First investment property and househack

[Armin Rostami]

Hello everyone, I wanted to come on here and introduce myself as a new member of the BP community and thank you all for all the fantastic resources and information you put out here!

I am getting started on investing in real estate and buying my first property and would love to hear everyone's advice that has been through this journey themselves. 

I am graduating college and moving to the bay area to start my full-time job this summer and will be there for at least 2 years for sure before I start thinking about moving. My goal was to purchase my first househack whether in a Multi family and rent out the unit or single-family and rent by the room. I know how crazy the housing market is in the bay and how high the prices are and it will be almost impossible to cash flow unless I put down a lot of money. But my goal was to find a good deal that I am able to at least break even and live rent-free while building up equity. 

Now my question to all the investors in San Francisco and everywhere else is that with how the market is up there, would it still be wise for me to look for deals in the bay, and am I able to find good deals to house hack and get the first real experience as a landlord? or will it be better to look for out-of-state markets with way more reasonable prices and cash flow opportunities?

Thank you again for all the great info here! I would also love to have a chance to connect and learn from any experienced investors that have done this in the past. So please don't hesitate to message me and I am happy to contribute in any way I can as well!

[Nathan Gesner]

Quote from @Armin Rostami:

Welcome to the BiggerPockets forums!

The Bay area is expensive, and California is also the most regulated, litigious corner of the world. I live in small-town Wyoming and have a dozen investors that pulled their money from California and moved it here because they couldn't handle the crazy. Take that into consideration.

Even in an expensive market, you may find something that makes sense via a house hack. If not, then I recommend you rent as cheaply as possible, earn a strong income while keeping expenses low, save up, and find another market to invest in. Here's my generic advise. Be sure to read "Set For Life" or "The House Hacking Strategy" to get started.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.