Bay Area new investor

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Brian Garlington:

Buy a duplex and house hack it.

Repeat.

Thanks for the tip Brian! I did a quick search and found that the Multifamily properties here in the South Bay are really scarce in supply. But I will see what I can do :)

Lane Kawaoka

Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes

4y

If you have a good W2 salary (over 100k) focus on that and buy turnkeys to start. Then move to LP deals.

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Lane Kawaoka:

If you have a good W2 salary (over 100k) focus on that and buy turnkeys to start. Then move to LP deals.

Hi Lane, thank you for the reply! Which specific property type would you recommend when you mentioned "turnkeys"? Is that SFR for long-term rentals/STR or multifamilies?

As of LP, I am actively looking at private funds and syndication deals. Let me know if you would have any suggestions on that since I am still super new!

Kushaal Malde

Lender · San Francisco · Member since 2019 · 113 posts · 49 votes

4y

Turnkey typically means SFH. Since you're already buying in GA, you could connect with turnkey providers local to your existing portfolio. But in response to your first post, your 2 thoughts are sound: a house hack will be something you could do tomorrow and will benefit you immediately and meanwhile learn more about syndications and PE if you're time is better spent at your day job (do what you do best, hire out the rest).

Also, I'd love to connect--- I'm pretty local to you here in Redwood city!

Michael Deering

Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes

4y

Get out of Cali.

Best decision I've made in last 10 years

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Michael Deering:

Get out of Cali.

Best decision I've made in last 10 years

LoL yeah that's what bunch of my colleagues and friends are doing. Unfortunately, I worked in Tech so the Bay area is still one of the best places to be in. But I am glad to see that remote working has become a trend now - so I might just stay around until I settle down in one of the companies.

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Kushaal Malde:

Turnkey typically means SFH. Since you're already buying in GA, you could connect with turnkey providers local to your existing portfolio. But in response to your first post, your 2 thoughts are sound: a house hack will be something you could do tomorrow and will benefit you immediately and meanwhile learn more about syndications and PE if you're time is better spent at your day job (do what you do best, hire out the rest).

Also, I'd love to connect--- I'm pretty local to you here in Redwood city!

Thanks for the great advice Kushaal! Yeah I am convinced that house-hacking is a good idea now (although it's really hard to find MF properties around the Bay area), and I will see what I can do while focusing on my day job.

Brian Garlington

Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes

4y

Quote from @Jack Jiang:

Quote from @Brian Garlington:

Buy a duplex and house hack it.

Repeat.

Thanks for the tip Brian! I did a quick search and found that the Multifamily properties here in the South Bay are really scarce in supply. But I will see what I can do :)

Small residential multifamily in the South Bay is usually scarce. My clients have found that there are more residential multifamily opportunities in Oakland than there are in all of Santa Clara County combined.

Raju BalakrishnanPro Member

Rental Property Investor · Santa Clara, CA · Member since 2016 · 219 posts · 112 votes

4y

It is bay area, completely an appreciation game it is. Wait for mid term, mostly an HELOC From your town home will be sufficient for your next down payment or a few homes in GA. Will the mountain view home Cash flow? not likely. Will returns be worth it, most likely yes! You might have seen that already in your home value. Bay area, getting your first property is hard, but if you do not need cash flow and wait for equity for long enough it may do wonders. Again it is market dependent, but all investments are.

3 Reply

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Raju Balakrishnan:

It is bay area, completely an appreciation game it is. Wait for mid term, mostly an HELOC From your town home will be sufficient for your next down payment or a few homes in GA. Will the mountain view home Cash flow? not likely. Will returns be worth it, most likely yes! You might have seen that already in your home value. Bay area, getting your first property is hard, but if you do not need cash flow and wait for equity for long enough it may do wonders. Again it is market dependent, but all investments are.

Thanks Raju! Yeah I was regretting not buying a SFR at the same price range. TH here typically appreciated much slower than SFR (even a 2010TH vs 1965SFR) due to the severe land shortage. Btw why would you suggest HELOC rather than cash-out refi?

