Home Buying in Sacramento>Question Details

Rashid, Home Seller in Santa Clara, CA

Which area in Sacramento good for buying rental homes as investment? any particular zipcode or devision?

Asked by Rashid, Santa Clara, CA Wed Jun 11, 2008

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Counter- intuitively for novice investors, the "low rent" neighborhoods are where the cash flow turns positive with the lowest investment, both out of pocket and percentage-wise. Hear me out. Say a $150,000 house in zip code 95815. 95838, or 95660 rents for $1200 per month. Depending on your spread sheet, that oughta break even at 20% down and cash flow positive with just 25% down.

Now move on up to the east side, pay $300,000 for the same size house, pull in a whopping $1800 per month. Oops , now you got a nicer neighborhood, and higher rent, the cost is double (or more), you have to put up 40% down to break even, and 45% to get into positive territory.

For the same down payment money ($120,000 to $135,000 ) you could buy a house in an "edgier" neighborhood for cash or leverage as many as four little houses.

Oh, if you want positive cash flow with only 20% down? You have to think complex, as in duplex, triplex, fourplex....
2 votes Thank Flag Link Fri Jul 4, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Hi Rashid,
I have all my rentals in Old Roseville.. 2 houses on 1 lot are preferable= 2 rents rather then 1.
I'm a Real Estate Broker and have 6 rentals in Old Town Roseville. All are rented except for 1 that I will be updating. Positve cash flow
Recently helped a client acquire 2 of these properties and have contractors ready to work and I assist with getting my clients a tenant.
Should you need some assistance email me at real_loans@surewest.net
I lived in Roseville for 6 yrs and still do business there. I'm usually there at least 1-3 times a wk. I currently live in Lafayette, California. 1.5 hours from Roseville.
0 votes Thank Flag Link Mon Sep 29, 2008
I would look closer to the college in the 95826 and 95820 zip codes. Downtown is still high in price for what you are paying for and you have a much better chance of finding a condo at $100,000 which you can rent $1200 to $1300 near Sac State or finding a home that you can rent for even higher. I also think that the zip code 95824 has great rental homes. Prices in this neighborhood have fallen to under 100,000 and you still can get 1000 + rents. These homes do need work though at these prices.
Web Reference: http://realtyaid.net/
0 votes Thank Flag Link Thu Jul 3, 2008
I would say the downtown area of Sacramento right now is a good investment. Especially some of the newly updated condos and lofts. They seem to hold their value well, are quite popular and often sell quickly. Good Luck.
0 votes Thank Flag Link Wed Jun 11, 2008
Hello Rashid:

It depends on your investment objectives. If you're considering a short-term hold, then the core area of Sacramento -- 95816, 95818, 95819 -- have been relatively stable, even during the downturn. These are high demand neighborhoods, for the most part.

If you are looking for cash flow, then you're looking at certain price points and configurations, which could include economically depressed neighborhoods or areas where prices have been substantially lowered. Bear in mind that every ZIP has its pockets or, as some call them, micro markets.

I'm working with investors in Tahoe Park (95820) and Natomas (95835) right now, but there are also good buys in West Sacramento, South Curtis Park, Citrus Heights, among a myriad of other areas. Some investors are buying up everything they can get their hands on in North Oak Park -- others gravitate toward Del Paso Heights because they can buy a rental for less than $100,000.

I'd suggest you run crime reports, look at historical price drops, compare inventory and year-over-year numbers, run the comparable sales and see how those stats line up with your objectives. You can access the last 15 months of housing trends from any number of Lyon agent web sites, including mine; but agents can also break that down for you to represent particular ZIPS or even map boundaries.

I advise my investors to consider long-term holds, which combine potential appreciation and cash flow, but everybody has their own criteria.
0 votes Thank Flag Link Wed Jun 11, 2008
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