Starting out in the Bay Area

12 Replies

Hello all! My name is Kahleb Kelsey, I am an officer in the Air Force and was just stationed at Travis AFB in Fairfield CA. I am very interested in starting my real estate investing career, however, doing the math based on the sales prices and rents has me convinced it is going to be very difficult to find cashflowing properties in the area. If anyone has any tips or advice on trying to get started in this area and how to find properties that are good investments from the start, I would be very appreciative. Thanks!

Hi Kahleb,

It's going to be tough in  CA.  You can try Vacaville and Vallejo and see if those areas might work for you.  

Hey Kahleb,

Cash flow is definitely hard to come by in CA, but it can be done (especially with higher down payments). The advice I give to anyone and everyone who is looking to start out investing in real estate is to read up on house hacking. It's a phenomenal tool to get your feet wet in the REI world while reducing or eliminating your housing expense altogether. Read Brandon Turner's post on the topic, but ignore the numbers he is using as they will most likely be completely inapplicable for your market. Instead focus on understanding the concept and think about how you could apply it in your own life.

https://www.biggerpockets.com/blog/2013/11/02/hack...

Good luck and happy investing!

Originally posted by @Kahleb Kelsey :

Hello all! My name is Kahleb Kelsey, I am an officer in the Air Force and was just stationed at Travis AFB in Fairfield CA. I am very interested in starting my real estate investing career, however, doing the math based on the sales prices and rents has me convinced it is going to be very difficult to find cashflowing properties in the area. If anyone has any tips or advice on trying to get started in this area and how to find properties that are good investments from the start, I would be very appreciative. Thanks!

Another way would be to build an ADU in an SFR and put both on rental.

Anything cash flows with a big enough down payment....

But if you're looking for the low /no down payment options and cashflow it's unlikely you'll find it anywhere worthwhile /reasonable distance from Travis. What's more realistic is you look to reduce your living expenses by househacking and find something you can fix up and get some equity. You'll likely get "more" in rent on a per room basis vs the entire property...  For example you get 1k per room plus split costs and you have 2 spare rooms vs 2k for the entire property if you just rented it out.

Then revaluation when you rotate out and either sell (tax free gains ) or keep renting out rooms...

Thank you everyone for your replies and advice! My plan was to actually househack from the start, first trying to find multifamily in the area, then once I found out they were next to non-existent pivoting to single family. The next step is finding a single family that is in a state of repair that makes it cheap, but not bad enough that it is unlivable for a time (I work as a full time pilot). I do have the option for around a $70k down payment, I just need to do a cost-benefit analysis on weather or not I use it as a down payment, or use my VA benefits and save it for a larger down payment down the road. The hunt continues! If anyone has realtors they can recommend I. The Fairfield/Vacaville area they would be very much appreciated!

@Kahleb Kelsey - try contacting David Greene, he is based out in the deep east bay. He might be able to help or direct you to someone who could help. Good luck with your search.

VA loan is unlikely to work out... Too many fees and your payments will be sky high ... And you'd have no equity really to tap into.

Construction is also extremely expensive and hard to come by unless you're doing the work yourself. Even then materials still expensive... Good contractors are busy and most have plenty of work, if you're lucky you can get a refferal and they'd squeeze you in. But....at best you're getting a fair price unlikely much of a discount.

If you really wanted to nerd out, you could probably find a way to reduce your living expenses with room mates and a cheap rental. You'd be surprised there's landlords out there who love military and or don't do good market assements of their rental value. Get couple room mates and sublease rooms to them you could probably get your living expenses low.

Then deploy capital elsewhere with better returns...

If by househacking you mean rent out part of your home, be careful with that in California. Our state offers many layers of renter protection. God forbid you get a bad nasty tenant and need to evict. You could be in for a long fight and meanwhile this person is living in your home. 

I’ve been a residential landlord for many years. Attorneys are very expensive but one generally dares not make a move without consulting one in this litigious state.  Sorry to be a naysayer.  But if you’re in the military I would request a transfer to a more landlord friendly state where the barriers to entry into the RE market are much lower. 

Thanks for your service and God bless America!

@Kahleb Kelsey Here's another idea: live in base housing, or rent a small house or apartment close to work that is below BAH. Ride your bike to work and save up as much money as possible and live below your means. Then take that $70k and use it to buy real estate that actually cash flows and provides a really good return on your money in areas around the US that have better investment opportunities than in the Bay Area. Look for somewhere in the Midwest or Southeast where you can buy a house for significantly less money than California. With $70k you could probably buy 2 or 3 properties and have positive passive income from day one! 

@Brian Larson - I'm on The David Greene Team so thanks for the shout out!

@Kahleb Kelsey - I understand the Bay Area and California in general look like an impossibility on paper.  The key is to look at something on paper and figure out it's highest and best use of the property according to your strategy.

SFH in the Fairfield/Vacaville areas are excellent vehicles to drive wealth. Not only are there opportunities to captures some instant equity based on the doing some updating and/or repairs, but the appreciation factor is something to consider as well.

We have meetups all over the Bay Area, so I just sent you a PM.

Hope this helps!

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Look Into to kelseyville and Clearlake too .

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