Buying my First Property (Advice, please)

[Justin Louie]

Hi BP!

I wanted to ask a question of anyone who might be able to give me a little insight and/or direction. Thanks in advance! Here's the situation:

I've been learning a lot through BP and books about REI, however my experience in real estate doesn't go much beyond that. I would like to make a purchase to begin my real estate career but I'm not sure what I should do.

I am in my mid to late twenties and recently graduated. I have a large student loan debt that kills my debt-to-income ratio making conventional loans difficult to get. I live in the Bay Area (peninsula) of California (San Francisco and the surrounding area if you're not familiar). The issue out here is that prices for homes are extremely steep, making cash flow difficult to obtain. I am also planning to be engaged soon, meaning I will need a primary residence. My job requires that I stay in the relatively immediate vicinity of San Francisco. I potentially could acquire a seller-financed deal for a 2/1 SFH from an extended family member (property is awaiting an inspection so that I can make an educated offer) that could be used as an investment property, however it is a little far to use as a personal residence. I am trying to make sure that the deal is still good. Even though seller-financing is a great way to get good terms, it still may not be a good deal.

My thoughts:

• Seller-Financing may be a way around the Debt-to-Income Ratio and the competitive market
• I can try to find some private/portfolio lenders. But with little experience this will be difficult.
• Ideally, house-hacking is the way to go to blend investment with a primary residence
• Cash flow will be harder to obtain
• Even if I get the 2/1 SFH for good terms, it would deplete my liquid cash and put me further off from getting a multifamily (likely better cash flow)
• As an alternative, I would be able to find better cash flowing property out of state or much further away in CA. I would have to rent for personal residence, though.

My questions:

• Is it better to do out of state or more long distance investing and gain some cash flow while still renting?
• Should I not get the SFH since it may not provide much cash flow and maybe defer me from my goal to get a multifamily.
• Is there anything I may be missing?
• Any other ideas

I really appreciate anyone's advice and/or thoughts. Thanks again BP.