Sacramento Duplexes Prices High – Rents Low…Why…?

Low Inventory of Sacramento Duplexes for Sale

If You Are a Seller – You’re King Right Now.

 

If you are an Owner of a Duplex in Sacramento or for that matter just about any other Residential Income Property, because we have low interest rates demand is high for your property.

CLICK HERE TO GET A QUICK VALUATION OF YOUR DUPLEX

Call me if you have questions regarding your situation.   If you are a Buyer or Seller, we know Income Property.

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker Associate   916.203.1260

Rent Control – Sacramento Duplexes, Tri-plexes & Four-Plexes For Sale

Be Careful With Rent Control It’s a Little Tricky – Affects Cash Flow.

 

I was out and about looking at some new listings for sale.   Below are my thoughts about these particular properties that I think might interest some of you investors.  The sad situation is that for some of these investors trying to sell their property is that over the years they have not maintained their Rental Income at “market”.

Typically many long time small investors make the mistake of allowing the rents to stay the same for years thinking that if they ever did sell, the new investor could raise the rents to market.

With the new State Wide Rent Control law in place it’s not that simple anymore, so beware.

Here’s a look at 3 investments currently on the market as of today February 1, 2021.

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First up is a duplex located at 2405 Wurth Court, Sacramento, Ca 95825.   I think this property could have been better prepared for sale so I was a little disappointed.  While I’d be surprised if they get a full price offer on it in this market who knows…?  Duplexes are hot.   Because of Rent Control when you get a vacancy…? REJOICE... That is because you can re-rent that unit at market.

Check out the Tri-Plex located at 1015 Circuit Drive, Roseville, Ca 95678.  This Tri-plex looks like it’s been well maintained and updated recently.   I think the only thing I’d do to upgrade this one would be to add “covered parking stalls” which would add value and people would pay more for that amenity.   This one should go quick because Rents are at or near market.

Now take a peek at the 4 plex located at 5755 Blachly Way, Sacramento, Ca 95841

I think the Owner on this Sacramento Four-plex could have taken a little better care especially on the curb appeal/landscaping side.   Several Satellite dishes are all over the place.   If you didn’t know, the owner has the right to tell a tenant where they can put a Dish.

The income on this one is also very skinny.   Two of the units are only at $700 a month and with Rent Control it’s a little tougher to get the rents at market.   We’ll keep an eye on out this one.

NOTE:  Regarding the 1st two properties I profiled.   While writing this blog post both of those properties are now currently in escrow.   Even with some Rent Control there are Investment opportunities here in the Sacramento area.

If you’re on the lookout for an Investment please call me at 916.203.1260.   If you are worried about managing your investment, let our crew do that for you.   Check out our Property Management Company if you’re interested.

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker Associate 916.203.1260   Ed@EdFavinger.com

 

Low Interest Rates Help Offset High Priced Sacramento Duplexes

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

 

 

 

Sacramento Duplexes for Sale – A Hot Market – But Short Sighted Sellers

Amazing How Overlooked Curb Appeal is When Selling In Today’s Market.

 

Here are 4 Sacramento Duplexes for sale that I’m going to profile because I’m actively looking to help investors find a decent deal in today’s market.   We do have Rent Control but,  with low interest rates available now, if you have a property that is priced right with rents at or near market, Investors are out there ready to buy.

So while I’m out previewing the available inventory I drove by these properties and in my opinion it’s a “turn off” when an investor pulls up to a property to see dirt in the front with not a bit of landscaping.

Here’s the list and my comments.   Let me know what you think.

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8919 Montoya, Sacramento – 3 bedrooms 2 bath on each side.   It’s sad that while they have a couple of nice specimen Eucalyptus trees, they are just surrounded by dirt that could have easily been a nice cool green lawn.

Nice looking landscaping I think gives the tenants more pride in where they live and having a lush green lawn surrounding these trees would have been simple and easy.   Doing that might also help mitigate and help sell given the fact this Duplex backs up to Highway 50 which might be an objection to some investors

Priced at $465,000Income is $36,000 one unit at $1,800 and one at $1,200.

Click Here for a Rental Survey of this property.

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9104 Nasreen Drive, Sacramento – 2 bedrooms 1 bath each side – Click here for a short video of the vacant side.   it would not take too much to fix this side up.  It would be worth it because of the location in an area of single family homes.   It’s basically an “eyesore” along with the one across the street and this lack of attention brings down the value of the neighborhood. It’s Priced at $415,000.

The rent is only at $850.00 per month for the occupied side and given the condition of the vacant side shown in the video needing work and updates,  you have to wonder about price.   There is an opportunity here but the price should be reduced to make a fair deal for a buyer.

By the way… Click Here for a Rent Survey to see how much was left on table.   The Seller should have raised the rents long ago which would have helped defray the improvement costs to the exterior.

