Home Buying in 95825>Question Details

Taza Guru, Home Buyer in Sunnyvale, CA

Is the investment property in 95825 worth investing?

Asked by Taza Guru, Sunnyvale, CA Mon Feb 2, 2009

I am looking at a 4plex in CA-95825. Is the investment property worth 250k to buy w/rents approx 650 p.m. p.u? What is your projection for the next 2-3 years? Thanks!
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This question is about this zip code Sacramento-CA-95825

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Dear Taza Guru: There are no guarantees in real estate investing, except that real estate investing has historically been the best hedge against inflation. When analyzing a real estate invesment, there are several indicators that can easily be calculated. Capitalization rate, cash on cash, return of and on investment, before tax cash flow, after tax cash flow, vacancy rate of rentals in the area, and average market rent of other comparable investments. You just need to decide what your goals are for all of the above indicators of investment value and purchase only investments that meet your personal criteria.

If you are just starting out in investing in real estate, congratulations to you. Put yourself together a team of an accountant, attorney, Realtor and if you need it, a property manager. Some people prefer to manage their properties themselves.

There are books to read on this subject. The worst thing you can do is go into real estate investing uneducated.

Good luck--I hope your journey is delightful.
Web Reference: http://SoldByErin.net
1 vote Thank Flag Link Tue Feb 3, 2009
The answer is always 'that depends'. It depends on your investment crieria that you have set up. there is no projection that anyone else can give you that's any more accurate than your own projection. I would make my decisions based solely on cashflow, so understanding vacancy rates in the area that you are considering in important.

You can cashflow a property at $2600/mo, I would suspect, but there's so many other factors such as $needed to invest in downpayment, and improvements prior to renting, demand for housing in that neighborhood, reserves to cover vacancies.....I know some of the streets there are very attractive where the parking is behind the buildings and the tree lined street is mixed with owner occupied housing ....not a bad area to consider if you can answer these other questions for yourself.

Good luck!
Web Reference: http://www.suearcher.com
1 vote Thank Flag Link Tue Feb 3, 2009
If you're talking about the fourplex on Carta Court, that is located in an excellent neighborhood. There is a lot of new construction in that area, and the location offers easy commuting to downtown. However, that property is presently under contract as a short sale -- which means it has received one or more offers and those offers have been sent to the short sale lender. You would most likely need to bid a higher price to win this deal, providing the lender is even willing to look at higher offers.

When bank management approves the short sale, which it has in this case, typically the banks don't want any more offers, even if they are thousands higher, because it would mean going back to scratch and they want to close the file.

The other drawback to this property is it doesn't have central A/C. Although not a huge concern, it is a factor to consider.

But if you're asking about the rental market, I suspect most people believe the rental market is strong because there are so many foreclosures and vacated sellers need a place to live. But while that is going on, there are also more rentals on the market as sellers who are not in foreclosure and need to move may rent their homes instead of selling them. On top of which, with interest rates so low and prices falling, we have a lot more first-time home buyers in the marketplace who would otherwise be renters.
0 votes Thank Flag Link Tue Feb 3, 2009
Sue is correct. There are many variables. Much depends on the condition of the property, location, your personal financial situation, acquisition expenses, repair expenses, how long you plan to keep the property, your tax situation, etc.

What sort of projection are you referring to over the next few years? Possible growth in the monthly rent? Possible growth in maintenance or operating expenses? Possible vacancy rates? Possible growth or appreciation in property value?

I would highly recommending conferring with a team of individuals prior to jumping in to this sort of purchase. Your personal financial planner, CPA, general contractor, property manager, and Realtor are a good place to start.

Good luck to you as you determine which investments make sense for you...
Web Reference: http://www.SacREBlog.com
0 votes Thank Flag Link Tue Feb 3, 2009
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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