All Forum Posts by: Wes Blackwell

Hi @Bruce C.! Welcome to Bigger Pockets! You're in the right place!

There are two types of individuals that will be of most value to you here.

#1) Other Investors -- more specifically, those with buy-and-hold experience. They'll be able to share resources for all the things you'll need as a landlord (repairmen, lawyers, accountants, etc.) and also provide shared experience about maximizing rents, dealing with difficult tenants, etc. 

#2) Agents Who Understand Your Investing Strategy -- most agents are too familiar with investing using buy-and-hold strategies, but most here will at least be familiar with the concept. You'll want to work with one who fully understands your investing goals, needs, and requirements. You'll want them to help advise you which areas to invest in, how to properly analyze property values and potentials, and source cash-flow generating deals for you. And don't let them pressure you... if they keep trying to get you to purchase the first deal that comes along instead of helping you find the perfect property, lose 'em. They'll only steer you in the wrong direction.

And don't feel like you have to meet everyone all at once. Just be patient, and the right contacts will come to you over time. Don't worry so much about big meetups, focusing on getting face-to-face with one person at a time (agents should come to you by the way).

I'd love to grab coffee and learn more about how I can be of service to you and share all my knowledge of the Sacramento Area rental market with you. I'm currently working with several other investors who have the same goals as you and can provide you with lots of helpful info. 

Hi @Ying Lan! Welcome to Bigger Pockets!

For one of my other investors, I recently compiled an analysis of every single 3-plex and 4-plex in the Metrolist MLS coverage area (Fresno to Yuba, Tahoe to Rio Vista) and found DOZENS of properties that will cashflow abundantly for you.

The good news is... my other investor can't buy them all! And there are plenty to go around! I've already done all the hard work for you in property analysis, and I would be happy to show you any property you have an interest in and offer my insight, expertise and analysis in finding the perfect rental property for you.

Just reach out and contact me and I'll share information with you and help you accomplish your investing goals.

Hi @David Luhman! Welcome to Bigger Pockets! Great question!

I agree with @Brett Chaponot here, in that you will want to talk with your lender and tax adviser first to fully understand your options and the financial implications of your decision.

I would also highly advise against a negative cash flow situation. You're going to have vacancies, capital expenditures, and other unexpected expenses that will come along and put you further in the hole. Even just a couple hundred dollars per month positive will help counteract that.

I always advise my investors that you have to think in terms of worst-case scenario... what if you lose your job? Or have an extreme accident that cripples your ability to work and bring in those extra couple hundred bucks to float those properties? Suddenly you'd be in way over your head and may be forced to unload some of those properties or go through several costly refinances back to 30 year loans to try and free up some cash.

Now, that will most likely not happen, but it surely has to someone before. So I'd advise to talk to the other members of your team first (lender and accountant) and leverage the equity in the inherited property to find several cash flow properties to invest in. I would say it's much better to have three cash-flow positive properties than 6 you have to come out of pocket for every month.

If you have extra cash, or are able to save up a decent safety cushion to cover the cost of a property going vacant a couple months or needing a major repair, you could always pay the property down faster with any extra cash flow and still recognize significant savings without obligating yourself to pay that higher amount every month like you would with a shorter term loan. 

Hi @David Zocchi! Welcome to Bigger Pockets! Just by being here on this site you're already well on the way to becoming a savvy real estate investor.

I'm a Realtor who's currently working with several other investors who are basically looking for the same thing as you... cash flow.

For one of my investors, I recently compiled a report of every single multi-unit property on the Metrolist MLS and ran the numbers to see what the property's gross cashflow would be if you kept the current tenants, put 20% down and had an interest rate of 4% (easily beatable if you have good credit and that much down, but I used worst-case scenario numbers).

In that report, I sourced 15 properties for sale under $400,000 that would have a gross positive monthly cashflow of $1,000 or more. That means that even after the mortgage payment, you'd be $1,000+ in the black, month after month.

Now, of course you have to take vacancy rates, capital expenditures (repairs), etc. into account, but at $1,000+ every month you're far enough ahead it practically doesn't even matter.

What I've found is that most first-time investors want to start with something they're familiar with (a single family residence) but when it comes to the buy and hold strategies, more units is the name of the game. 

It's smarter in the long run as well... think about it...

30 years from now, would you rather have a single family home that rents for $2,000 per month, or a fourplex that has total rents of $4,000? No brainer.

If you want more information on how to make a buy-and-hold investment work in the Sacramento area, just reach out and I'll share all my knowledge and information with you.

Basically you made a $500 mistake instead of a $7,000 one.