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3416-18 Viking Drive, Sacramento, 2 bedrooms 2 bath and a 2 bedrooms 1 bath configuration.  Absolutely no curb appeal in my opinion.   It’s too bad there’s so much potential here because it sits on a corner lot with some mature trees that need some landscape enhancement and done right would have made this property really stand out.

However, they did some interior remodel of the 2 bedroom 2 bath side – Click here for a quick video tour of the exterior and see the explanation of what I would have done.

Priced at $439,000  Click Here for a Rent Survey

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10996-10998 Hirschfeld Way, Rancho Cordova – 2 bedrooms 2 bath 2 car garage and a 2 bedroom 1 bath 1 car garage.

It’s amazing to me this is the only one of the 4 properties I’m profiling here with some curb appeal.   Guess what…? They have the highest income with existing tenants in place.    Priced at $460,000 the income now is $36,900, with the 2 Bed/2 ba unit @ $1,575 and the 2 Bed/1 ba unit @ $1,500 per month.

Click Here for a Rent Survey    It appears their rents are right at market from that survey.

 

Finally – In conclusion if you are thinking of Selling a Duplex, don’t forget the curb appeal when putting it on the market.  You should also make it a part of the maintenance expense because it will payoff in the long run.

 

In the Mean Time…?

Make it a Great Day…

Ed Favinger, Broker CRS, GRI, SFR

 

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Sacramento Duplex Sales Update – Charts and Graphs Below

It’s a Seller’s Market -That’s The Bottom Line – See Below

 

I just ran the data and thought I’d share some of it with you.   If you have been looking for a Duplex for sale in the Sacramento area you know it’s been a little bit difficult.

Here’s an important Market Definition:   Buyer’s market: more than 6 months of inventory based on closed sales.  Seller’s market: less than 3 months of inventory based on closed sales.   Neutral market: 3 – 6 months of inventory based on closed sales

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Months of Inventory based on Closed Sales in June 2020: 1.4

      • Down 58.1% compared to last month
      • Down 17.9% compared to last year

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Duplexes For Sale in June 2020: 50 units.

      • Down 19.4% compared to last month
      • Down 25.4% compared to last year

Duplexes Closed in June 2020: 35 units.

      • Up 94.4% compared to last month
      • Down 12.5% compared to last year

Duplexes Placed under Contract in June 2020: 44 units.

      • Up 69.2% compared to last month
      • Down 2.2% compared to last year

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Finally… the graph below shows that List Prices are going down and Sales Prices are going up.

If you are a Duplex owner in the Sacramento Region and are thinking you might like to sell, I hope you come away with the idea it’s a Seller’s market.   To get an idea of what you might be able to sell for, send an email my way at:

Ed@EdFavinger.com or call/text me at 916.203.1260.

In the Mean Time…?

Make it a Great Day..!

 

Ed Favinger, Broker, CRS, GRI, SFR

Sacramento Duplex Market Update – Post Covid-19

Sacramento Duplexes in Good Condition are Selling – If Priced Right..!

 

That’s always the story isn’t it really in just about any market ?   Well maintained properties priced accordingly to the market conditions will always sell, many time with multiple offers.

Since the last update regarding sales data,  I did some follow up research to show you what sales have been like since the last post I submitted over a month ago.   Remember this is the sales data for the following zip codes: 95608, 95610, 95621, 95628, 95630, 95825, 95826, 95841, 95827.

The Sales Data from the May 12 post entry disclosed a List Price to Sales Price Ratio of 99.5%.  The information below that I’ll share shows the market still pretty warm and some properties with more than a couple of competing offers.

My Duplex sales Summary effective June 15, 2020 shows there’s a little bit of a price dip on some of the Duplexes for sale because as you’ll see the List Price to Sales Price Ratio is now at 97.7%.  This information is from closings occurring after May 7th up to June 15th.

You will notice however the Gross Rate Multi-plyer (GRM) has an average now of 12.81 for Sold/Closed Duplexes which is down from the 14 GRM for Active, Pending & Sold/Closed Transactions in the Summary from a month ago.

With fewer properties on the market we’ll see what happens in the next few weeks but I think you’re going to see an uptick in sales because we’ve got more pending now with the Average Days On Market down or the same for Pending and Closed Sales.

The Duplexes that are priced over the market or in poor condition you’ll see have a much higher Days On Market Average.

Rental Market is pretty good now too.   Units in good condition are renting up quickly at top dollar in spite of the Covid-19 situation here.

Bottom Line…?

If you are looking to purchase a Sacramento Duplex, give me a call at 916.203.1260.  Texts work too or you can send an email to me at Ed@EdFavinger.com.   We not only can help you in your purchase, but we also provide “2nd to none” Property Management as well.

