I am a RE newbie from the San Francisco bay area. Recently found BP online and have fallen in love with the podcast~! (Great job, Brendon and Josh!)
We got our first primary home in 2012 (good timing) but latter realized it’s not a good investment buy. (One of the best school district in the east bay but with comparatively low rental return and negative cash flow...ouch..)
I’ve heard a lot of successful stories that meet 2% rule and have positive cash flow with less than 20% down payment. However, I don’t quite see those deals in my neighborhood near Fremont/Union City. Condo/townhouses that produce $2000 rent/month will easily cost $400-500K and a single family house of $3000 monthly rent will be around $700K. I am interested in knowing what the investors’ perspective on a market like this? Given the strong momentum of housing demand in the bay area, is it still an attractive market to invest? How would you advice a newbie to start her RE investing (who can only afford $400K~ property) in the hot market like this?
Look forward to all your perspectives!
Welcome Greta! Cash flowing properties in the bay area are nearly impossible to come buy unless you bought at the bottom of the market or you're using one of your units as a meth lab.
I live over in SJ and I travel up to Sacramento to look for cash flowing duplexes.
IMO: Condos are not worth the hassle of dealing with HOA politics and dues.
Welcome. Time to build the foundation below.
Check out the Start Here page http://www.biggerpockets.com/starthere
Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.
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Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.
Consider checking out HUD homes for small multi's owner occupied gets first crack.
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over
The SF market is a beast of it's own, even though I do business in South Bay, it's still nothing like the SF market.
Your success will largely correlate with your education... would recommend start going to meet ups (meetup.com), start having conversations with people who are heavily involved in the industry, @J. Martin can probably point you to a few people in the SF area or at least give you a good into into buy/hold.
I primarily flip so my experience in buy/hold is very limited.
@Jordan Thibodeau , thanks for sharing your experiences! Yeah...I found HOA very time-consuming to deal with as well.
Account Closed , thank you for all the great info! I've finished the Ultimate Beginners' guide and working on Real Estate Rewind. Very informative!
@Brandon Lee , thanks for the tips! Do you have any group in meetup.com that you would recommend? I saw there were a couple BP meetup held in SF bay area a while ago and look forward to joining one in the future.
@Greta Tseng , you came to the right place for some awesome people and good advice! You are in the never-ending dilemma of South Bay investors. Hard to find cash flow with high prices. First of all, forget the 2% rule. This is a whole different market in other states. You will never find this in the Bay, and probably not even in Central Valley. You remind me I need to write an article about Bay Area vs. Bigger Pockets ratios..
But @Jordan Thibodeau is only looking at a particular part of the market I think, especially in the South Bay. I'm in contract right now on a deal in Oakland that I expect to come in at about 7X GRM ARV. and 10+% CF before principal paydown, in addition to any appreciation. I only have to use the storage area as a meth lab to make money Jordan!!! Just kidding. It looks like it will cash flow like crazy with some hard work in the first 1-2 months. And about $40-80K in built-in equity. No meth labs. Just govt-guaranteed income from Sec 8 tenants. Higher maintenance, but more than compensated for..
I hold a monthly meetup in Oakland, and @Johnson H. will be holding monthly meetups in SF in the future. Please email me or PM me your email, so I can notify you about the next meetup. [email protected]
I'm also organizing a big RE investor summit towards the end of this year in the Bay. Please post here if you're interested!
@J. Martin : What a great relief to know that 2% rule is not applicable to the bay area. How about positive cash flow and 50% rule? It seems to me most of the bay area RE opportunities are speculating buy on future appreciation since the cash flow are mostly negative. I will be looking forward to your new article about the bay area dilemma!
And Yes I would love to join the meetup and summit!
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