Good place to buy an investment property? (Sacramento, Citrus Heights: renters, insurance)

[DontKnowIfImComingOrGoing]

Hi,

I'm thinking of buying an investment property and hold on to it for 5+ years.
I hope to get a profit from capital appreciation just expect the rent to cover
my mortgage,taxes etc. I expect that a few times a year I'll have to make
up the difference b/w the rent and mortgage especially when I have repairs.

So where are a good set of places to buy a rental property.
I'm looking at spending no more than $300K.

I've looked at downtown and there are 950 sq ft condos
going for $200K. But these places in 2000 cost only $120K
so I don't think they'll appreciate much.

I've looked at West Elk Grove. Nice newer homes and I'll even
make a few dollars in the rental income, but I'm scared
that the homes are so big (2500+ sq ft) it will attract two families that
will rough it up.

Thoughts on other area?

[wburg]

Look at Oak Park. Properties are going for a song there, and currently a lot of musicians, students and artists who would have moved to Midtown 15-20 years ago (back when it was cheap, overlooked, and more dangerous) are moving there--not just rentals, but also buyers willing to take a risk. That's a pretty good sign that it will be the next hip neighborhood in a decade or so. If you like the idea of fixing up old homes, many are in relatively intact condition simply because the previous landlords didn't bother fixing anything.

It's not a choice for everyone--it has a much higher risk/reward profile, but over time you'll probably get a better return on investment, and you can get in for a lot less. Look at the northern part of Oak Park, north of Broadway and within a few blocks of McClatchy Park on 33rd and 5th. There are a lot of houses in the neighborhood selling for $40K-100K. Almost all need work in order to be habitable (let alone rentable) but if you're good at that sort of thing or know a good contractor they can be fixed up and still rentable with a reasonable profit margin.

[edwardius]

Someone is worried about renting to families that might rough up a place and you suggest Oak Park? How much damage do you think the hookers and parolees are going to do to a property?

[wburg]

Originally Posted by edwardius

Someone is worried about renting to families that might rough up a place and you suggest Oak Park? How much damage do you think the hookers and parolees are going to do to a property?

So you rent to hipsters and students instead, and maybe if they pay $50K for an investment property instead of $300K they might worry a bit less about damages.

[DontKnowIfImComingOrGoing]

Wburg has a good point. In terms of potential reward Oak Park is an excellent choice.

However, it will require quite a bit of time to rehab an older building. I've done it once
and even when working with contractors it took 3 years.

That was before kids, now I have kids so I think that rules out oak park.

Any other suggestions?

[charles strickland]

If you are really interested in renting to artists, street poets and musicians, then you really should look at Citrus Heights. That neighborhood is pretty much the center of Bohemia in this region. Its probably the most hip address in the region.

[Shope]

lol at hipsters and students renting in Oak Park. I would suggest college greens. Now there is a solid rental market where your house will appreciate nicely when the market picks back up.

[DontKnowIfImComingOrGoing]

Originally Posted by Shope

lol at hipsters and students renting in Oak Park. I would suggest college greens. Now there is a solid rental market where your house will appreciate nicely when the market picks back up.

Okay. I investigated College Greens as a place to buy a property to live in.

What is the source of the solid rental market?
Why will it appreciate?

I thought I did my homework on that area, but perhaps I missed something.

I like hipsters and students as friends, but I'm not sure they make for the best
renters.

Thanks.

[Shope]

Originally Posted by DontKnowIfImComingOrGoing

Okay. I investigated College Greens as a place to buy a property to live in.

What is the source of the solid rental market?
Why will it appreciate?

I thought I did my homework on that area, but perhaps I missed something.

I like hipsters and students as friends, but I'm not sure they make for the best
renters.

Thanks.

It's right by Sac State, you will always have renters. I would buy in the La Riviera area between College Town and Watt avenue. College students arent the best renters for keeping a house nice I agree. Whatever place you buy DONT fix it up until you are ready to sell. You will easily be able to pay the mortgage with the rent. My parents just picked up a 3 bedroom there for a tad over $200k and rented it out for $1600 a month in a couple of days. Once the market picks back up they will fix it up a little and sell it for much more.

[sacramento916]

I am a realtor and I do a lot of business in Elk Grove. Contact me and I'll help you with your investment plans.

Elk Grove is definitely a great place to invest. The homes are affordable, the neighborhoods are nice and the school district is good.

Rent to income ratio is also pretty strong. If you are purchasing in the mid-200's range, you should be able to break even. I work primarily with investors and have consistently steered them towards Elk Grove because the value and the cash flow just makes the most sense there.

The other areas where you will find properties under $300,000 cannot compare. South Sacramento has some pretty rough areas and you will have issues finding dependable tenants. Carmichael/Fair Oaks areas will only have older/smaller homes in that price range, cash flow will be an issue. Natomas has very high flood insurance, and most houses there have HOA. Anatolia in Rancho Cordova has very high HOA, Mello Roos and also contaminated ground water in Northern Anatolia.

Elk Grove, comparatively speaking in that price range, has a large inventory of nice homes to choose from and an excellent school district. As well as cash flow which makes sense.