Computer guy (Bay area) wanna start his investing journey.

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Computer guy (Bay area) wanna start his investing journey.

Harshil Patel
Phoenix, TX · Member since 2019 · 20 posts · 3 votes

Hello BP community. I am new to BP community. I was listening BP podcast actively since I got to know about BP community. This is huge ocean of very talented people. I am techie guy and have very little knowledge about real estate. Thanks to @David 

@David Greene and @Brandon Turner podcast. Each episode is unique and so many ways people get benefited out of BP. 

Everyone know for new investors Bay area is very expensive. I am looking to invest in next few months in real estate investment. I have few questions since I am learning.

1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

Looking forward to connect with more people in San jose bay area. 

Regards,

Harshil

2Reply
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Most Popular Reply

Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y

Hi Harshil! Welcome to BP. I'm not in computers or in the Bay Area, but I used to be an engineer and I'm in LA... close enough? :)

1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

In my experience, the best way to know about prices is to shop around. Shopping around will give you a feel for options and then it'll also help you to know a good deal when you see one. Just be cautious as you shop, especially if you're looking at Zillow and those, that's there's not really a good way to know the true condition of the property in order to know how it correlates to the listed price. It doesn't matter for initial shopping, but just keep it in mind.

2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

Depends on what your local area is. If you're somewhere like the Bay Area, that is a very expensive place to take your first risk. Way more to lose. And since there isn't cash flow there, you have to be more strategic in how and what you buy in order to profit and to me, that's an advanced skill. But if you live in Kansas City, sure, buy local. But then if you do out-of-state as a newbie, what kind of property you buy and how you buy it (teams, etc.) will be crucial because high-maintenance properties from afar are dangerous.

3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

Apartments usually don't pencil out because of condo fees. SFRs and MFRs can be good, but again it depends on what market you're in and what the numbers scratch out to be.

4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

FHA will only work if you're living there, and it's not usually all that advantageous - at least with where we are in the current RE economy - because it's likely to cancel out your cash flow, or make it negative, with PMI and higher interest. You can always keep an eye out for seller financing, partnerships, etc.

1Reply
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10 Replies

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  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Harshil Patel

    Welcome to BP community! 

    Before jumping into the properties prices and all, you need to decide how much time can you devote to RE as a business? If it's limited, consider passive options. Alternatively research various options within the active field first and then pick the one to concentrate on.

    Hope it makes sense?!

    0Reply
  • Harshil Patel
    OP
    Phoenix, TX · Member since 2019 · 20 posts · 3 votes
    7y

    @Alina Trigub : Thank you for sharing valuable points. That is really good point. As a passive investor what is your thought process about starting with condo rentals? 

    Should I consider only 1% rule and invest ? Since in San Francisco Bay Area iit will be really expensive buy the REI probably. Should I do the analysis of long distance REI as well considering I am new in REI.

    0Reply
  • Adam Mayberry
    Architect · San Jose, CA · Member since 2014 · 90 posts · 57 votes
    7y

    @Harshil Patel consider investing passively in projects.  You can make returns, without spending all the time needed with dealing with the in's and out's of development process.

    I'm putting together a fund soon to allow individuals just like yourself to do just that. 

    0Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y
    Harshil,
    You can start with condo's, but ensure the HOA fees will still make it worth your while! I started my journey as a passive investor in syndications.  This investing type is perfect for someone who wants to spend some time upfront on learning what syndications are and how they work, and then some time on selecting the deal sponsors, and then eventually the investments. Once your investment is made, there is no more work for a passive investor to do. So it becomes truly passive at such point. 
    There're other passive options such as note investing or lending, but these generate ordinary income. So for anyone who's W-2 employee it should be all about how much you KEEP (and not how much you make!)
    If I can help you further, feel free to PM me.


    Originally posted by @Harshil Patel:

    @Alina Trigub : Thank you for sharing valuable points. That is really good point. As a passive investor what is your thought process about starting with condo rentals? 

    Should I consider only 1% rule and invest ? Since in San Francisco Bay Area iit will be really expensive buy the REI probably. Should I do the analysis of long distance REI as well considering I am new in REI.

    1Reply
  • Harshil Patel
    OP
    Phoenix, TX · Member since 2019 · 20 posts · 3 votes
    7y

    @Adam Mayberry : Thanks. Keep me  posted.

    0Reply
  • Sherwin Gonzales
    Rental Property Investor · San Francisco, CA · Member since 2015 · 236 posts · 156 votes
    7y

    @Harshil Patel congrats on starting your journey into the world of real estate investing! See below to my responses to your questions.

    1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

    Sites like Zillow and Redfin are great to get quick comps for a property but you can also leverage an agent's skills and tools to run comps for you. That's what I usually do and I also sometimes check craigslist or rentometer to get rental comps.

    2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

    It's really up to you and what your goals are. Do you want to be more passive or more active in the deal? If passive, then long distance real estate investment might be a good choice where have an operator or sponsor do all the leg work on a deal. If you want to be more active, then maybe a local investment might be best to get your feet wet and gain hands on experience in a deal. I personally wanted to be more active in my deals in which I find the deal and work with brokers and lenders during escrow, and once closed, I'm the one managing the property and any rehab work if necessary. So figure out what works with your current lifestyle now.

    3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

    What type of property peaks your interest and which will help you achieve your goals. You say you are more interested in rental property investment, so that applies to all the property types you mention. Find out what you feel comfortable to deal with now. Do you want to deal with a single tenant in a SFH or multiple tenants in a MF property? Do you want to deal with a small property to start or jump to a big one right away? If you're uncomfortable, you can always partner with someone who has experience and work with them to learn off of and mitigate your risks.

