Starting out in the Bay Area- Peninsula

5 Replies

Hi Everyone! 

My dream of investing in real estate if FINALLY going to come true! Before I even knew that real estate investing was a career/ lifestyle choice I would say that I wanted to be a landlord when people asked me what I wanted to do with my life. I've read a few books, blogs and been on bigger pockets for a few months now, I know I still have no idea what I'm doing but I'm going to do it! I've come into some money and wanted your opinions on how to invest it.

I currently live in San Bruno and can invest up to $50k down and will be getting pre approved with my boyfriend to qualify for more. We will definitely be buying in the Peninsula which is notoriously expensive (I've begged an pleaded for the BF to consider the east bay but he says N-O, he's a surfer has has to be by the water... traffic... blah blah blah) 

I'm considering a live in fix and flip, you can find property for $515-$560 as is with similar properties selling for $675+ turn key and we're both handy so we will be doing most of the labor on our own.

I'm also drawn to multi family properties and a live in buy and hold, with us occupying one unit for a few years. But the only ones I've seen are over 1M, this would be crazy right? I know other units can qualify you for a higher loan but I have no idea how the calculations work and I haven't talked to a loan officer. I guess that would be the first step. (I'm talking my self out of this as I type.)

Am I missing any other avenues of investing? What would you do with the money in the peninsula? Anyone currently doing similar in my area? San Bruno, South San Francisco, Pacifica? 

Hi @Jennie Testman  Welcome to BP! Love your enthusiasm...it has come to the right place! If you're looking at properties in the peninsula, they're most certainly for a buy and hold reasons, especially if you're considering living in one unit.  Either way, there are some really savvy folks on this site and they will not hesitate to give you some incredible advice.  See you around the forums!

Hey @Jennie Testman ,

In my limited experience I'd say your best bet might be to connect with one or more investors who are doing flips further out in areas where prices aren't so high. Unless you really want to bank on appreciation I'd look to areas where you have a few exit strategies: fixnflip, fix n cash flow... I know the first instinct is to do something right in your area/where you want to live, but seems most beginners in the hot CA markets build up some momentum by going out of area/out of state. Even if you can manage to find your way into a duplex in your area, you won't cover expenses on one rent, probably not even two rents. With 50k you could buy something for cash in another market, then refi out and repeat. 

Anyhow, I'm pretty new, so take these comments with a grain of salt. Let's hear what others have to say.

Orion is right on, its great to have the motivation and some cash to do something, but one bad investment will eat that right up. seems like you are in the time in your life when the gambles can be made and live minimally. do it now, take the risks now, but make sure they are calculated. 

I am perusing multi's as well, but I am from the east coast where i have done my investing and still do, which offers go in at 50 to 75k per unit. Here is more like 125k. I now live in Napa, but this area is very tough to get the numbers work. As Orion stated, even if those units are rented its still tough to break even with all the expenses. and breaking even is not why we all do this.

I enjoy sharing what I know and open to all avenues and suggestions as well. Contact me any time and can help where I can. If you have the time and knowledge to do the rehad and some cash to put in the game, I or others could make something work. But the right partner makes all the difference in the world.

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Thanks for the input! I think I would be most comfortable doing a live in flip, especially since I know the market in my area and what would be a good deal. I think that's the avenue I'll head down for my first investment! 

Thanks again

@Jennie Testman  ,

I bought a 4-unit building with FHA @ 3.5% down for my first building. Was probably the greatest choice of my life. I assume you're doing FHA if you only have $50K and are determined to buy on the peninsula..? That will be tough to buy a true fixer unless you do the FHA 203k. It's a PITA, but one of the few ways to buy a beat up house and get rehab money for only 3.5% - 5% in...

I believe 4 units go up to about $1.2MM in Bay for FHA. They will use 75% of the rents from the other units you're not living in. 75% of actual, if occupied. 75% of market rents in appraisal if vacant. (mine were vacant foreclosure from FNMA/Homepath).

Or you can buy somewhere where you don't want to live, and make some more cash flow. But you'll need a bigger downpayment for that. Check out this one I just finished with purchase + rehab @ $430K and rents over $5k a month..

http://www.biggerpockets.com/forums/223/topics/132989-deal-success-story-in-process-cash-flow-in-the-sf-bay-area

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