If there are no deals in the SF Bay Area...

24 Replies

then what can I do in the mean time besides saving and learning more about REI? Like a lot of people say on here, you just have to get started but it's tough if there's nothing to purchase. Ideally I'd love either a SFH or a 2-unit building with 75% LTV or less. Anybody seeing anything out there? Any where in or within 30 mins of SF.

@Jonny Cerri

I know the feeling, I'm priced out of the Bay Area completely.

Are you locked on the Bay Area or can you widen your geography that you're willing to work in (maybe northern California - Sacramento? Maybe different States all together?) 

Doing that should open up lots of possibilities?

My partner and I have our jobs and family here. We don't want to leave the BA.

@Jonny Cerri

Got it, makes sense if the goal is to fix and hold or fix and flip. I was thinking more of a buy and hold strategy that lends itself better to being out of state friendly.

Maybe somewhere nearby (still within driving distance for a day trip) would work (say, Sacramento?)

I know this post will probably not help much, but I'm feeling the same way @Jonny Cerri . I'd like to employ some of the strategies in @Brandon Turner 's book but the bay area is a tough market to seemingly find things that can fit those strategies. Or maybe I'm just too much of a newbie to see it all.

If at all, here's to moral support and to some luck and hard work to yield some good investments for all of us in the bay area.

@Shez B. I'm also considering things much further away from the bay right now. Just started to do a little more research on areas that may fit withing a 2 hour driving (ideally not that far). Maybe it is just that time that we have to do what we have to to find something good.

@Justin Louie

Definitely seems that way. I've seen/heard good things about Sacramento, might be worth a look!

Originally posted by :

Or maybe I'm just too much of a newbie to see it all.

Justin,

You hit the nail on the head with this statement. The Bay Area is flooded with old as well as new money.  Most of the good deals don't make it to the market unfortunately, but that's the fact of life.  

We're being offered a 7-unit off market deal in San Jose for $1.15MM now, and we're complaining that's high.  Just put things in perspective, we just rented out a 300 sq. ft. studio for $1,500/month and a 500 sq. ft. 1/1 for $2k/month. Retail investors would be all over this deal and more than likely bid it up if it hit the market.  Here we are.....still negotiating for a lower price and hope to settle for $1.05MM.  :-)

Newbies will have to get in line like the veterans.  We used to be newbies at one point, but we paid our dues and graduated to intermediate. Gotta put in the time.  Expecting a deal to be handed on a silver platter is going to be tough.  Like the old saying goes "If you're willing to only do the easy things, your life will be hard. If you're willing to do the hard things, your life will be easy."

Hope you will crack the Bay Area code one of these days. 

Sac, Yuba City, Stockton, Merced, etc. drive 100 miles and there are plenty of deals.
Originally posted by @Jonny Cerri :

then what can I do in the mean time besides saving and learning more about REI? Like a lot of people say on here, you just have to get started but it's tough if there's nothing to purchase. Ideally I'd love either a SFH or a 2-unit building with 75% LTV or less. Anybody seeing anything out there? Any where in or within 30 mins of SF.

 If there aren't deals locally where you are located, you may have to look outside of where you reside.

Tricky market.  I'm a broker/GC in Sac.  There isn't much cash flow, but there are opportunities to flip.  The higher end market including Mid town/ Downtown/East Sac/Land Park and vicinity is appreciating rapidly.  Other areas in Sac are seeing more reasonable, steady increases.  Mid town is unique for multiple reasons including revitalization and the construction of a new arena.  I recently over bid (admittedly) for a light flip in mid town and BRV was up $50k at closing.  In 2014, investor clients/ partners purchased mid town properties that have almost tripled in value.  Yes, we were (and are) speculating.  This isn't for the risk adverse, but there are opportunities here.  

@Minh Le I know I'm a newbie. So thank you, and I appreciate the comment. It is a tough road ahead and the more I learn, the tougher the road seems. I'd love to hear more about what you're doing and how you're doing it. I think I recall you mentioning that you're part of a San Jose Meetup. I've been trying to make it out to one of them and I hope that I'll get to talk to you one of these days. 

Also, you say that newbies have to get in line behind the veterans and put in our time. I get it. I agree with it. I'm all for it. As someone who went though the newbie phase, what did you do to graduate? I'm willing to put in the time, but I want to try to and use that time as efficiently and effectively as possible.

