Newbie Investing in Northern California?

[Darius Tan]

Hello all,

I'm a young professional with ~100k looking to invest in positive cashflow rental properties, ideally in Northern California. Currently located in the South Bay.

I've read up on some literature, and I know the basic formulas - I know what NOI, CAP, COCR, etc is, and am aware that average expenses are 45% of gross rents.

Through a casual look on redfin.com, it seems that COCR is pretty abysmal, even in lower-middle class neighborhoods (3-5%) even with 20% down. I have a couple of questions:

Should I be looking elsewhere? Ideally I'd like to be close to my properties.

Should I join REI clubs to find motivated sellers instead of looking online, where most people would look?

Is the 4.5% for a 30 year rate accurate for the mortgage I would be getting? (First time, non live in homeowner, credit of 680)

Seems dangerous to invest in Oakland, 5th highest crime rate in the US, I shouldn't touch it right?

Thanks a lot.

Darius

[Jon Holdman]

Wow lots of questions there.

You're in a tough area. Rent to prices ratios are very, making it nearly impossible to have monthly cash flow. Most buy-and-hold investors in the bay area are looking for appreciation, not cash flow.

You won't find motivated sellers at a REIA. You will find other people just like you who are looking for great deals. Its possible you'll meet some wholesalers who have deals. Whether they are good deals remains to be seen. But a REIA is a good place to make some contacts, and it would be worth checking them out.

Interest rates will be higher than 4.5% for a NOO, 30 year loan. I have one in the works with Chase at 5.5%. 680 is not a good credit score. You need to work on that. Above 750 would be ideal for getting the best rates on NOO loans.

You may have to go further afield. Sacramento, maybe?