Rental properties in the Bay Area

[Tamera McNeil]

Hello,

I am Tamera McNeil and looking into buying rental properties and investing. I would greatly appreciate feedback about buying real estate in the Bay Area. Thank you and excited to be on the BiggerPockets platform. 

[Bradley Buxton]

@Tamera McNeil

The bay area can be a good place to invest. It's more capital intensive than most other markets and the pay off can be bigger. For a long term buy and hold or depending or your strategy there is still money to be made. Downside is that there are many restrictions and laws to navigate.  Do your research and visit any area at different times of the day to get a feel for the parking situation, noise levels, and traffic. 

[Tamera McNeil]

Thank you so much @Bradley Buxton. 

[Becca F.]

@Tamera McNeil

I invest in the Bay Area. From talking to other investors here, I would lean towards the East Bay suburbs. San Francisco, Berkeley and Oakland have the most pro-tenant laws. If you get a higher income tenant (e.g engineer, tech worker, doctor, RN, etc) you may be able mitigate some risk. I wouldn't do any type of Section 8 or tenants with questionable income, if it were me. My tenants are higher income. 

San Jose and Santa Clara is appreciating a lot but it's very expensive to buy as in $1.5 million+. The Peninsula is more expensive than the East Bay (I'm highly biased towards the East Bay). I'm not a fan of buying anywhere near SFO with airplanes flying over you (or the tenant). If you find a deal on the Peninsula it's either distressed and needs a ton of renovation or not a good area. I know some people who are doing AirBnbs to get better cash flow - it's negative cash on long term rentals unless you're doing 50% down or paying all cash but most people are looking at California more for appreciation. Any community with an HOA will most likely prohibit any short term rentals.

 Feel free to DM me if you have questions or would like to talk further. 

[Mike Paolucci]

Quote from @Tamera McNeil:

Hello,

I am Tamera McNeil and looking into buying rental properties and investing. I would greatly appreciate feedback about buying real estate in the Bay Area. Thank you and excited to be on the BiggerPockets platform. 

If you can house hack, do it. It's probably the best and easiest way to get started investing in my opinion. The biggest issue I found when I started off while living in San Francisco is going to be the high entry points for investment properties + the landlord laws not being that friendly. 

For me, it made more sense to invest out of state in a landlord friendly state. It's not easy though and you'll need to really do your due diligence if you decide to go that route. I'd recommend taking your time when choosing a market and look at all of the economic drivers that are helping the communities expand. Not only out of state, but in-state as well. Don't just randomly pick a market. 

Couple buddies of mine from the Bay Area ended up investing near Sacramento (better price points than the bay). 

Happy to answer any questions you may have. 

[Sean O'Keefe]

Following - I'm also based in the Bay Area

[Tamera McNeil]

@Becca F.

I appreciate your feedback and I am leaning more toward East Bay. Thank you for sharing that information with me. 

[Tamera McNeil]

@Mike Paolucci

I have considered out-of-state markets, including Tennessee, Texas, and Arizona. I also agree with you regarding the Sacramento area. 

Thank you for sharing, I appreciate it. 

[Becca F.]

Quote from @Tamera McNeil:

@Mike Paolucci

I have considered out-of-state markets, including Tennessee, Texas, and Arizona. I also agree with you regarding the Sacramento area. 

Thank you for sharing, I appreciate it. 

 I agree with the Sacramento area. I kind of looked in that area, haven't driven up there to look around. 

I also considered Nashville, Tennessee and Arizona. I visited Franklin and Brentwood, Tennessee more than 10 years ago - really nice suburbs but expensive now.  I know several California investors buying in Texas, specifically Dallas area, but they are doing a syndication to buy an apartment complex. If they bought a single family or 2 to 4 unit in Texas it was at least 5 years ago.  Even though property taxes are high in Texas, I guess they made the numbers work. 

I have a different goal from new investors. I'm not trying to scale or acquire "more doors".  I'm looking at the asset and RE as a store of wealth (as part of my overall investment portfolio) to pass onto my kids. I'm looking at Nevada, either Reno/Lake Tahoe or Las Vegas. Nevada has low property tax rates (as well as Arizona). I would rent out the Nevada property then later on, leave the Bay Area and move into the Nevada home to semi-retire (work on a part-time/contract basis) - there's no state income tax whereas California is taxing all my income, including rental income from my Indianapolis properties. I'm still working out the numbers and pros and cons. 

[Raju Balakrishnan]

Bay area is for buy and holds. If you have other income to support and has capital, you will get rich slowly with appreciation. I like Stockton, as the prices are low but appreciation is bad. But it is a harder market than bay area as finding good tenants and right areas to invest for your criteria takes more work. 

[Alfath Ahmed]

Quote from @Tamera McNeil:

Hello,

I am Tamera McNeil and looking into buying rental properties and investing. I would greatly appreciate feedback about buying real estate in the Bay Area. Thank you and excited to be on the BiggerPockets platform. 

 If you are buying in the bay area, you need to be comfortable with the property only appreciating unless you are open to putting down 50-70% down on the property. 

This is a major reasons bay area investors look in the midwest in faster growing cities.