BiggerPockets

Hey everyone, I've decided to get into real estate investing and have started to do a ton of due diligence and research on the topic. I have gained a lot of information here on BP and wanted to thank all the contributors on this forum. I believe I am ready to take the plunge into REI with all I have learned from my studying.

I currently reside in the SF Bay Area, CA (San Jose to be exact) and thus it will be difficult (near impossible) to find REI properties that cash flow well (10%+ cap/25%+ COCR) in my home territory. Moving is currently not an option as I have a full time job here locally that I enjoy and plan on keeping for a while.

Before I start diving into a marketing plan looking for deals I want to pin down a target area. Thus my plan for my first REI property is to look for homes/*plexs somewhere in the Central Valley, about 1-2 hours driving distance (i.e. Tracy, Modesto, Stockton, Sacramento). I took a day trip to Tracy/Stockton/Lodi/Antioch/Pittsburg over the weekend and visited a bunch of homes I found on Zillow and stores/shopping centers in each town to get a feel for those areas and the people. They didn't seem too bad. Even the worse neighborhood in Stockton I didn't feel like my life was in danger (there was kids playing out, but it was the middle of the day and I just drove around the supposedly worse "hood" in Stockton called "Kentfield"). Anyone have any experience of REI in this region of CA? My concern is the economy is really bad in these parts; like 20%+ listed unemployment and high crime indices (source: city-data.com). Do you guys think it would be a good idea to start out with my first property 1-2 hours away? Or is even out of state viable for a first timer? I have decided to allocate a sizable chunk of cash starting out in REI, but want to minimize the cash risk starting out and will definitely be extremely patient in finding that "awesome" deal for my first investment.

Also does anyone have any recommendations for good REI clubs in the SF Bay Area (in particular the South Bay). I went to rei-club.com/creonline to search the directory and started going to the meetings of this club called "SJREI". Those meetings were really good, I started networking with a few folks already there and the speakers were really informative, but I want to see what else is out there before I actually join a club and fork over full dues.

Thanks again.

I would honestly stay away from Stockton / Tracey. Farming in CA has been hammered, and until exporting from CA and the US is favorable I don't see it getting better.

Antioch isn't a bad place to get started, and neither are some parts of Sacramento. You can find some pretty good deals in Sacramento, but some are in area's that aren't so nice.

The distance won't matter too much if you don't plan on managing the property yourself. What's your goal? Are you going to manage yourself?

I'm just getting started (Solano County guy here) and decided to go out of state (I didn't have much up front capital, so finding a house in the 100k range is all I could really afford with the 25% down and keeping a repair / 6 month mortgage buffer).

I should be closing in about 3 weeks and am anxious as hell

Charlie I don't know how much capitol you have available to you, but if you have a reasonable amount, I would look into foreclosure properties in your area. I have taken good hard looks at the SF Bay Area, and there are many properties being sold at a "song". It could be useful to you, or perhaps not...but worth a try.

Hi Charlie,
Welcome to BP.
I also live near SJ, Saratoga in fact, and I came to the same conclusions, so I started investing in Sacramento, either buying cheap and flipping or buying and renting out.
I prefer REOs, less hassle than short sales. You can purchase for 50K in Sac and rent out for $800/mo not fantastic but good enough when you have a few. You make less if you buy condos, but easier to manage. You can also buy at auctions, if you have the time to do your DD.
I would not recommend Antioch which is getting worse.
I have not gone to any of the REI clubs in our area but if you find a good one I would be interested in checking it out.
Stay in touch,
Rolly

Thanks Rolly for the advice. I'll definitely let you know of any REI clubs that are worth regularly attending in the South Bay.

Sacramento does seem to be the ideal spot for me starting out. It appears that ARVs are almost as low as Stockton, but the economy is better in Sacramento (state gov jobs?). I am also familiar with the area/trip up there somewhat as I attended school about 15 miles west in Davis. The 2 hour away thing is does worry me (especially for a first time landlord) but I do have friends out there that could help me manage (simply providing a face). I think I'll start looking for deals here locally in the South Bay (not Saratoga though, I don't think property there cash flows well :D ) and in Sac for now (forgoing the Stockton/Tracy/Modesto area).

Charlie, Pm me.....

Request accepted

Excellent Matt, I'm definitely down to network/exchange ideas/etc. with you.

I'll try to set you up as a colleague so I can PM you my contact info.

Hello Charlie,
Sacramento can be a pretty good market. If you find yourself getting more interested here perhaps we'll have the opportunity to share experiences.

Best of success to you.

Hi Charlie,

I am currently working on flips and rentals in the Sac area. I live in the Bay Area and have established some strong networks with agents, contractors and banks. Also getting some big discounts on REO's direct from the bank right now. I am always looking for people who are interested in partnering up or sharing info. Contact me if you (or anyone else for that matter) would like to talk.

Take Care and Good Luck,

Billy