First Time Buyer!!! Advice for Bids & Rent (SF Bay Area)?!

4 Replies

I got pre-approved for a 3-5% down 30 yr mortgage @ 3.75%.

I'm looking to get a 3/2 house in the Bay Area. I plan on living in one room with my girlfriend while renting the other 2 rooms to friends with stable incomes. I understand that there are risks associated with this and laws that favor the tenants (for example I may have a tenant that stays for free for upwards to 6 months). What are your thoughts on this? I plan on reducing my mortgage payments significantly through renting the other rooms out to build equity up over time. Someone recommended that I look into duplexes to save the headache of having to live with potential bad tenants (who may be my friends :x). Thoughts?

The bids I will be making will be for houses that are commutable to SF whether through the Bart Station or the Ferry (~40min-1hr commute). A real estate agent told me if I make a bid too low that my offer will be rejected and that's it (due to a higher bidder and that there are many bidders per house---upwards to 10 or more). Is there any way to put a counteroffer to raise my bid? Can I still negotiate for the best price in the Bay Area? It's uneasy to put together a bid knowing that I can't adjust it. Any advice for this?

Thank you!!!

Bay Area is a very competitive market. If we have multiple offers scenario, this still happens on majority of desirable properties sold, we typically counter or ask only top 2 or 3 offers to submit their best and final. The best approach in this situations is to work with an agent and submit offers that are competitive with no contingencies. This will definitely give you a great start. 

Duplex may be a good option to avoid headaches with having a roommates but it may be difficult to find something within 1hr commute as they are not that popular here in Bay Area.

Thank you @Marcin Zajac ! I just found out that the property I'm interested in had few if any offers which is why they lowered the price recently. The house is valued over 200k more than the homes around it in the same neighborhood primarily because the house is almost twice in size in real estate square ft. Is this an opportunity or should I avoid it?

Sounds like they do not have any offers since the property is most likely overpriced for the neighborhood . Also from investor perspective you probably do not want to buy the largest and most expensive house in the neighborhood as this will limit opportunities for any future value added.
I would pass on this property and keep looking for better opportunities.

Marcin,

I'll keep that in mind and that makes logical sense. I'll hold off and keep looking for investments that make sense long term as a first time home buyer.  Perhaps I should look for duplexes more south of SF. Cheers!

Originally posted by @Marcin Zajac :

Sounds like they do not have any offers since the property is most likely overpriced for the neighborhood . Also from investor perspective you probably do not want to buy the largest and most expensive house in the neighborhood as this will limit opportunities for any future value added.
I would pass on this property and keep looking for better opportunities.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.