@Justin Louie ,

Our mind is so powerful.  If we believe there's no cash flow in the Bay, we're right.  If we believe there's cash flow in the Bay, we're also right.  Isn't that cool?  

Yesterday was truly a BP day for me.  I talked to @Chris RG in the morning.  I shared with him a couple of strategies that have worked for me.  

I had lunch with @Tori Manuel and shared with her the type of deals I'm looking for, how I structure my deals with my partners, and how she can maximize her profit by wholetailing.  I shared with her some deals I just did, and some deals I'm currently underwriting.  It's interesting she said, yes, that one cash- flows; and yes, that one cash-flows too, etc.... She said I made her think.  I guess that was good???

I shared with @John Collet how my partner and I get all dominating agents in our market to work with us.  Now, the deals are coming to us.  We don't have to look for them.  

I shared with @Xiaojun M. three off-market deals I'm currently underwriting, which are all better than the deals she has been analyzing.  I will give her the first shot at these deals if I pass on them.  

I think I also shared a couple of things with @Jonny Cerri off-line.  Don't remember what the heck I said.  

I also met with a tenant and signed a new lease.  Their rent goes from $1,700/month to $2,100/month.  Where do you invest and get that kind of rent growth?  Now I just have to find a way to get my cousin out of my rental so I can increase my monthly cash-flow by another $1k/month.  Sigh.......But I'm not complaining.  

Show up to @Johnson H. 's meet-up in San Jose, and I'm more than happy to share with you everything I know.  When I say everything, I mean everything.  It's much easier to talk in person than exchanging emails.  I don't have anything to sell unfortunately although Johnson has been suggesting that I should charge people for my time.  When I decide to do that, I will split the profit with you Johnson as it was your idea.  LOL!!!

Cheers.  :-)

@Minh Le , you dont need to split the profit with me, just send me good deals that you pass up on! I would be a buyer at $1.15 with 7 units, I am not going to argue over $100k like you and your partner lol

Minh Le Everything you say is spot on! If you ever make it to Los Angeles Id love to take you to lunch. The best part of this post is how generous you are with your time and willingness to help out others. To your continued success!!!

@Minh Le is correct.  If you think you can or cannot do something, you're right.  

There are deals in the Bay Area.  I know numerous people who are absolutely crushing it right now.  I'm not quite in that category, but my partner and I have several deals (fix and flips, wholesales, short sale) going right now.

Many of the methods you read about in books don't work in this market, but deals are out there.

Jeff Pollack, Trident Equity Group | [email protected] | 650‑533‑8534 | https://www.meetup.com/San-Jose-Real-Estate-Networking-Club/

@Minh Le

   Minh Le  Bay Area Guru  I like it !!! .. .walked into the living Room and my wife is having her coffee while watching Yancy's argue over some crap house in Vegas LOL.

Its called the power position and why so many are unrealistic as to what RE is and how to break into it.. they don't want to put in the apprenticeship and work there way up.

Now many in the Bay Area as Minh has mentioned are very cashed up with their jobs and stock options etc.. so they can play the big boy game out of the shoot.. but they still won't get the deals if they do not network in person and create and environment to allow that to happen...

What we need to keep in mind is sellers or Brokers representing sellers are going to gravitate to those who can actually transact.. .not some one who can't prof up .. .with something better than a letter from some lender...

And I can vouch for Minh  when he was in PDX last summer for a wedding he took the time to come visit me in person... Maybe to see if there was a real person behind the BP forum poster.. LOL..

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Hi,

A few misc thoughts from a fellow Newbie:

1. Definitely join meetup.com and make the time to come and talk/listen in person to @Minh Le , @Johnson H. and other very experienced fellow investors. Meetup link is in Johnson's signature.  Another meetup/guy, I highly recommend is J. M. runs a more structured RE meeting where I have learnt a lot from their speaker of the night and of course there is networking time too. (Jeff can correct me). I am very thankful to these guys who run the meetups and the fellow investors who generously share their experiences.

2. IMHO put more weight on investor strategies that are working now. 2009-2012 "rising tide" and all that made everyone "successful".

3. My introductory, but extremely valuable education from meetups like these, came from experienced and successful (and smarter than me, like those previously mentioned) investors who generously shared their successes and in some cases failures. I found a surprising number of diverse strategies that have worked and in most cases IMHO they could work in the current environment (could also fail, right?).

