Sacramento Real Estate Moguls-To-Be: Where & How to Shop

Now that the real estate statistics are beginning to show slightly bigger numbers of people headed out in January to look at and make offers on both single family homes and condos, my hunch is that a lot of these people making offers are investors hoping to add to their portfolio before property values head up again.

It is important however that you as an investor know where to look and how to analyze a property before you buy it or even make an offer. There is an art to making an offer as well, but more on that some other time.

First of all though you should decide if what you want to buy is a single family or multifamily property. Single family houses are homes like we buy to live in, multi unit properties include duplexes, triplexes, apartment buildings and such. I recently learned that multi unit properties are usually better for income purposes, but I still prefer single family homes to some degree, especially if you are an investor just starting out. They give you a better idea about what's involved and are easier to sell if you want to get out.

Another very important factor that determines your success (or failure, but we won't talk about that) is the location or community you buy a rental in. Your best chance of making an income by having the place rented all year is to pick a 3 bedroom, 1 - 2 bath home in a neighborhood that is what we would call "middle of the road." Very expensive neighborhood tend to be cashflow negative and very inexpensive homes tend to have repairs. Try to strike a balance. My favorite neighborhoods are ones like Colonial Village, Colonial Heights, the older parts of Elk Grove, Foothill Farms,and for want of a better name the zip code of 95821. These are all older, established neighborhoods with good rental property that stay fairly stable in value.

When determining how to buy the home, realize you don't have to be a vulture. If a home is a good buy, go ahead and pay full price for it. If you don't, it means you don't trust yourself. If you do your homework and realize there's money to be made, you will not be afraid of paying the asking price. Also, don't write embarrassingly low-ball offers. If the market's bad, chances are property values are already depressed. You shouldn't need to rob anyone to make a good purchase.

Good luck!