Like Frank said, trust your gut. If something about the deal seems fishy, pump your brakes before moving forward.

And if anyone ever starts demanding all the money right away, that should be a sign you have a problem on your hands. Either they really need it and will not give back down payments because they can't afford to, or they realize they've found a sucker and can't wait to cash in on your ignorance.

I'd say chalk it up to a win, as you learned more about doing proper due diligence before signing the dotted line, and overall this lesson was extremely cheap compared to the price that others have paid when breaking into real estate.

Best of luck in the future!

@Jarrod Cook,

Thanks for the quick response!

I am definitely interested... what gets me duplex out here can get me a 10-20 unit building out there!

My relative could act as my "boots on the ground" so to speak if the property need rehab, attention, etc.

BUT -- he knows very little about real estate, and has a 50+ hour per week job to boot. Thus the challenge...

So while although I live in sunny California, I have a close relative who lives in the MUCH cheaper Alabama market, specifically Pelham, about 30 minutes south of Birmingham.

I was wondering if some investors or real estate agents in the area can tell me what the local market is currently like, and what kinds of investing strategies (buy and hold? Fix and flip?) are currently working in the area. Thanks!

@Matthew Kelly,

I would post in the Sacramento forum, as you're sure to find some wholesalers there.

You can find it at: https://www.biggerpockets.com/forums/621-sacrament...

Also, try searching for members and reaching out to wholesalers directly to share what you're looking for and see if they have any deals for you:

https://www.biggerpockets.com/meet

Lastly, try joining your local REIA club or searching for Real Estate related meet up groups on Meetup.com

http://www.meetup.com/find/?allMeetups=false&keywo...

Those links are sure to help you find someone who's got the perfect deal for you.

Best of luck!

The main thing Elk Grove has going for it is top notch school districts. Mostly 8's, 9's and 10's on GreatSchools.org.

A friend of mine who lives in the area claims some parent will rent in a certain school district just to get the mailing address, but don't even live there! Talk about a low-maintenance tenant!!!

Because it is such a family oriented area with awesome schools, you get an extremely high level of owner occupied housing, 80%+.

In Sacramento on the other hand, there are plenty of zip codes with less than 50% owner occupancy, so there's simply way more renters which helps keep demand (and rents) high.

Another thing Elk Grove doesn't have is multifamily units. There are two (yes, only TWO) duplexes/triplexes for sale right now in ALL of Elk Grove.

There is a Duplex on La Nuez Dr offered at $315,000 with rent's of $985 each side, hardly passing the 0.60% test let alone the 1% test.

And there is a Triplex on Rancho Grande Ct offered for a whopping $520,000 with total rents of less than $2,800 and scores even lower on the 1% test.

Put simply, there are better rental markets out there amigo.

While you might be able to find a rental with no rehab needed in a great area, and possibly great tenants, the prices are simply too high and the inventory too low and due to most people living there wanting to own the home you may go awhile in-between renters when your high quality tenant saves up some cash and buys a house.

@Brad Cogswell,

The area of Sacramento offering the most opportunity to investors is the Oak Park area, which essentially everything East of 99, West of Stockton Blvd, South of 50 and North of Fruitridge Rd.

It's what you'd consider an "up and coming" neighborhood, meaning it really used to suck, and in some parts still really does suck, but they city is investing a lot into the neighborhood to try and gentrify the area and so investors are jumping on the bandwagon and flipping the hell out of that place.

Just Google "Oak Park Gentrification" and read all the news articles.

But buyer beware, it's sort of a street-by-street basis. Let someone else take the risk in the more 'shady' areas and try your BRRR strategy towards the north end just south of 50 or on a street where several other flips have taken place.

Some properties in there are going for way more than they should, which might allow you to get in and get a great cash-out number once the rehab is complete.

The rents will be higher on the northern side, and will take a dip as you head south into the heart of the Oak Park area. Be sure to drive this neighborhood thoroughly before pulling the trigger.

Another area to consider is the Del Paso Heights / Old North Sacramento area, basically all of the 95815 Zip code.

They are also trying to gentrify that area as well, but it's second in line to Oak Park, so you won't get as much help with the boost in property values down the road but you'll also face less competition from other investors and rehabbers.

Once again, it's a street by street basis in this area... For example, I found a remodeled duplex for $259,000 and rents over $1,000 per side that I was considering buying, but it's directly across the street from the grimiest apartment complex you've ever seen.

There are some very knowledge Sacramento investors on here, so hopefully they'll chime in with some other neighborhoods to consider or can expand on Oak Park and Del Paso Heights.