H1B Couple Exploring Real Estate Investing: Seeking Strategy Advice and Networking

[Akshay Monga]

Hi BiggerPockets community,

We are a married couple based in the California Bay Area, both working as software engineers with a combined income of close to a Million USD. We’re relatively new to real estate investing but are eager to learn and start building a portfolio. Here’s a detailed look at our situation and the questions we have:

1. Current Financial Snapshot:

• Savings: A solid mid-seven-figure amount currently invested in the stock market.

• Primary residence: A 2-bed, 2.5-bath townhouse purchased in 2020 with a 2.75% interest rate. At the time, we were not thinking as investors and primarily focused on buying a modern, pretty property under $1M. While the property hasn’t appreciated much since purchase, we’re considering keeping it as a rental due to the low rate. Property is in downtown San Jose location with possibility of new parks next to our location being built and also new constructions around our neighborhood.

2. Goals and Strategy (Feedback Needed):

• Immediate Goal: Move out of our current townhouse to a larger single-family home (SFH) for our growing family (new baby and a big dog).

• Our strategy: Buy a fixer-upper SFH in a "B" neighborhood, ideally with ADU (accessory dwelling unit) potential. The idea is to rehab it, add value, and live in it for a few years. We plan to keep this property long-term as part of our portfolio and look for additional investing opportunities in the future. Does this approach make sense as a first step for us?

• Long-Term Goal: Build a real estate portfolio focused on long-term appreciation and equity growth. We’re open to zero or slightly negative cash flow initially, as long as the deal provides solid equity potential. Positive cash flow would be a bonus. We don’t plan to leave jobs and live off of the portfolio but have it as a wealth generator aka hedge against future risks.  

• Multifamily properties also interest us, but we’re unsure if they’re the right starting point for beginners. Would it be better to start with SFHs or dive directly into multifamily?

3. Additional Considerations:

• H1B Visa Constraints: As visa holders, our real estate investing strategy has to remain passive (e.g., hiring property managers). How does this affect the feasibility of managing fixer-uppers or multifamily properties?

• Investing in High-Cost Markets: The Bay Area is an expensive market, but we’re open to exploring out-of-state opportunities if they provide better returns. Are there strategies for finding good deals in high-cost areas like the Bay Area?

• Current Property: Should we keep our current townhouse as a rental, considering the low 2.75% interest rate, even though it hasn’t appreciated much since purchase?

4. What We’re Looking For:

• Feedback on Strategy: Does our approach of starting with a fixer-upper SFH align with a sound investment strategy? Should we pivot to focus on purely investment properties like turnkeys or multifamily instead?

• Resources for Learning: We’re working on improving our deal analysis skills and would love recommendations for tools, books, courses, or calculators tailored for beginners.

• Networking and Connections: Are there local Bay Area meetups or forums for new investors? We’d love to connect with like-minded individuals and seasoned investors to learn from their experiences.

5. Personal Reflection:

• We’re excited to start this journey but realize we have a lot to learn. We’d appreciate any advice, insights, or resources you can share to help us make informed decisions and avoid rookie mistakes.

Closing:

P.S. If you’re based in the Bay Area or have been in a similar situation, we’d love to connect and hear about your journey. Thanks in advance for your help!

[River Sava]

Hey Akshay, welcome to BP!

Sounds like you’re in a strong financial position, and it’s clear you’ve put a lot of thought into your strategy. SFHs are a great starting point, but small multifamily properties (like duplexes or triplexes) could also work well given your financial foundation. The key is understanding your comfort level with managing multiple units right out of the gate.. 

Investing locally in the Bay Area will come with higher acquisition costs, but appreciation can still build wealth long term, so don't be weary if you're property doesn't cash flow right now the bat. However, exploring out of state markets could offer stronger cash flow upfront, so it’s worth evaluating both paths.

A piece of advice would be to focus on building your core 4  team: agent, lender, contractor, and property manager. Having a trusted team in place can make or break deals as you scale and face unexpected challenges. One question I have is if you're considering using hard money? If so, make sure to look into lenders who will work with first time investors on rehabs.

Good luck and happy to connect with you!