NextHome Premier Properties
  • Ed’s Blog
    • Ed’s Video Channel
  • InvestingReasons Why To Invest – Definition of Cash Flow Analysis – 1031 Exchanges
    • Definition of Terms – Cash Flow Analysis
    • Sacramento Duplexes & Sacramento Apartments for Sale
    • Ed’s Hot Picks
  • Property Management
    • Questions About Qualifying
  • About
  • Featured Homes For Sale & Rent
    • Folsom Home For Sale
    • Rentals
  • Get a Quick Home EvaluationHome Valuations
  • Sign Up for Automatic Home UpdatesYou get a list of homes to your computer
  • Search
  • Menu Menu
PreviousNext
12

NextHome Premier Properties

They Call Me Mr. Ed – The Best Darned Real Estate Blog Period…!

Sacramento Four Plex For Sale But Income is Way Too Low

October 17, 2019/in Folsom Homes for Sale, Folsom Rental Properties, Investment Real Estate, Landlord Tenant Issues, Property Management, Real Estate Sales, Rent Control, Rental Rates, Roseville Homes For Sale /by edfavinger

This Sacramento Four Plex for Sale has a List Price of $580,000, 16.11x’s Gross Rents.

Folks, now that we have Rent Control for the most part effective on Jan. 1, 2020 I’m seeing a few listings coming up like the one pictured at 5743 Blachly, Sacramento.   There are some issues any Investor in the market now should be aware of if they plan on making money on this property.  Sadly there are others out there just like this one.

I’ve always been told to “keep the rents at Market” at all times, because you’ll have the cash flow for reserves and repairs when needed.   When it’s time to sell, you’ll get your asking price with not many issues like the one you’ll encounter below.

This owner has the monthly rents almost $300 each unit below market or translated annually to be about $14,000 in missed income.

The Rents shown on the listing for each 2 bedroom 1 bath unit @$750 per month, with a Gross Annual Income of only $36,000.00, when it should be about $50,000.

Our Property Management Company, Haven Properties currently manage 2 Four-plex Apartment buildings in the immediate area on Keoncrest Circle.   The Average Rents for the same unit configuration as the one pictured are Blachly$1,045 and we even have one at $1,200.

HOW TO GET TO MARKET RENT… ?

The obvious solution for any Investor in this transaction is to raise the rents to the Market Rent for the area to make the deal work.   The only other option would be for the Seller to bring the price down to reflect the value of the existing rents which I’m sure is not an option the Seller has considered.

If you keep the current tenants you can’t raise the rents higher than the Rent Cap that’s part of the Rent Control Law.  The Rent Cap is currently 5% plus the rate of inflation for the area which is about 3%.

However the “work around” would be that either the Seller gives the existing tenants a termination now prior to January 1, 2020 or the Buyer does it when they close the deal,  hopefully before the end of the year.

However the Buyer is going to have some “turn over” expenses.  Those are the only two options I can think of because after January 1, 2020, Just Cause Eviction comes into play.

It makes a little tougher to sell now doesn’t it…?

The lessons learned are a few more hassles and roadblocks that could have been avoided if the owner kept the Rents at Market.   To see what I am talking about…?

  • Click here for a Proforma Cash Flow at the Current Rents.
  • Click here for a Proforma Cash Flow at the Market Rents.

Which one looks better…?

 

Think it over and in the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR 916-203-1260

 

Related Articles

Daly City Landlords Line Up To Evict Tenants Ahead of New State Law  SFist.com

Los Angeles City Council moves forward with eviction, rent increase moratoriums LA Times

 

Tags: Residential Multi-family Sacramento for sale, Sacramento 4-plexes for sale, Sacramento Duplexes for sale, Sacramento Four Plexes for sale
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share by Mail
https://secureservercdn.net/198.71.233.227/jza.0ea.myftpupload.com/wp-content/uploads/2020/11/NextHome-TheCallMeMrEd.png 0 0 edfavinger https://secureservercdn.net/198.71.233.227/jza.0ea.myftpupload.com/wp-content/uploads/2020/11/NextHome-TheCallMeMrEd.png edfavinger2019-10-17 14:20:342019-10-17 14:20:34Sacramento Four Plex For Sale But Income is Way Too Low

Ed Favinger

Phone: 916-203-1260
NextHome Premier Properties
620 East Bidwell Street
Folsom, CA 95630
CalBRE # 00812744

Property Search

$
$

Free Rental Survey for Investors

Reviews

Customer Testimonials
Powered by Reach150

Ed Favinger

Phone: 916-203-1260
NextHome Premier Properties
620 East Bidwell Street
Folsom, CA 95630
CalBRE # 00812744

Each NextHome Office Is Independently Owned and Operated. The information provided herein is supplied by several sources and is subject to change without notice. The owner of this website does not guarantee or is in any way responsible for its accuracy, and provides said information without warranties of any kind, either expressed or implied. Should you have any questions, concerns, or needs, please feel free to contact the owner by clicking on the about page.
More Rent Control – Now You Must Accept Section 8 Vouchers…? Tenants Have to Follow the Rules or a Termination of Tenancy Could Occur
Scroll to top