Anyone in California Bay Area starting out for the first time?

Question

Got about $10k, and in a few months gonna have $15k. But is that enough to start out in the bay area? Housing is high over in this market, but anything is possible. Looking to house hack! Any advice?

Account Closed · Answer

@Nico Murillo I started with a $12,000 down payment on an FHA 4plex in Oakland, back in 2014. That has now snowballed into $11M of Bay Area real estate.

House hacking is by far your best chance at getting starting here. Just start with one. Equity pay down, rent growth, and appreciation will help you continue to buy more.

Blake Edwards · Answer

@Nico Murillo - The sticker shock of the Bay Area drives a lot of people away.  Meaningful action and due diligence is key to making something work for you in this market where the sky is the limit.  $15k doesn't seem like a lot of money on paper, but there are ways to make it work for you and your goals.  Being open minded and preserverance are two pieces to the puzzle that are often overlooked.

Mark Pedroza · Answer

@Nico Murillo

Here's a link to local Bay Area meetup's.

https://www.meetup.com/topics/...

Numerous investor's in the Bay Area and maybe someone will assist you on your venture..

Chris Mason · Answer

Saj got me in the thread by mentioning Oakland.

Here's a super rough draft beta testing chart intended for Realtors. It factors in Oakland and Berkeley's steep transfer tax, since that is a "wtf?!" time and time again for FTHB. Some towns have city transfer taxes that are half of Oakland, just "split the difference" for those, and for more accurate information you will want to speak with a loan originator.

It assumes no seller concessions for closing costs, no lender credit, no down payment assistance. The blank spots are "this doesn't exist with this little down, don't bother."

What's worth noting here is that for your first $10k, the bulk of that is just flat "pound of flesh" closing costs - title, escrow, appraisal, property taxes collected at closing. After that, closing costs start to become more trivial, and you're leveraging at a ratio of about 20:1 w/ FHA after factoring in the "not fixed" closing costs that scale up a tad with purchase price.

Like I mentioned above, this is rough draft, not ultra accurate, but it gives a sense of "if I save another $5k, what does that get me?" and in that regard it's sufficiently accurate. And if it means I get fewer phone calls from people with $2k saved up who want to buy $700,000 homes, that's ok with me. :P

Matt K. · Answer

I'd say the real question is how fast can you aquire more capital. If you can't increase your savings then it's going to be hard to continue to scale up, no matter how much you reduce your living expenses.

You could rent hack and get an out of state property and probably get your housing expense pretty low...but you won't get bay area equity.

If you did get a bay area property you'd probably need considerable equity to tap into to snowball it into more properties...and that's going to take time.

If you can find a way to increase your cashflow incoming then you'd be able to accelerate your investing... But 10-15k doesn't go far in terms of a house. Plus it's never a good idea to take your reserve funds down to zero as that leaves no room for repairs/vacancy or upgrades.

Henry Paul Trinidad · Answer

Hey Nico! Good to see someone who's starting up as well.  We both need to join more groups and discussions then! What I'm trying to pursue right now is getting a Lease-to-own property and probably start from there.  I chose this cause I want the property to  be mine in the long run.  Found my property at the Zumbly website! Check them out if you have time.  Zillow and Realtors is an option also.  Goodluck on your venture man!

Nico Murillo · Answer

i appreciate everyone chiming in for my question this was a huge help!

Anyone in California Bay Area starting out for the first time?

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