Hi, I am trying to get into the real-estate and trying to buy my first property. But I am not sure what will be the best strategy to go with in this market. So I will be living in lower part of the Bay Area because of work, and my initial thought was to house hack with small multi-family property, but it seem like it's very tight market to make 0 or positive cash-flow. So I was thinking buying small multi-family units out-of-state for positive cashflow. Will it be better strategy to buy out-of-state rental property (small multi-family) first for positive cashflow or house-hack a small multi-family property in Bay Area?
A very long time ago I made a “sacrifice” by buying a duplex in deep, deep east Oakland to house hack. It didn’t have a washer dryer on-site and parking in the area was worse than San Francisco. I put a Section 8 tenant in one side, and I lived in the other side. My friends and colleagues were talking all kinds of “nonsense” to me. Over the 5 years I lived there as the duplex in the hood kept appreciating in value I refinanced 3 times, took cash out and paid off all credit cards, my car notes and started buying (serious cash flowing) rentals in the Midwest.
Moved out of the hood….. still own the duplex (as well as many others) and put a Section 8 tenant in the unit I used to live in.
Your first step should be to get pre-approved with a lender. @Chris Masoncan help you out with that.
@Brian Lee overall, I'm a big advocate in that your first property should be a house hack investment, however, I can't exactly speak on behalf of the Bay Area. I understand the price to rent ratio makes it difficult to justify investing in the market, but I would still consider pursuing a house hack deal before getting involved in small multi-family out of state. Even if your first house hack deal is cash flow negative, look upon the principle that you're building equity in the property and that your essentially paying cheap rent. Furthemore, house hacking is not one dimensional in the sense that your only option is to purchase a 2-4 unit property. In this market you're going to have to get creative regardless of your investment stratgey. Have you looked for potential properties that have an in-law suite that could be used for AirBNB or short term renal? Have you analyzed rent by the room investments? Point being, you're classic house hack deal of buying a 2-4 unit property, living in one unit and renting out the others is becoming less viable given the huge demand. Hope this helps!
A very long time ago I made a “sacrifice” by buying a duplex in deep, deep east Oakland to house hack. It didn’t have a washer dryer on-site and parking in the area was worse than San Francisco. I put a Section 8 tenant in one side, and I lived in the other side. My friends and colleagues were talking all kinds of “nonsense” to me. Over the 5 years I lived there as the duplex in the hood kept appreciating in value I refinanced 3 times, took cash out and paid off all credit cards, my car notes and started buying (serious cash flowing) rentals in the Midwest.
Moved out of the hood….. still own the duplex (as well as many others) and put a Section 8 tenant in the unit I used to live in.
Your first step should be to get pre-approved with a lender. @Chris Masoncan help you out with that.