime, and speak with your insurance provider and an attorney about the possible liabilities. Best of luck!

Hey Gino, good question. I'm from the area and also a Realtor, so let me see if I can help...

If you have access to Metrolist, you should also have access to their "Trends" reporting by TrendGraphix. It's one of the links in the top menu bar when you log in. You can customize a report specifically for the city of Stockton and for whatever time frame and property type you desire.

So, in less than 3 minutes, I pulled a report showing me that in the last 4 the median home price has improved 90.2%, the days on market has dropped 44.8%, and there's currently 2.9 months of inventory based on closed sales. Best thing is they'll make all the pretty and fancy graphs for you.

As far as other statistics in regards to job growth, rental rates, etc. goes, the most convincing place for you to look is always going to be the news. You can essentially piggyback on the authority of the local news media and publications, and it will demonstrate to your investors that you have your finger on the pulse of the market.

Here's some examples for you specifically in regards to Stockton:

'Region's Outlook Bright, SJ Leaders Say'

"John Solis, director of the San Joaquin Employment and Economic Development Department, said his department is working to ensure many residents stay employed, or find new positions for job seekers.

Last year, his department hosted 84 job and resource fairs in an effort to find work for some 31,000 residents. Of those events six were job fairs featuring major employers throughout the county, while 78 were resource fairs assisting job seekers in finding work.

The department has also helped find jobs for 2,575 teens in San Joaquin County as well, he said.

In an effort to make sure their clients stay employed, Solis said the department is launching a layoff aversion strategy program that will match job seekers with employers that fit their skill sets."

To further back this up, Business Insider mentions Stockton CA in the top ten metros for job growth.

Stockton also made the list of Realtor.com's list of Top 20 Hot Markets.

San Joaquin County also just beat it's own record in voter registrations with 310,000.

I'd say those statistics make Stockton a great place to look for investment property, and if you forward this information to your investors, I think they will feel much more confident in your investment plan and overall skills as a flipper.

P.S. If you're interested in flipping, I would also take a look at the Fresno market, but you'll have to do your own research on that one... best of luck!

Hi @Suresh Kannan! Welcome to Bigger Pockets! You're in the right place!

Fundamentally, there are two types of real estate investing strategies for beginners:

1. Fix and Flip: This is where you find a property that is in need of some work, and you fix it up to sell for a profit.
2. Buy and Hold: This is where you purchase properties that will make you a nice positive cash flow every month, all the while appreciating in value and being paid off by your tenants.

Fix and Flip is a short term strategy that can make you a lot of quick profit, but is also much riskier as so many things can go wrong with the rehab or resell. Incorrectly estimate the after-repair-value of the property even just a little, and it can cost you tens of thousands.

Buy and Hold is a long term strategy that's more about wealth building. 30 years from now you'll have a property paid off by someone else that you can sell at any time, and until you do you get a nice rent check showing up every month to put towards retirement, invest in other properties, or simply just enjoy. Usually the worst thing that can happen is the occasional bad tenant, but there's a lot you can do to decrease the chances of that happening.

It will be tough to find a property for a low enough purchase price that you can rent for high enough to cover the mortgage payment. Most of the time you're going to be negative a few hundred bucks and have to come out of pocket every month just to meet the mortgage obligation. Go vacant for a month or two, and this becomes a serious problem. I would highly suggest you avoid this strategy for now. It may work in other markets, like those out of state, but for now there are much better deals to be had in the Sacramento area.

For example, you could always purchase what's called a "Multifamily" property that has multiple units for tenants to live in and rent from you. These are more commonly called a duplex, triplex, or fourplex. The benefit of this strategy is that you can have multiple renters in the property, and usually see enough monthly rent to cover the mortgage payment and even pocket a couple hundred dollars in cash every month. Overall, a much better investment opportunity that a single family residential home.

I'm currently working with several other clients who are pursuing the same investing strategy as you, and I've analyzed the current multifamily market here in the area enough to tell you there are cash-flow positive deals to be had whether you put 5% down and live in one of the units or put 20% down and rent it out completely.

For now, the best things to do would be:

1. Educate Yourself: Right here on Bigger Pockets is a great place to start. The creators of the site have created a extremely thorough and detailed guide on how to utilize a buy-and-hold strategy. You can buy it here on the site and it's easily worth 10-20x the price.
2. Build Your Team: As a real estate investor, you'll need to connect with local professionals who can help you achieve your goals. A mortgage lender can help you find the right loan product, a CPA can help you take the right deductions, and a real estate agent can help you find the right property. Network here on the forums at a local real estate investment groups and in no time you'll find the right people to help you reach your goals.
3. Learn the Local Market: Most important you'll need to work with a real estate agent who understands your goals and can provide you with expert analysis on the local market. You'll need to know what kind of properties are available for purchase, what kind of rents you can charge for those properties, and what neighborhoods are best for your long term goals. An experienced agent who's worked with other investors before and spends all day in the market analyzing properties will help you shortcut your path to success and find you the right property to purchase once you're ready to pull the trigger.

I know it's a lot to handle, and you may feel a little overwhelmed a some points, but just take it one day at a time and don't feel like you have to purchase any time soon. Don't rush this decision, as it could cost you thousands. 

Read the forums here, and ask any questions you have, and before you know it you'll feel confident and ready to buy your first investment property! Best of luck!

@Patrick Boutin -- Since you're in the Bay Area, you should be able to find plenty of stuff locally to attend to. A lot of other investors in your area still invest over here in Sacramento, and in plenty of other place in California and across the nation, so there are still valuable connections to be made.

A lot of marketers use Meetup.com since it's really easy for people to find you based on their interests, and as we all know there's plenty of Real Estate Investment Education out there to be had. So that may be unavoidable, even at the good meetings.

My advice would be to go there with the intent of being social. Make it your goal each night to shake hands with 10 people and introduce yourself. See if there's anyone important or valuable you can introduce them to that will help them reach their goals. Before you know it, you'll be the great social connector and the buzz surrounding you will be unbelievable. When you're ready to pull the trigger on your first deal, don't be surprised if some people approach you wanting to partner with you.

In the end, you really just have to find the silver lining in every situation, and even if someone is trying to sell you something, there is still from value to be had from going even if you have zero intent of purchasing their products.

@Patrick Boutin -- Your best bet to find a title company that will do this for you is to get a recommendation from another investor nearby who is already doing it. Title companies are more likely to work with agents like Greg and I since we are very likely to bring them lots of business.

As for Property Radar vs. Realty Trac, my advice would be to try both and see which one you like best. They're both currently offering a free trial, so you've got nothing to lose.

Property Radar Free Trial

Realty Trac Free Trial

@Harry Case -- to find non-owner occupied properties, you can either team up with a real estate agent who can pull that sort of information for you, or you can use a service like Property Radar to pull this kind of information yourself. Lastly, you could try working with Direct Mail Service Provider that can put together a mailing list for you.

@Chris Isaacson -- thanks for the response! I've always been one to say that a fast nickel is better than a slow dime, and dealing with builders and constructing new homes probably isn't worth the headache. It is for the ambitious, but for the elderly I just see it being a pain in the butt.

I posted about it in the Sacramento forums to see if I could find some local developers who may be interested, and we even have a brand new duplex being built up the street so I'll run it by them too. Right now it's off-market, but if the right offer comes along my client will certainly take it.

My girlfriend's father is a contractor who's made his living building homes from the ground up and selling them, so I'm going to discuss the prospects with him tomorrow over turkey and see what he thinks.

I'll be sending you a pm, and thanks for the tip about the in-house agents and getting in front of the builders!