First Time Buying in CA and The Multi Family Property

[Muhammad Akhtar S.]

Hi BP community,

Some background: I’m a software engineer based in California. I’ve been investing in single-family rentals in the Dallas–Fort Worth area, I own two properties and both are fully paid off. Overall, I’ve had a good experience so far and I’d like to expand my real estate portfolio. I prefer turnkey properties, plan to hold them long-term, and rent them out.

Current Deal I’m Evaluating:

• Multifamily property (4 units) in a great school district in CA.

• Purchase price: $2.5M.

• Gross rent: ~$11.5K/month.

• I plan to live in one unit and rent the other three.

• Financing: 30% down, 5.5% rate for 7 year ARM from my bank.

Questions I’d love your input on:

1. Does this deal make sense from a numbers perspective (given CA’s market and long-term appreciation potential)?

2. How would you evaluate this property versus continuing to invest out-of-state (like Texas) where prices are lower and cash flow tends to be stronger?

3. What risks am I not considering if I move part of my portfolio into a high-cost market like California? Anything specific to consider when buying Multi Family property?

Thank you!

[Sean O'Keefe]

Following - I'm based in California