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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 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

 

Related Articles

 

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Don’t Forget Curb Appeal When Selling a Rental Duplex

First Impressions are Important to Investors & Tenants

I’ve been selling Real Estate Investment properties like Duplexes and Four-plexes in the Sacramento area now for almost 30 years.

It’s always amazing to me how many properties over the years I’ve seen that are on the market where you have junk, debris, non-operational vehicles in the driveway and the usual “over grown” grass/weeds.

Why is that important….?   Because the impression given is that the inside of the property will mirror pretty much what you see on the outside.

When You First Pull Up to a Property – First Impressions: 

If you’re an investor and looking at purchasing a property, do you think a prospective tenant will feel a potential pride of  where they might live if Curb Appeal is poor..?  Furthermore do you think they will want to pay you top dollar rent if the property looks unkempt?

From our Property Management experience the prospective tenant(s) will default to a position that the Owner/Landlord will probably not maintain the property if things go wrong if the Tenant was to make a repair service request.

Property Value is Affected:

In addition to the poor curb appeal when a tenant first pulls up to view it, think about the impact an unkempt yard would have on your neighbors.   For example, if  you currently live in a well maintained nice neighborhood of single family homes and all of a sudden you start see front yards of a few places standing out because they are over run with weeds and debris, increased property values will not be as great largely because of the poor neighborhood perception.

Guess what…? That standard works on Duplex or any other Residential Investment as well.

Call a Property Manager – Let Them Take Care Of it:

Just an FYI…?  A good Property Management company will have a list of preferred vendors to help maintain the property and even notify you if they see something out of place on their weekly route.

Real Estate is a long term deal for the most part, so fix up the front yard now because it will pay you back in higher rents, better quality tenants and higher return at Re-Sale.

Now, if you’re thinking of Selling or even Renting up a unit please call me at anytime at 916.203.1260 for more information about the current rental/sales market.

 

In the Mean Time…?

Make it a Great Day…

 

Related articles

Rent Control Is Here in Sacramento & Soon Statewide

Get Your Rents Up To Market Now Before January 1, 2020 Because Rent Control is Here.

 

The State of California it looks like is about ready to implement a Statewide Rent Control Law that recently passed both house of the State Legislature and headed to Gavin Newsom’s desk.

According to the Sacramento Bee Article I have here for you, it won’t become law until 1/1/2020.

If you have not raised the rent in a long time my suggestion is to do it now and get it close enough to the current market rent as you can because after the 1st of the year you will be limited in what you can do.

In addition, the more onerous “just cause” eviction will now be a factor in cleaning up a property that needs to rid itself of uncooperative tenants that maybe laying waste to the property and intimidating neighbors.   In the past with situations like this, we’d only have to give a 30 or 60 day “termination of tenancy” notice which had no defense.  It could be for any reason at all.

We rarely ever used that tool, but it did come in handy when we had situations that our Property Management Company encountered from time to time.

CLICK HERE FOR THE SACRAMENTO BEE ARTICLE DATED  SEPTEMBER 12, 2019 09:48 AM 

Now if you think Rent Control is going to help, it’s not.  The people it’s meant to help won’t get it.

Related Articles

CALIFORNIA LEGISLATORS MADE A MESS OUT OF RENT CONTROL. THEY JUST DON’T KNOW IT YET | OPINION – Newsweek, Sept. 13, 2019

California embraces failed rent-control policies at the statewide level – Washington Examiner, Sept. 12, 2019

If you have more questions, please contact me at 916.203.1260 or drop a note at favinger@rwnetwork.com

In the Mean Time…?

Make it a Great Day…!

Duplex Market Still Strong – Low Inventory – Prices Continue Up

Even Fixers Get Multiple Offers..! Just Not Top Dollar..!

I haven’t written an article in a while and thought I’d get back in here and update those of you that follow this blog from time to time

RE-SALE SACRAMENTO AREA DUPLEXES

Duplex sales in the Sacramento Region are still pretty healthy with rising prices and rising rents because of a Strong Economy.

Mistakes I See Sellers Make:

The biggest mistake I see some Duplex Sellers now on the market, is thinking an “as is” sale of a property that has a lot of “deferred maintenance” will sell for just about what a “Fixed Up” property will bring in.Duplexes - 1

Another mistake,  besides not maintaining the property, would be an existing unit Rents far below the market.  The reason usually given is “they are long term tenants”.  This reason ignores the fact when they go to Sell the Duplex, a new owner is going to have to deal with tenants receiving large rent increases.

Why to Avoid Those Mistakes:

Because they haven’t raised the rents during the long term tenancies, these tenants know they have a good deal and never report much in the way of needed repairs and since they always pay the rent on time,  the Seller hasn’t been by the property or maintained it unless it was an emergency.

Because the rents were so low, there was no incentive for the owner to make any upgrades to or any effort to enhance/upgrade.   Most of the time they only made repairs after a complaint.

Example of what I’m talking about:

I’m in escrow now on a Fair Oaks duplex where the HVAC unit will have to be repaired to the tune of $2,000 because the unit hasn’t been serviced in years.  What’s more… Even with this fix, there’s no guarantee and the contractor said you’d be better off getting a new unit.  Had it been maintained and serviced on a regular basis, the unit would have had more potential life and not become an issue in the Sale Escrow.