Shauna O'Donnell

Investor · NJ · Member since 2022 · 9 posts · 5 votes

4y

Hi Jiang, have you could looked into propertied that aren't currently multi-family but have the potential to be? For example, I know a ton of houses in the bay are build up on the second floor and many have a full, underused garage that could be pretty easily converted into a 1 or 2 br apartment. You could look for a house that already has the right plumping and electrical lines run down there so the costs would be minimal. I'm far from an experienced investor, but it's always what I thought could make owning a home in the Bay Area actually affordable. I also know that most cities are open to permitting ADUs due to short housing supply.

Allan C.

Rental Property Investor · Member since 2018 · 826 posts · 809 votes

4y

@Jack Jiang I'll provide the contrarian views based on my experience. First, don't get out of CA as others suggest. If you have good W2 income you'll see your wealth accelerate faster in CA once you get into REI. Second, I would ditch the TH. As you noted the appreciation is worse than for SFH or MF, and you'll get stuck with increasing HOAs that don't add value.

Third, I would not pursue the ADU route if you have a high income and demanding W2. You are in a good financial position because of your primary job, so it's likely better you keep your bed focused on doing that well and passively investing in RE. Doing large value-add plays are good when you have experience or more time to give. Doesn't seem to be the right fit for your situation.

House hacking a 4-plex is an option if you don’t mind more shared walls and mixed income neighbors. Otherwise, get into syndications as a LP to build up your equity position to buy nicer assets down the line.

The key to winning in CA is time and patience. Early years of owning a property are ugly from a cash flow perspective.

6 Reply

Brian Garlington

Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes

4y

I second what Allan said..................Keep the TH. Find a 4plex, triplex or duplex...........Don't be "mad" when I say this but if you are able to convice your spouse or significant other to "sacrifice" where you would like to live, in order to live the way you want to really live, then the world will open up much faster for you.

OP

Member since 2022 · 23 posts · 15 votes

4y

Thank you Allan and Brian for the great advice! I will keep looking at the MF possibilities and try to switch my TH in the next couple of years.

Anna Patty

Investor · SF Bay Area · Member since 2018 · 17 posts · 12 votes

4y

@Jack Jiang Hi Jack, congratulations on getting started! Its nice to meet another Rookie investor in the Bay Area! We bought a SFR in 2014 in the East Bay and in 2016 purchased a MF property in Vallejo - detached 3/2 + 1/1 home on a large lot. Got a great deal then (although prices have gone up) but I think you're able to still find quite a few MF properties in Vallejo. We had a Section 8 tenant in the front home and I made a ton of mistakes and learned a lot from this investment purchase. But all good now - we have a property manager and its become a passive investment now that we hired this property management company. Happy to share more details if you are interested!

@Brian Garlington I've been looking at the Cleveland OH area recently. Seems like a great city to invest in - are the property management companies hard to find? Do you have an agent that you work with in the area?

@Kushaal Malde @Jack Jiang I am also actively looking at syndications and private funds deals. There are quite a few options out there and quite overwhelming! Do you have any research tips? Is there a Bigger Pockets Bay Area meet up group? Would be nice to connect IRL!

Raju BalakrishnanPro Member

Rental Property Investor · Santa Clara, CA · Member since 2016 · 219 posts · 112 votes

4y

Quote from @Jack Jiang:

Quote from @Raju Balakrishnan:

It is bay area, completely an appreciation game it is. Wait for mid term, mostly an HELOC From your town home will be sufficient for your next down payment or a few homes in GA. Will the mountain view home Cash flow? not likely. Will returns be worth it, most likely yes! You might have seen that already in your home value. Bay area, getting your first property is hard, but if you do not need cash flow and wait for equity for long enough it may do wonders. Again it is market dependent, but all investments are.

Thanks Raju! Yeah I was regretting not buying a SFR at the same price range. TH here typically appreciated much slower than SFR (even a 2010TH vs 1965SFR) due to the severe land shortage. Btw why would you suggest HELOC rather than cash-out refi?

Cash is fine too, depends on your scenario. HELOC gives additional flexibility for a higher interest rate. But any way to use equity is fine!

