Analyzing Cashflow vs. Asset Appreciation in Rental Property Investment in Bay area

[Manaswi Mishra]

Hi I am a 31M living in Mountain View and am looking for a rental investment property within 50 miles of my residence. My monthly HH income is 16k USD after tax.

After looking at multiple properties and calculating the overall net income it is quite difficult to come to a net positive cashflow (taking into account Mortgage payment, HOA, property taxes, insurance, rental taxes).

I do understand that rental properties are a function of appreciation but wish to know what would be the best methodology to understand the overall negative cashflow to asset appreciation ratio or a metric to benchmark it against e.g. % appreciation YoY. Additionally what could be good indicators to identify a good investment property in Bay area, which locations are currently suitable for such type of an investments within 50miles? I do wish to avoid high crime rate areas e.g. Oakland, but open to advise if I should not be doing this and why. 

Thank you!

[Ruchit Patel]

Congratulations on your great income ( I know it might not be great by bay area standard )

I am in bay area, and these are the few things I have learned:

-- investment should make sense today, and not only in the future, as present is certain, and future is not!! 

-- negative cash flow property will turn into huge liability if you ever have layoff from W2

-- nothing in bay area cash-flowed at 2.5% interest rate, so forget it at 7.5%

-- that's why there is an influx of people investing out of state, that's what I did