So the Bottom Line…? 

Prices are going up for sure and if you want top dollar for your investment, you should take an honest look at it and if repairs/upgrades are warranted, do them.  When you then raise the rent, you’ll see most tenants will put up with it because you have maintained it and they are proud to live there.

When you have maintained the Property and maintained Rents at Current Market, you are using the “prudent investor standards”.

By the way… Have you heard Interest Rates are coming down….?

If you’re thinking of Selling or Investing in the area, please give me a call at 916.203.1260.   I’ll actually answer the phone.. Texts will work also.

In the Mean Time…?

Make it a Great Day…!

 

Related stories

City of Sacramento Adopts Rent Control Ordinance BPE Law Group Blog

 

 

 

 

 

High Costs of Rent in Sacramento Turns Renters into Home Buyers

Old News To Us in Real Estate.

There have been several articles all over the print and social media about the rising rental rates here in the Sacramento Region.   It was only a matter of time before Renters would turn into Home Buyers because it’s cheaper.

Our Property Management Company with approximately 400 total units of various configurations has only 7 current vacancies with, we think,  another 7 coming up within the next 30 days or so.Hand writing the text: Buying a Home

So it’s no surprise to those of us who work in the field everyday when we hear another news report about the market.

So after listening to the morning news on KFBK I got another news story from KCRA Channel 3 talking about the same thing.

Millennials are beginning to buy homes because Rents are so high here they’ve now begun to figure out it’s a better deal to Buy and own.

I’ve noticed that a lot of the Sacramento Duplexes being financed by FHA loans which are only given to Owner Occupied Buyers.. another trend in my opinion.   I’ve written before about buying a Duplex to live in one side and rent the other.  No surprise to me of late seeing more people do just that.

If you are currently a renter and would like to be a Home Owner, contact me today and I’ll get you started on your way.

In the Mean Time…?

Make it a Great Day….!

Ed Favinger, Broker, CRS, GRI, SFR     favinger@rwnetwork.com  916.203.1260

Related Articles:

This is the Number 1 obstacle keeping people from buying a home CNBC

Bread and Butter Sacramento Duplex for Sale

Your Basic Sacramento Duplex for Sale.

You’ve got to check out the Duplex for Sale at 7312-7314 Arleta Court in Sacramento we just listed a couple of days ago.

It’s on a nice Leafy green Cul-de-Sac location with other like kind duplexes.

CLICK HERE for a link to get Cash Flow Figures, Rental Survey and more pictures of the property and the surrounding street.

If this Sacramento Duplex interests you, please call or send a text to me at 916.203.1260.   You can also send an email to:   favinger@rwnetwork.com

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE

 

Sacramento Duplexes – A Good Buy for Long Term Cash Flow…!

Sacramento Duplex Prices Are Steady & Rents Are Good…!

With the annual rate of appreciation of Real Estate prices in the Sacramento area generally slowing down a bit buying a Duplex here might be a little easier with fewer multiple offers.

20140905_144808Don’t get me wrong if you have been looking for an Investment like a Sacramento Duplex there are still multiple offers occurring.

That is especially true if the Duplex has been well maintained with good curb appeal and a great tenant profile paying close to or at Market Rents.

Those Duplexes that have some deferred maintenance issues and below market rents will take a little longer to sell if they are not priced correctly to make up for their deficiencies.

Here’s some quick statistics for you regards closed sales from January 1, 2019 to Date, February 12th.

Average Average   Pct of
List Price Sales Price List Price
 $  371,088  $   365,641 98.5%

As you can see it looks like prices have stabilized somewhat, but the rents are still going up.   Maybe now is the time to make a move into Buying a Sacramento Duplex.

If you’re thinking of investing in Sacramento Duplexex, maybe a Four-Plex or even a small Apartment complex please drop me an email note at favinger@rwnetwork.com or call/text me at 916.203.1260.

By the way… We do Property Management as well.

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE

Related Articles

 

 

 

Sacramento & Rancho Cordova Duplex Investors – Heads Up…!

The Way You Manage Your Duplex Will Determine The Rent Return & Appreciation Down The Line

Over the years since I’ve been writing here,  I’ve discussed Investing in Sacramento Duplexes for sale.  Other areas with great potential are Citrus Heights, Carmichael and Rancho Cordova with a lot of neighborhoods of Duplexes that come up for sale from time to time.

While in many respects Duplexes have the same amenities as a Single Family home, they are for the most part properties occupied by “non-owners” called Tenants.

An Investment Property like a Duplex has to be managed correctly to get the most value out of your investment in the form of higher rents and of course at re-sale increased appreciation.

I’ve got a little slide show that I would like to share with you.   This is one of my pet peeves – the lack of proper management and allowing Tenants to do what they want with your Investment.

What is my pet peeve…?   Parked cars on the front yard grass.    See below.

 

What do you think…?

If you are thinking of buying a Duplex in the Sacramento Area, think about managing it as well.   Good management will make you money.     Check out our Property Management Company.

 

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, 916-203-1260     favinger@rwnetwork.com