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Anna Patty:

@Jack Jiang Hi Jack, congratulations on getting started! Its nice to meet another Rookie investor in the Bay Area! We bought a SFR in 2014 in the East Bay and in 2016 purchased a MF property in Vallejo - detached 3/2 + 1/1 home on a large lot. Got a great deal then (although prices have gone up) but I think you're able to still find quite a few MF properties in Vallejo. We had a Section 8 tenant in the front home and I made a ton of mistakes and learned a lot from this investment purchase. But all good now - we have a property manager and its become a passive investment now that we hired this property management company. Happy to share more details if you are interested!

@Brian Garlington I've been looking at the Cleveland OH area recently. Seems like a great city to invest in - are the property management companies hard to find? Do you have an agent that you work with in the area?

@Kushaal Malde @Jack Jiang I am also actively looking at syndications and private funds deals. There are quite a few options out there and quite overwhelming! Do you have any research tips? Is there a Bigger Pockets Bay Area meet up group? Would be nice to connect IRL!

@Anna Patty Thanks a lot for replying! I haven't been investigating East Bay since I heard California is heavily biased towards tenants (especially during COVID time). Also I took a look at the MF around the South Bay, the appreciation is somewhat worse than even a century-old SFR which is confusing.

So how is the rental market in Vallejo, and would you recommend investing there in the next few years?

OP

Member since 2022 · 23 posts · 15 votes

4y

Quote from @Anna Patty:

@Jack Jiang Hi Jack, congratulations on getting started! Its nice to meet another Rookie investor in the Bay Area! We bought a SFR in 2014 in the East Bay and in 2016 purchased a MF property in Vallejo - detached 3/2 + 1/1 home on a large lot. Got a great deal then (although prices have gone up) but I think you're able to still find quite a few MF properties in Vallejo. We had a Section 8 tenant in the front home and I made a ton of mistakes and learned a lot from this investment purchase. But all good now - we have a property manager and its become a passive investment now that we hired this property management company. Happy to share more details if you are interested!

@Brian Garlington I've been looking at the Cleveland OH area recently. Seems like a great city to invest in - are the property management companies hard to find? Do you have an agent that you work with in the area?

@Kushaal Malde @Jack Jiang I am also actively looking at syndications and private funds deals. There are quite a few options out there and quite overwhelming! Do you have any research tips? Is there a Bigger Pockets Bay Area meet up group? Would be nice to connect IRL!

Also for syndications, I haven't been researching too much. I heard Crowdstreet and Fundrise are fine, and there are tons of other smaller ones on the market. I am considering investing in that since the next few years is gonna be tricky to deal with.

Kushaal Malde

Lender · San Francisco · Member since 2019 · 113 posts · 49 votes

4y

@Anna Patty My research tips for syndications and PE would be to check out/browse through https://www.privateinvestorclu... and https://www.crowddd.com/. Would be happy to share more details about why I recommend.

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

4y

Quote from @Jack Jiang:

Hi all, I am Jack, a super rookie investor based in the Bay area. My partner and I earned fairly ok on W2s, and we have just started buying real estate since 2021 - bought our primary home (3B TH) in Mountain View in May 2021, and bought our first investment property (4B SFR) in GA in March 2022. We made tons of mistakes buying our first two properties (I can share them in another post if you are interested), but it is what it is, and we are planning for the next steps.

Goal:

1. (mid-term) Change to another SFR in the Bay area in 2-5 years (mainly for family purposes).

2. (long-term) Continue to grow investment property portfolios in GA (or other states). I personally like GA since I went to college there.

3. (long-term) Involve in slightly larger real estate projects (e.g. apartment, storage, development etc.) while not quitting my job (yes I kinda enjoy my day job).

Challenges:

1. SFRs in the Bay area are crazy expensive, the down payment and mortgage payment would be a huge gap to fill.

2. My primary home has a limited upside (after all, it's a TH), and we don't see the rent outgrow the mortgage payments in 2-4 years (it's ~$4600 vs $7500 now). Most likely there's no way for us to afford the new SFR without selling the current home.

3. The investment property in GA is barely cash flowing right now. I am not confident that I would be able to cash-out refi in 2-5 years given the rising interest rate.

Questions:

What should be the right strategies for long-term planning? Currently, I have 2 thoughts:

1) Rent out my primary home as much as possible (which would bring us ~1500-1600/month), save, and invest conservatively in the next few years (both in stock and RE). We can probably afford the new SFR in 2-5 years after selling my primary home.

