Looking into investing into a duplex in Oakland - am I crazy?

Question

Hello BP! I am finally ready to ask some questions after some time of research. I hope there are people that can help me.

Situation: my family(me, my hubby and 1.5 yo son) are moving back to California in the begging of January 2022. We want some sunshine in our lives. We temporarily moving to my parents place, but will be actively looking for our first home. I recently came up with an idea to invest into a duplex instead of SFH which could help us pay mortgage. I want to start off with a duplex just to get my feet wet and see what it's like to manage a property. Also I doubt we will qualify for a triplex or fourplex price...

Questions:

1. Am I crazy to buy a house now in such red hot market? Should I wait?

2. Is it real to buy a duplex for <1M in Oakland area?

3. We talked to a loan officer in our local bank and what we qualify for is max $970,000. And he said that if we are getting a duplex and plan to live there we have to pay 15% of downpayment. Is 15% downpayment for duplexes is a usual thing in any banks? Anyone knows a better bank that doesn't require 15% downpayment for duplexes?

4. Is Oakland a good REI place? Which areas are better for us to look at considering we have a child? My husband really wants to live there - he loves the area since he lived there for a long time, but from all the horror(fake news...?) stories of what is going on there I'm not sure...

I have many more questions but let's start with these :)

Brian Garlington · Answer

Contact @Chris Mason He can probably give you additional perspective. Yes, buying a duplex in Oakland for under $1Million is not only possible, but it is done every week.....we help people do it all the time. I always warn people though to act fast....if a duplex becomes available with a vacant unit, be ready to see it and offer on it fast. A couple of people I started working with were amazed three times in the past two weeks that duplexes became available with a vacant unit and they went pending less than a week after they hot the market....one went pending in only two days.

Gulnoza Bobokalonova · Answer

Thank you all for some insights! I think we established that I should not stop and keep looking for a good deal :)

Lois S. · Answer

I'm surprised that no one has responded here regarding the harsh rent control environment in Oakland, and the limitations on what LL can ask an applicant for your unit. Please consult an attorney familiar with these issues, or just do a google search. https://bit.ly/3z37wQS

good luck!

Paul Merriwether · Answer

FORGET OAKLAND DUPLEX'S!!!!

See my comment in your other post. Think taxes and that 15% down is approx $150,000!!!! Buy out of state townhouses for easy cashflow that could cover your taxes on an Oakland home for $970,000. You'll have property management & your cashflow could be $1500/mth. if you pay cash for the properties. It's just math.

How much do you have for a down payment? The other option is buy a home with the possibility of converting the garage to an ADU. Now you have that duplex!!! I hope hubby is handy with tools!!!

Crime is an issue however you'll be safe. Check Trulia for the crime in the area you looking to purchase. Maxwell Park is the safest in the range you are looking to pay. You'll need to hustle as a neighbor just their home went pending in a few days it was listed at $970k. While a home in Aug listed at $870k sold for $1.2m. Could prices come down? NOT HARDLY!!! Far too many buyers that have been out bid already just looking for their opportunity to purchase ... you had better hurry!!!

Ziad Hamati · Answer

You are not crazy to buy in a red hot market. You will always find a deal in any kind of market as long as your numbers work. I have myself bought couple of properties this year.

Should you wait hoping prices will come down? Or, What if you wait and prices keep going up and you lose on appreciation? No one can predict what will happen. Every market is different. Some markets are seeing a slight decrease in home values, other markets are going up. In general, most markets are still low on inventory

You want to buy a Duplex to live in which is a great way yo get your feet wet as you said. Also, when Duplexes are on market, the house hacker (you) always has a higher chance of winning the bidding war against investors. Because an investor is only willing to pay up to a certain price for that Duplex. Whereas the House hacker will almost pay any price for the Duplex to live in for FREE.

Regarding the downpayment, every lender / bank is different. I would suggest to call couple more lendors (bank, credit unions, local mortgage company) basically shop around. Usually, rules are slightly different when a multifamily is involved, so i wouldn't be surprised if they are asking for 15%.

Looking into investing into a duplex in Oakland - am I crazy?

Looking into investing into a duplex in Oakland - am I crazy?

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