Looking To Purchase A Home Close To The Bay Area (Sacramento: low income, section 8)

[MtnHiker55]

I am a long time resident of the Bay Area. I will soon be selling some property in the East Bay and will need to reinvest it. I was looking at single family homes in $425-$500K price range. It looks like Tracy would be the closest to the Bay Area in that price range. My goal is good rental income along with price appreciation. Tracy seems to have a low crime rate and fairly good schools.
Any thoughts would be appreciated.

[rhbj03]

How about the East Bay area?

[NextStage]

You may want to keep an eye on Castro Valley as well. Schools are very good and rentals always seem to be in demand. There aren't a lot in that price range but you'll always see a couple smaller single family homes or condos in that range. CV puts you closer to SF, Oakland, Hayward, Pleasanton, etc. Tracy is a hike and probably a hellish commute. Even driving during non-commute hours isn't easy.

[MtnHiker55]

I looked at some property in CV but in that price range most everything was old and in need of renovation.
I was hoping to avoid that by purchasing something a little newer.

[PixelatedTherapy]

Originally Posted by MtnHiker55

I am a long time resident of the Bay Area. I will soon be selling some property in the East Bay and will need to reinvest it. I was looking at single family homes in $425-$500K price range. It looks like Tracy would be the closest to the Bay Area in that price range. My goal is good rental income along with price appreciation. Tracy seems to have a low crime rate and fairly good schools.
Any thoughts would be appreciated.

Tracy is an exurb (as in it's not within the Bay Area, but serves as a bedroom community for the Bay Area) and when the market finally cools, cities like Tracy are going to see their property values plummet.

Pittsburg, Antioch, Vallejo are all in the Bay Area and all in your price range. Even some smaller places in Pinole, Hercules, Richmond (Richmond has dangerous neighborhoods, so be aware of that),Rodeo, and Concord may also be worth looking into.

If you're looking to invest, make sure it's in the actually boundaries of the Bay Area, the exurbs are last to appreciate and first to devalue.

[jade408]

Sacramento seems like a smarter play to me. Cheaper. And has the built in jobs of govt, the supporting organizations and growing ranks of tech companies. Intel, Citrix ans Apple have large presences there.

[MtnHiker55]

I have considered Sacramento and its bedroom communities such as Roseville, Lincoln and El Dorado Hills.
Any thoughts on these towns?

[beb0p]

Originally Posted by MtnHiker55

I have considered Sacramento and its bedroom communities such as Roseville, Lincoln and El Dorado Hills.
Any thoughts on these towns?

Those are nice solid areas. The thing is, it's hard to find rentals with good returns in Sacramento unless you go into the lower income neighborhoods. Places like Roseville, Lincoln, and EDH are nice but the numbers don't work for me.

Sacramento has a much higher home ownership rate (and much lower percentage of renters). The nicer the neighborhood, the less renters because homes are affordable and those who have solid financials prefer to buy. It's the lower income neighborhoods that have rental demands because the cheap rent makes it attractive to lower income renters who can't afford to buy, usually that means Section 8 tenants.

Sacramento is not the Bay Area where good solid income earners have to rent because homes are so expensive that they either will never afford to buy a place or need a long time to save up the down payment. Sacramento homes are relatively affordable, most people with good credit and stable jobs have already bought homes or would have no trouble doing so. Those who had to rent are usually low income/bad credit types.

I've found that even in nice neighborhoods, the pool of rental applicants usually include mostly lower income renters who are "stretching" their income to get into a nicer place. If you find the ideal tenants (good income, good credit, stable); don't expect them to stay long because they will buy their own place sooner or later (usually sooner). The best tenants I've had are divorcees - they have good income but they lost their homes in the settlement and had to rent until they restore their finance. In other words, they would have been homeowners but due to circumstance had to drop into the rental market.

With that said, I'm not discouraging you from buying in Sacramento. I am telling you it's a different market where the landlord needs a different mindset. I know plenty of people who own rental properties there and are very happy.

.

[MtnHiker55]

This is all good information. Thanks for pointing this out