2) Invest aggressively into crypto, syndication, private fund, RE, etc., and potentially delay the SFR purchase plan according to the status of the investment.

It's a hard decision to make since the economy this year is a bit flaky. I have some cash reserve on hand, but I am not sure if I should go all-in right now (or any soon). Experienced investors and senior members please advise me on how the plan could be made, and what mistakes I should avoid. Thank you all so much in advance!

Also feel free to reach out if you want to connect. I am a bit shy but I am trying to overcome that :).

Welcome aboard Jack. My opinion, real estate is by far the better option than Crypto. Crypto is whack yo. And that's coming from a shirtless dude painted blue, so you know it's legit.

Scott Sklare

Real Estate Broker · Beloit, WI · Member since 2015 · 232 posts · 60 votes

4y

Quote from @Jack Jiang:

Hi all, I am Jack, a super rookie investor based in the Bay area. My partner and I earned fairly ok on W2s, and we have just started buying real estate since 2021 - bought our primary home (3B TH) in Mountain View in May 2021, and bought our first investment property (4B SFR) in GA in March 2022. We made tons of mistakes buying our first two properties (I can share them in another post if you are interested), but it is what it is, and we are planning for the next steps.

Goal:

1. (mid-term) Change to another SFR in the Bay area in 2-5 years (mainly for family purposes).

2. (long-term) Continue to grow investment property portfolios in GA (or other states). I personally like GA since I went to college there.

3. (long-term) Involve in slightly larger real estate projects (e.g. apartment, storage, development etc.) while not quitting my job (yes I kinda enjoy my day job).

Challenges:

1. SFRs in the Bay area are crazy expensive, the down payment and mortgage payment would be a huge gap to fill.

2. My primary home has a limited upside (after all, it's a TH), and we don't see the rent outgrow the mortgage payments in 2-4 years (it's ~$4600 vs $7500 now). Most likely there's no way for us to afford the new SFR without selling the current home.

3. The investment property in GA is barely cash flowing right now. I am not confident that I would be able to cash-out refi in 2-5 years given the rising interest rate.

Questions:

What should be the right strategies for long-term planning? Currently, I have 2 thoughts:

1) Rent out my primary home as much as possible (which would bring us ~1500-1600/month), save, and invest conservatively in the next few years (both in stock and RE). We can probably afford the new SFR in 2-5 years after selling my primary home.

2) Invest aggressively into crypto, syndication, private fund, RE, etc., and potentially delay the SFR purchase plan according to the status of the investment.

It's a hard decision to make since the economy this year is a bit flaky. I have some cash reserve on hand, but I am not sure if I should go all-in right now (or any soon). Experienced investors and senior members please advise me on how the plan could be made, and what mistakes I should avoid. Thank you all so much in advance!

Also feel free to reach out if you want to connect. I am a bit shy but I am trying to overcome that :).

Hello Jack, I would be more than happy to have a visit with you. I live, invest, manage, and rehab in south-central Wisconsin, Beloit, and Janesville Wisconsin. I have many BiggerPocket clients realizing 20% cash on cash returns. Feel free to give me a call.

Anna Patty

Investor · SF Bay Area · Member since 2018 · 17 posts · 12 votes

4y

It's true. Heavily biased towards tenants. There has been appreciation since I bought it in 2016 so the CF isn't as good as before. But who knows, the prices may go down soon? I'm actually looking to purchase out of state properties going forward since CA has been so tricky for RE investors.

OP

Member since 2022 · 23 posts · 15 votes

4y

@James Wise Yeah I won't invest >10% in crypto since it's just a huge casino right now. Zero-sum game there.

Chandana Raghunath

Member since 2019 · 3 posts · 2 votes

2y

Hi Jack, Not sure if you still need help with your situation, but here's a lesser-known fact that I thought could help you buy your second home in the Bay - people are buying $2.5M homes without paying 20% in downpayment with $8000 PITI (YES!)

If you're still looking to buy your new primary home or want to scale your buy & holds in this economy, you can hold on to your cash, and increase your net cash flow. Happy to help!

Chan Raghunath

Co-Founder & Operating Partner, CR Creative Finance LLC