Fresh college graduate looking to get into the market.
Member since 2023 · 8 posts · 14 votes
Hello All,
I just graduated college and I am looking into getting some rental properties for cash flows. The bay area is currently saturated which has lead me to consider other rental markets across the U.S. I would like to acquire a multi-family unit that I can live in while I rent the other units out to others. Which markets should I look at considering my main objective is to obtain properties that I can hold and collect cash flow. Thank you to the creators of this platform it is cool to see so many likeminded people.
One place to start is Dave Meyer's list of the best cash-flowing markets. The spreadsheet that goes with the article has data on the top 100, not just the top 10. I would give major weight to markets you already know in some way (for example, maybe family or friends live there and you've traveled there a lot over the years). Once you have a few ideas of markets in mind, you could perform a more detailed analysis looking at things like population growth, employment and crime.
Since you're also talking about moving to your target market yourself, also make sure it's somewhere you personally are interested and excited about living! Consider taking trips to a few cities on your short list to get a feel for them before you decide where you want to live. And don't be ashamed of moving to your target market and renting for a little bit at the beginning while you get to know the exact neighborhoods, get a feel for what's on the market and build your team.
Were you planning to stay in the Bay Area? Are you considering leaving only due to the cost of housing or would you stay if you found something in the Bay Area? Depending on your budget, there are some places you could find cash flow if you live in one side of the unit. My suggestion here is to buy a small single family, then convert it into 2 units and permit one side as an ADU. Depending on the deal you get the house for and the market, you could live in the smaller unit and long term or (likely more profitably) medium term rent the bigger part of the house. Then you get some cash flow (though less then other markets for sure) but also the benefit of appreciation and equity that comes from holding in the Bay Area.
I've seen some places that could work with this model in Oakland, Berkeley, Concord, east San Jose.
You will probably need a stable job for 2 years and 3.5% down payment in cash, plus some more cash, to make this happen on an FHA loan.
Definitely, I will need to get a job to show that I am able to pay that loan on a property. Would I be better off saving up 20-25% down for a property or should I just go the FHA route?
Were you planning to stay in the Bay Area? Are you considering leaving only due to the cost of housing or would you stay if you found something in the Bay Area? Depending on your budget, there are some places you could find cash flow if you live in one side of the unit. My suggestion here is to buy a small single family, then convert it into 2 units and permit one side as an ADU. Depending on the deal you get the house for and the market, you could live in the smaller unit and long term or (likely more profitably) medium term rent the bigger part of the house. Then you get some cash flow (though less then other markets for sure) but also the benefit of appreciation and equity that comes from holding in the Bay Area.
I've seen some places that could work with this model in Oakland, Berkeley, Concord, east San Jose.
I wouldn't mind staying in the Bay Area? I wouldn't mind house hacking and sharing a house with people. I am also willing to sacrifice a little comfortability for profitability. The main question I would ask is if I would be able to attract quality tenants. A main house with an ADU would be awesome as I am looking to maximize profitability.
One place to start is Dave Meyer's list of the best cash-flowing markets. The spreadsheet that goes with the article has data on the top 100, not just the top 10. I would give major weight to markets you already know in some way (for example, maybe family or friends live there and you've traveled there a lot over the years). Once you have a few ideas of markets in mind, you could perform a more detailed analysis looking at things like population growth, employment and crime.
Since you're also talking about moving to your target market yourself, also make sure it's somewhere you personally are interested and excited about living! Consider taking trips to a few cities on your short list to get a feel for them before you decide where you want to live. And don't be ashamed of moving to your target market and renting for a little bit at the beginning while you get to know the exact neighborhoods, get a feel for what's on the market and build your team.
Thanks for the advice, I'll take a make a list out of those cash flowing markets and analyze the pros and cons of each market.
You will probably need a stable job for 2 years and 3.5% down payment in cash, plus some more cash, to make this happen on an FHA loan.
Definitely, I will need to get a job to show that I am able to pay that loan on a property. Would I be better off saving up 20-25% down for a property or should I just go the FHA route?
if you find a deal where the numbers work with fha why not do that.