    4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

    Seller's financing is a good option. As I mentioned above, you can also partner with people to fund the deal for you while you operate the deal so that you don't have to come up with the 20% down yourself. You can research other loan programs that will allow you to put down less than 20%. Talk to lenders. Network. Talk to other investors. Network. See what others have done and keep asking yourself "HOW" can I do certain things.

    I hope this helps. Good luck on your journey!

    1Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    7y

    Hi Harshil! Welcome to BP. I'm not in computers or in the Bay Area, but I used to be an engineer and I'm in LA... close enough? :)

    1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

    In my experience, the best way to know about prices is to shop around. Shopping around will give you a feel for options and then it'll also help you to know a good deal when you see one. Just be cautious as you shop, especially if you're looking at Zillow and those, that's there's not really a good way to know the true condition of the property in order to know how it correlates to the listed price. It doesn't matter for initial shopping, but just keep it in mind.

    2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

    Depends on what your local area is. If you're somewhere like the Bay Area, that is a very expensive place to take your first risk. Way more to lose. And since there isn't cash flow there, you have to be more strategic in how and what you buy in order to profit and to me, that's an advanced skill. But if you live in Kansas City, sure, buy local. But then if you do out-of-state as a newbie, what kind of property you buy and how you buy it (teams, etc.) will be crucial because high-maintenance properties from afar are dangerous.

    3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

    Apartments usually don't pencil out because of condo fees. SFRs and MFRs can be good, but again it depends on what market you're in and what the numbers scratch out to be.

    4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

    FHA will only work if you're living there, and it's not usually all that advantageous - at least with where we are in the current RE economy - because it's likely to cancel out your cash flow, or make it negative, with PMI and higher interest. You can always keep an eye out for seller financing, partnerships, etc.

    1Reply
  • Harshil Patel
    OP
    Phoenix, TX · Member since 2019 · 20 posts · 3 votes
    7y
    Originally posted by @Sherwin Gonzales:

    @Harshil Patel congrats on starting your journey into the world of real estate investing! See below to my responses to your questions.

    1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

    Sites like Zillow and Redfin are great to get quick comps for a property but you can also leverage an agent's skills and tools to run comps for you. That's what I usually do and I also sometimes check craigslist or rentometer to get rental comps.

    2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

    It's really up to you and what your goals are. Do you want to be more passive or more active in the deal? If passive, then long distance real estate investment might be a good choice where have an operator or sponsor do all the leg work on a deal. If you want to be more active, then maybe a local investment might be best to get your feet wet and gain hands on experience in a deal. I personally wanted to be more active in my deals in which I find the deal and work with brokers and lenders during escrow, and once closed, I'm the one managing the property and any rehab work if necessary. So figure out what works with your current lifestyle now.

    3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

    What type of property peaks your interest and which will help you achieve your goals. You say you are more interested in rental property investment, so that applies to all the property types you mention. Find out what you feel comfortable to deal with now. Do you want to deal with a single tenant in a SFH or multiple tenants in a MF property? Do you want to deal with a small property to start or jump to a big one right away? If you're uncomfortable, you can always partner with someone who has experience and work with them to learn off of and mitigate your risks.

    4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

    Seller's financing is a good option. As I mentioned above, you can also partner with people to fund the deal for you while you operate the deal so that you don't have to come up with the 20% down yourself. You can research other loan programs that will allow you to put down less than 20%. Talk to lenders. Network. Talk to other investors. Network. See what others have done and keep asking yourself "HOW" can I do certain things.

    I hope this helps. Good luck on your journey!

    Thanks for the sharing.

    0Reply
  • Harshil Patel
    OP
    Phoenix, TX · Member since 2019 · 20 posts · 3 votes
    7y
    Originally posted by @Ali Boone:

    Hi Harshil! Welcome to BP. I'm not in computers or in the Bay Area, but I used to be an engineer and I'm in LA... close enough? :)

    1:) How to determine the average price for property in that particular area? ( Currently looking at websites like zillow /trulia). Are there any other ways?

    In my experience, the best way to know about prices is to shop around. Shopping around will give you a feel for options and then it'll also help you to know a good deal when you see one. Just be cautious as you shop, especially if you're looking at Zillow and those, that's there's not really a good way to know the true condition of the property in order to know how it correlates to the listed price. It doesn't matter for initial shopping, but just keep it in mind.

    2:) I have heard so many things about long distance real estate investment. For new comers we should focus on local area first as a first investment to get the knowledge?

    Depends on what your local area is. If you're somewhere like the Bay Area, that is a very expensive place to take your first risk. Way more to lose. And since there isn't cash flow there, you have to be more strategic in how and what you buy in order to profit and to me, that's an advanced skill. But if you live in Kansas City, sure, buy local. But then if you do out-of-state as a newbie, what kind of property you buy and how you buy it (teams, etc.) will be crucial because high-maintenance properties from afar are dangerous.

    3:) Which kind of options I should consider like 1-2 bedroom apartment or Single family home or multifamily home? The near future goal is , I am more interested in rental property investment.

    Apartments usually don't pencil out because of condo fees. SFRs and MFRs can be good, but again it depends on what market you're in and what the numbers scratch out to be.

    4:) what are the financial options to buy the first property. Like I am aware of bank loan or FHA loan, Any other ways which can allow me to get the loan less than 20%. :)

    FHA will only work if you're living there, and it's not usually all that advantageous - at least with where we are in the current RE economy - because it's likely to cancel out your cash flow, or make it negative, with PMI and higher interest. You can always keep an eye out for seller financing, partnerships, etc.

    Thank you so much.

    0Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    7y

    @Harshil Patel Welcome...BP is a great site for the most part, but as you mentioned, there is a "sea" of information here that will pull you in every direction possible...Think about an OKR framework to focus in on developing your strategy. There are a million ways to make money in this industry and someone to try and sell you on each one of those. 

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