4. A suggestion for your title post might be: "If there are no deals from new MLS listing, that allow for all the standard contingencies and a regular home mortgage at 75% LTV, 100% financed by only me, in the SF Bay Area..." perhaps better highlights a lot of constraints that you have placed on your "deal"??? It might well be that you want to maintain those constraints but IMHO it is at least valuable to recognize that they might be able to be removed.

5. I am too much of a newb to suggest what, where and if you should be investing in the SF Bay Area now and the following is by no means complete. I believe strategy is very much a personal fit to your skills/resources/risk/objectives/weaknesses. However, apart from looking within 2h drive or out of state - I know meetup attendees who I believe are making those work in 2015, perhaps consider strategies for improving deal flow (direct marketing, properties on MLS a long time with motivated seller whose needs you can meet, syndication, networking with wholesalers, value-add strategies that might broaden your pool: add sq ft; raise rents), strategies for improving purchasing attractiveness (partnering, syndication, bridge loan); perhaps review your constraints for house-hacking (IMHO this seems the easiest direct investment); and of course there is the more passive notes or a combination of any of the above.

6. Even though it all comes down to the numbers... sometimes those numbers are quite soft - predicting appreciation rate over the next 30 years? Not trying to start a cash-flow vs appreciation war, just saying that for me appreciation is more difficult to quantify than rent, and when considering SF Bay Area investing I find it to be a valuable part of my analysis.

Good luck!

@Jonny Cerri invest somewhere else or, if you want to do the house hacking approach then move to somewhere you can do it. I lived in NYC for 10 years and had a similar challenge - I recently moved to Cincinnati where the deals are plentiful (although I invest in other cities as well). 

Medium logo1Joe Fairless, Best Real Estate Investing Advice Ever | http://www.apartmentsyndication.com | Podcast Guest on Show #227

Originally posted by @Ali Boone :

The properties exist, but you won't find cash flow on any of them that close to SF.

@ OP - SF sounds like a bubble; wait it out you might get lucky when it pop's

@Jonny Cerri

Are you limiting yourself to your local market?

If you are then it will be difficult to find what you're probably looking for and/or expensive to acquire.  Even then your returns may be very low.

On the other hand, if you're open to the idea of better markets where your investment properties are professionally managed then you open up a world of better possibilities.

I hear this question often from CA, NY and NJ investors.

Continued success!

Medium norada real estate investmentsMarco Santarelli, Norada Real Estate Investments | (800) 611‑3060 | http://www.NoradaRealEstate.com

Get a map of Nor Cal and stick a push pin on your house. Mark out a 150 miles radius from that point. Start looking towards the outer end of that circle. Chances are its within 2 hours of where you live. Start investing in those more affordable markets. Build up a good track record and slowly work your way back to the Bay Area. I live in San Jose and this has been my strategy. Like others have said, there are deals, but you aren't going to find them on the MLS. It will most likely be off market word of mouth type of deals, or the result of direct marketing. I think there is good opportunity in the South Bay for Estate type sales where a trustee is looking to unload a decreased parents SFR quickly so that the estate can be settled. Find the deal and the $$$ will follow. Lots of people in this area with brokerage accounts earning miserable returns.

What is driving the SF demand? And how long are the local experts predicting it can continue with the high prices before a correction or dip will come? I know no one has a crystal ball but if so many people are saying they are unable to buy there now due to the high prices and high demand then I would think there is a change coming at some point?

In my market  (Vegas) we are still on average about 30% below the prices in the peak so we are not in the same boat as SF currently.

Thanks in advance.

Medium rgc adams team logoRobert Adams, The Adams Team at Rothwell Gornt Co. | [email protected] | 702‑349‑9175 | http://www.LVrealestateHELP.com

Originally posted by @Minh Le :
We're being offered a 7-unit off market deal in San Jose for $1.15MM now, and we're complaining that's high.  Just put things in perspective, we just rented out a 300 sq. ft. studio for $1,500/month and a 500 sq. ft. 1/1 for $2k/month. Retail investors would be all over this deal and more than likely bid it up if it hit the market.  Here we are.....still negotiating for a lower price and hope to settle for $1.05MM.  :-)

Damn Minh, you make me drooling ....  :-D

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