If you are thinking of Selling a Duplex, I want to talk with you.   I can show you how to get the most out of your investment.

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR

 

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Sacramento Duplex Market – Is It Dead…?

Duplex Market Is Active… Just Not As Much As it Was Before

Yes the Real State Market is a little slow but for those of you that are thinking of jumping into the Residential Income Property arena and thinking of buying a Sacramento Duplex,  I’m happy that you stopped by and took a minute to check this out.

It’s been a while since I’ve posted anything on this site but going forward I’ll be doing more and more here.

Effects of Rent Control and Covid-19

You may or may not be aware that we now have Statewide Rent Control from the passage of AB1482 last year which came into effect January 1, 2020.    Last year, the City of Sacramento also passed a Rent Control law that included a Rent Control board.

The result is they’ve capped the annual rent increase to no more than 5% + the local CPI which was 3.3%.   They also  included some tenant protections such as “just cause eviction” standards.

So we start things off the year with Rent Control and then the “Declaration – State of Emergency”.  All evictions were stopped until the end of the declaration.

Not only that, but in Sacramento County the courts aren’t going to start any court proceedings for evictions for at least 60 days after the declaration is lifted.

Some Sales Data to Look at.

In spite of the somewhat negative news above, I did a little research to show you what sales have been like.    I don’t see a lot of movement in price changes from List Price to Sales Price and I notice the Gross Rate Multi-plyer has an average of 14 for Active, Pending & Sold/Closed Transactions.

The Sales Data below is from March 15th until May 7th and includes the Zip Codes that I work primarily in which are: 95608, 95610, 95621, 95628, 95630, 95825, 95826, 95841, 95827    .

Total Active for sale now  –  25
Avg List Price    –  $498,238
Avg Days on Market     –        34
Avg Gross Rate Multi-plyer -14

Total Closed Sales       –          15
Avg List Price    –  $480,527
Avg Sales Price  –  $478,027
Avg Gross Rate Multi-plyer 14.2
Avg Days on Market           –  19
Avg # of Offers Per Duplex – 4.5

Total Pending Sales         6
Avg List Price     –   $427,983
Avg Days on Market        –     17
Avg Gross Rate Multi-plyer 14
Avg # of Offers Per Duplex  – 2

I’ll have another post in the next day or so regarding what to look for in the current market to get the most out of your investment.   Some of the inventory out there now is a little high given the amount of rent you’re able to receive if they have current tenants.

In the Mean Time…?

Make it a Great Day

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

 

 

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Tenants Have to Follow the Rules or a Termination of Tenancy Could Occur

When Given a Notice to Enter to Make Repairs… Be Available

We recently had the occasion of having to serve a tenant on more than one occasion to allow a Plumbing company entry into his unit to make a repair on a water leak that the tenant originally called in.

The plumbing company made more than a few attempts to get into the unit, but the tenant was never fully cooperative. Plumbing companies and other vendors we use can not always make an “on time” appointment. They will do their best but a lot of times they will have a “window” of time.   For example, “well be there between 9-11”.

Personally I agree with the tenant that if they use a window, it means they have to be there a 9 but the vendor may not show up until 10:30.  However,  that is the environment we live in and while it’s sometimes inconvenient we have to get the repair completed.

When the tenant stood us up again, we gave him a 48 hour notice to enter.

On the day we were supposed to enter, we get there with a copy of the keys just in case the tenant wasn’t home which,  in this case he wasn’t,  although he said he would be.

Here’s a list of the violations of his lease.

  • The Keys We Had Don’t Work – Tenant Changed the Locks
    If you didn’t know, as a Tenant you are allowed to change the locks on your door, BUT, you have to give a copy of those new keys to the Property Manager/Landlord in case they need access,  as was this case. Since the tenant wasn’t there and would not be available, we had to drill out the key and replace the lock.
  • The Tenant had “unauthorized” pets in his unit !
    After we get into the unit we find the tenant has dogs that he never told us about and was not authorized to have.
 So What Can Happen To a Tenant in a Case Like This..? 

The Tenant is going to be given a bill for the replacement of the lock since he didn’t give us a copy.  He also had dogs and never told us or got authorization so he getting a Termination Notice.

The new Statewide Rent Control Law does not come into effect until January 1, 2020, so his “termination of tenancy” doesn’t require any reason for the termination.   This was a tool that made it easier for Landlords to get rid of Tenants who don’t follow the rules.

So the advice I’d give you if you going to be a renter is, please follow the rules.   Most property managers don’t like kicking people out of their homes, but if you don’t follow the rules that is what could happen to you.

If you are an Owner/Investor looking for Property Management Services, please check us out at Haven Properties, Property Management Services 2nd to None.

 

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR

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Sacramento Four Plex For Sale But Income is Way Too Low

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…?

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