I have been thinking quite some time now to buy a rental property. I live in the bay area and prices are sky high to make this a realistic goal. I am fresh to my career so I do not have a ton of money to put down. I am looking into a multi-family home with 4-5 units as a start in the bay area which will be roughly about $2 million. How can I get started as I can barely afford to even put 3% down. Any help, advice will be greatly appreciated!
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
8y
Hey @Account Closed you actually got me thinking last night about the Bay Area a little more. I have cash for 3.5% down on a $1M 2-3 unit...I guess I assumed competition would be too tough going in with an FHA loan.
You think going with an FHA loan puts me (or anyone) at a huge disadvantage?
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
8y
Look for a 2-3 unit under $1M. There's plenty of them. Get an FHA loan through @Chris Mason who does them all day. He can even help refer you to down payment assistance programs to reach that 3% down payment. Don't fret if you feel you won't qualify for assistance. Some programs help those making under $175K/year, which is considered low income in the Bay Area
Real Estate Broker · San Francisco Bay Area, CA · Member since 2015 · 116 posts · 76 votes
8y
@Diana H. I agree with Saj. You can still get 2-4 unit buildings in the Bay for under $1m. There's quite a few cash-flowing buildings in the southern parts of SF/Upper Peninsula under $1.5m.
If you expand your search to Alameda County (specifically Oakland) - there are TONS of 2-4 unit opportunities (and even a handful of 5+ units) for investors under $1m. But I doubt that will be the case in 5 years time, with the the rapid pace of growth that is occurring in those areas.
That is great to hear! Is there any guidance as to where to start on this? Should I speak to a loan offer first? Look into assistance programs? Search for properties?
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
8y
Hey @Account Closed you actually got me thinking last night about the Bay Area a little more. I have cash for 3.5% down on a $1M 2-3 unit...I guess I assumed competition would be too tough going in with an FHA loan.
You think going with an FHA loan puts me (or anyone) at a huge disadvantage?
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
8y
@Tyler Jahnke offering with FHA will definitely put you at a disadvantage on winning competitive properties, but you won't know until you try. There's several MFs that have been on the market for 60+ days. Do you think the seller cares about what kind of financing you are getting? They just want to sell their property.
Rental Property Investor · San Francisco, CA · Member since 2015 · 236 posts · 156 votes
6y
@Diana H. have you thought about partnering up with people, especially for your first mf 4-5 unit deal? You mitigate your risks, share the rewards, and learn from each other? You can also pool funds together do that you don't completely deplete your savings and have some working capital available for your rental property. What do you think?