Sacramento Real Estate Gal Answers!

Okay, it's time for Sacramento Real Estate Gal to answer some of those questions that rolled in, without further ado...

Question #1: What is an REO? All these acronyms get thrown around so much and they make no sense to me! - Potential Investor But Don't Know Much.

Dear Potential Investor,
First of all, let me congratulate you on wanting to know more and learn. I always admire people who take initiative to learn about their money, because no one cares about it as much as you do!
As for the alphabet soup you've run into - an REO stands for Real Estate Owned. It is usually a house that has been foreclosed on by a lender for non-payment of the mortgage.
Usually, such a house is put back on the market for sale or auctioned. REO sales are always as-is sales, so it is wise to get all inspections done, including a termite, home inspection and roof inspection.
In today's market, you don't have to go about digging for these houses either. You can search the list of foreclosures at Elite Properties. This list is updated weekly.
Hope that helps you drop the "potential" from your name! Good luck!
Also read: Are Foreclosures Worth It?; Two Types of Investors

Question #2: I'd like to hear your advice for investors. Do you think it makes sense for investors to buy non-owner occupied RE in Sacramento? If so, what sort of deals make sense to you? You often say things like "Such and such was such a gret deal. I wish that I had bought it for my portfolio." So back this up with specific deals and/or strategies. - Bogonflux

Dear Bogonflux,
First off, let me just begin this with a disclaimer that you should never substitute anyone's advice, mine included, for your own research. But more specifically, I am of the buy and hold variety of investors. I would like to flip a house soon, but have not done so yet. I believe in buying houses that are well below the median priced homes in first-time buyer neighborhoods and rent them out to people who cannot afford to buy yet.
To make this even a better investment, it makes sense to buy them as fixers and live in them while you work on them. My husband and I have lived in every house we bought for at least two years while we worked on them.
The strategy goes something like this: buy an inexpensive fixer-upper, fix it up, refinance it, buy another home, rent the previous one out. While the cashflow is a trickle in the beginning, it is well worth it in the long term. I have friends that have used this strategy to build a pretty decent-sized nest egg.
Hope this helps!
Also read: Adding Value to your Real Estate; My Own Real Estate Numbers