Im currently looking to buy residential income investment about 1,3M but where will be better cash flow in the Bay Area? Or where should i look close to Bay area beside Bay Area . Thank you
It appears that people living out of CA knows more about Bay Area than the locals living here. I have invested in the Bay Area, peninsular, east bay, and Central Valley for over a decade. All properties cash flow well. What kind of blind statement it is to say that Bay Area does not cash flow.
Just purchase 4 properties this year alone, one in Central Valley, one in east bay, one on peninsula, and one in Santa Cruz. All properties cash flow positive. What a surprise.
@Paris Snow I'm not from the Bay Area but I know it's expensive. It's the most expensive market in this country.
Cash-flow and California don't really go hand-in-hand, but you could consider other strategies or figure out an amount of cash you're comfortable injecting into a rental property to hold it. As a mid west investor that idea makes me sick, but I'm sure plenty of people are doing it. At the end of the day appreciation, tax benefits, cash-flow, and principle paydown are equally important.
Since you said "cash flow" and "bay area", you sound unknowledgeable about the area. Most areas of CA are an appreciation and principal reduction investment. I have to ask, do you have any idea of what it takes to be a landlord in this area? If you don't have a master level understanding of the laws, rules, and tenant loopholes of this area, you will be crushed. It is one of the most anti-landlord areas in the US and it is not an area to enter into without serious thought.
If you want/need cash flow, you need to look outside the expensive areas.
I was a LL in the Bay Area for 30 years. Every month I had to feed the properties to make up for negative cash flow. Upon exit however BANG! Went from idiot to genius in a heartbeat!
Positive Cash flow and Bay Area GENERALLY do not go hand in hand, but I have seen some good success with this when you find a triplex or 4 plex in East Oakland with PROPERLY screened tenants....especially Section 8.
House Hack! I find it to be the only way to potentially cash flow day one. Of course, this may be extreme for some people, as house hacking and trying to cash flow means you'd have to live in the living room to rent each room out.
If that's out of the question, and you're only looking to buy an investment property, I'd suggest finding a way to buy an SFR and separate it out to two units internally. Hope this helps!
It appears that people living out of CA knows more about Bay Area than the locals living here. I have invested in the Bay Area, peninsular, east bay, and Central Valley for over a decade. All properties cash flow well. What kind of blind statement it is to say that Bay Area does not cash flow.
Just purchase 4 properties this year alone, one in Central Valley, one in east bay, one on peninsula, and one in Santa Cruz. All properties cash flow positive. What a surprise.
From the analysis I've done you will have to go to the central valley, think Fresno and Stockton. Within the immediate bay area, you would have to find some really really motivated off market sellers.
It might also be worth looking into investing into an opportunity zone (Oakland) where the tax benefits make the deal very good.
Finally, try focusing your search on multifamilies. When looking at single family properties you will compete with homebuyers who will outbid the properties value. Multifamily properties typically bid closer to their value because the buyers are more numbers focused than someone trying to buy a home.
Sacramento isn’t exactly Bay Area but we bought a rental home there this spring and are getting decent cash flow and the home has appreciated $40k in 6 months. We put a pretty healthy chunk of money down on it, but we are happy with it.
@Karla Simmons from valejoe, Fairfield, vacaville, all the way to Sacramento, there are plenty cash flowing properties. I have a 5 unit in Fairfield, purchased in 2016 for $750k, monthly rent around $9k now, Value about 1.5 m now. I also visited woodland area, which is also a nice city, just too far from where I live. What a joke people keep saying Bay Area does not cash flow.
We live in Vacaville so Sacramento not a huge stretch for us distance wise. I agree with you that you can cash flow in Bay Area. Just takes more money to get into the game.
@Paris Snow don’t listen who people who don’t live here, ie. Indianapolis, that you can’t cash flow here. I bought a 14 unit in Oakland 6 months ago, already at 1% rule and cash flowing $6000/month. That’s over $400/month/unit. And I only put 25% down.
@Jaron Walling@Arya S. Shots fired! What’s the better Market? Indianapolis or West Coast city’s? I personally own in both! Seattle I’m collecting about $2,800/ month per unit in a B+ area that are currently valued at $550,000/door and my Indy investments collect $1,600/door valued at $175,000/door, also in a B+ area. My vote is for Indianapolis!
@Jaron Walling@Arya S. Shots fired! What’s the better Market? Indianapolis or West Coast city’s? I personally own in both! Seattle I’m collecting about $2,800/ month per unit in a B+ area that are currently valued at $550,000/door and my Indy investments collect $1,600/door valued at $175,000/door, also in a B+ area. My vote is for Indianapolis!
Smart man. How much has your Seattle property appreciated per year? My guess is $80-100k/year. Indianapolis appreciates I’m sure, but at a much lower rate.
The way I see it - everyone preaches cashflow, but I think its fine to have some negative if theres good outlook for appreciation. There are plenty of tax strategies to pay nothing on capital gains tax, like 1031 or 121, but you'll have to pay taxes on cash flow.
In the past 5 years, if you bought a SFH anywhere in south bay area, your home has appreciated at LEAST 300k-800k. How long would it take to cash flow that much?? Cashflow is great, but if your home appreciates the way it does in the Bay Area, you'd be light years ahead of the person who went for $1000 cashflow per month. It's a very different style of investing that most people who aren't from the Bay Area don't understand in my opinion.
I live in Silicon Valley, and I'm an investment advisor who specializes in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:
1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.
2. Buy or inherit and hold all their lives while working the properties for income.
I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.
Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.
Most of my clients fall into the first group above. If you are or become an accredited investor, you can buy into institutional grade $50-125M projects with as little as $100,000 and diversify.
Sorry everyone i forgot to mention im gonna do 1031 exchange for that and so i dont have that much time (1 month) to study more about other option beside the Bay Area. So i may just do the exchange and take advantage of the appreciation and may do another 1031 exchange later when i have better knowledge about where is better for cash flow to invest. But yeah, Im new to real estate and im still learning. Thank you everyone for your sharing and time and support my topic.
@Arya S. In regards to appreciation, again my Money is on Indianapolis! The Bay Area has ran its course, how is the growth rate sustainable? It’s not. Indy is a huge metropolitan market with serious untapped potential with political views that will become more and more popular as time goes on. If I had $100,000 to invest (and I do) I’m staying away from the toxic political environment that’s California… 😃
@Arya S. In regards to appreciation, again my Money is on Indianapolis! The Bay Area has ran its course, how is the growth rate sustainable? It’s not. Indy is a huge metropolitan market with serious untapped potential with political views that will become more and more popular as time goes on. If I had $100,000 to invest (and I do) I’m staying away from the toxic political environment that’s California… 😃
Fair enough. And my apologies for my people’s turning your hometown into Lake Tahoe :)
This may not fit your 1031 exchange element, but if it is cash flow you’re after, I’d look into real estate notes.
You can get great ROI and cashflow from them and there are no property management hassles. Also, you can easily hold notes nationwide and wouldn't be confined to your region.