Greg W, Both Buyer and Seller in El Dorado Hills, CA

What is the average rent for a 3 Bedroom 2 Bath in Serrano? Is it worth taking a negative?

Asked by Greg W, El Dorado Hills, CA Fri Mar 13, 2009

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I like the older parts of EL DOrado Hills for rentals rather than Serrano. Mostly because of the Mello Roos fees which is an added expense in Serrano. The surrounding villages are still in the same school districts and share the same community without all the rules and fees. I rather agree that taking the sq footage method works well for me and my clients. I would say $1 per sq foot and sticking within $100 of that number is fair and reasonable. The water fees in EDH are high and so most landlords are not including that as a covered expense. I have been a landlord in EDH for 15 years and find that it is a good community to have property in. Given this down economy, we landlords need to check out the tenants carefully and have a cash reserve in place to protect ourselves. I think that the values here haven finally made this a good buying opportunity. I myself starting recently thinking of buying another rental. Good luck!
0 votes Thank Flag Link Tue Sep 8, 2009
Average rents for that size house in Serrano should be around $1500 per month. There are Mello Roos bond assessments and HOA dues to consider in Serrano. Those 2 items can add $300 to $500 per month to your principal, interest, tax, and insurance payment.

As far as considering a negative every month, you can do better. This is an opportune time to build your portolio of rental property, and you can find properties that will cash flow from the start. It is all about the numbers. Start with the monthly rent and work backwards to find out how much you should pay for your next rental property.
0 votes Thank Flag Link Mon Aug 31, 2009
A very very rough estimate - and it seems to not be far off when checking is approx $1 a square foot.

Then figure on the low side. I'd figure a 1700SF house would be $1500+ a month. A 3000SF house maybe
$2500 on up depending on amenities (pool,views for example). There will be rare exceptions like the
4000SF newer home by Green Valley school for $1995 a month (see Homepointe).

Connie Barnes has good answer re "worth the negative".....
Web Reference: http://www.annaboyd.com
0 votes Thank Flag Link Tue Mar 17, 2009
I’ll answer this question from a different perspective because I have been asked the same question by clients who want to move to a new home but either couldn’t or wouldn’t market their current home at a price that would be competitive in our current environment. They look at renting the current property as an alternative to having to take a loss on the sale and speculate that the property will someday regain its original value. I know of several cases in the last 18 months where homeowners took this approach only to experience more unexpected market turbulence and depreciation. In every case those properties went back to the bank.

A rental should be treated as a business and a good business plan should not “hope” for positive future events to occur. A business should expect a return on investment after time spent and expenses. If you were going to buy a business, would you invest money if you knew the business would lose money every month?

The good news is that today, interest rates are low and so are home prices which helps take the sting out of having to sell a current property for less or find a new investment property that can provide positive cash flow for you.
Web Reference: http://www.conniebarnes.com
0 votes Thank Flag Link Sun Mar 15, 2009
Now for the first part of your question: $1736 is an average.

This is taken from: http://www.homepointe.com/owner_services_rental_survey.asp

The average is based on 12 Homepointe managed three bedroom homes in El Dorado Hills. The rents on those dozen homes ranged from $1495 to $2200
0 votes Thank Flag Link Sat Mar 14, 2009
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Rarely, - Buying a rental property with a negative cash flow is akin to making a regular, required deposit to a retirement account. What makes it riskier is that you must continue to make those deposits, come heck or high water. The negative cash flow property may povide you with future profits from apprecitiation, and possible tax advantages in your future tax returns. But for the near term, negative cash flow situations are only for the well-to-do, - people who are well insulated from the recession.

There are so many positive cash flow opportunities currently, why go negative?
0 votes Thank Flag Link Sat Mar 14, 2009
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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