New real estate investor needs advice

[Risa Robertson]

Hi everyone,
I've been on here awhile, learning, listening, and reading as much as I can about real estate investment and man... is it ever addictive! Now, finally I'm taking the leap to reach out and ask your thoughts.

Some background:
I have a steady, professional career in San Jose, CA and around 60K of cash. The market here is not in my budget, but I love the bay area and would like to settle down here. I have a rent-controlled apt at a decent rate here and am happy to stay put for awhile while learning about real estate.

At present, with my credit score and available cash, I qualify for a 300K loan, which doesn't buy anything in this area. So I've begun looking at out-of-state investment options to get started. The price range and criteria I've set is becoming clearer, but I haven't settled on it yet.

Another option is to try to get into a multifamily home in Oakland, with tenants already in place. Those homes run 400-600K+. The numbers aren't exactly favorable, but I am already paying $900 a month rent, so it seems a decent option. I've read that, if tenants are in place (with financials to verify), banks will increase the amount an owner-occupant can borrow. My mortgage guy says that is inaccurate. Is anyone familiar with this?

As investors, what would you do?
Stay in the rental, invest in some out of state properties and build credit?
Or try to move into a multifamily investment in Oakland? Does anyone else know about multifamily FHA loans and how to qualify for more?

Thanks so much for your input as my head has been swimming with these thoughts for MONTHS. Your expert opinions are SO appreciated.

Have a lovely day,
Risa Robertson
Real Estate Investor-in-waiting

[Manch Hon]

Bay Area is a big place. People sometimes forget how big and diverse Bay Area is. 300K can buy you a very good house in Contra Costa County for example. People usually have to sacrifice for their first house. Maybe commute is longer. Maybe the area is not as nice. Maybe schools suck a little. Whatever it is, 300K is a workable amount in Bay Area. Don't let people tell you otherwise.

It seems you just assume 20% down payment? Not so. There are many programs, government or privately funded, that can let you buy with less down. FHA is a great example. I know you have to pay mortgage insurance. But if that is all that's between you and your first house? Heck with it.