At 12 X’s Gross Income The Cash on Cash Is Skinny… But So What…? Low Interest Rates Will Help Offset the High Prices.
If you are thinking about buying a Sacramento Duplex I would like to warn you that the income on these Duplexes many times is going to be lower than market. Many Sellers over the years get used to the same tenants and many of them will let the rent slide under market because the tenants have been there so long.
But when they go to sell, it becomes a bit of a problem if the rents are really well below market.
Rent Control Is The Problem with Existing Low Rents
Don’t forget that we have Rent Control. While you can’t raise Tenants Rents to what the current market is, you’ll be able to raise them each year 5%+rate of inflation. If a tenant was to move out because they bought a home or moved away that will be the time to get the unit at market. However in the mean time you’re stuck with them because of Rent Control up to a point.
A Quick Follow Up Review
I wrote about 4 properties a couple of days ago and thought I’d update you with what the Cash Flow would be on each of these properties. These figures assume you get the property at the “offer price” shown on these Cash Flow Proforma’s.
10996-10998 Hirschfeld, Rancho Cordova – The nicest of the bunch and had the most income.
Click here for the Proforma Cash Flow Analysis
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3416-3418 Viking Drive, Sacramento, Ca – a 2 bedroom 2 bath unit that is vacant and could be rented at market. This one looked terrible from the street but I think if the new buyer makes an effort to clean up the front, inside is nice enough we can get a decent rent amount here. The problem with this one though is the existing tenant on the other side is only at $975 Per Month.
Click Here for the Rent Survey
Click Here for the Proforma Cash Flow Analysis
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8919 Montoya, Sacramento 3 bedrooms 2 baths on each side – I think the curb appeal could have been nicer. Rents are high on the side that is updated but below average on the other.
Click Here for the Proforma Cash Flow Analysis
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9104 Nasreen Drive, Sacramento, Ca – This one was the roughest of the bunch. I did post a video of the interior of the vacant side. I think there should be a discount on the price a little deeper than the others because of it’s condition and low rental rate of $850 on the occupied side when it should be at or over $1,350.00.
Click Here for the Proforma Cash Flow Analysis – It’s a Pending Sale if you can believe it. We’ll see if it falls out of escrow.
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If you are looking for a Sacramento Duplex for sale, then call/text me or drop me a note via email.
In the Mean Time…?
Make it a Great Day…!
Ed Favinger Broker, CRS, GRI, SFR 916.203.1260 ED@EdFavinger.com
