[Kind of]Starting Out: Need Advice and Self Introduction

[Harry Zhou]

Hi BP family,

I am a software engineer from SF Bay Area. Working at one of the top companies in the world, I love my job, earn a very good salary and have no plan to quit.

My buddy (also software eng) and I have quite a bit of cash and will like to buy and hold a few properties with equity and good cash flow.

I've been in touch with quite a few members on the BP and yet to find any property with good rental income and equity. Some prices offered are even higher than the MLS. Granted I will be out of state and am willing to pay a little bit of premium for turnkey, but the price and/or income ratio are just not making sense.

Are there good suggestions for equity and cash flow? Or should I hold my cash and wait for the next collapse. Please advise. Any input is welcome.

[Jay Y.]

@Harry Zhou Well, to do well out of state (in general), will require you to build a sound team out there and you'll need to accumulate a good number of units... otherwise, why bother?

From your profile, I can tell you're very ambitious (20 properties in 5 years) and from what you already said above, you are plenty cash strong.

The Bay Area is usually not an option for those with a capital problem, but that doesn't apply to you. There's no barrier to entry you have to overcome, so why not just invest in your own backyard (doesn't have to be right this instant, but markets are cyclical so there will always be opportunities).

Cash flow may not be as readily apparent on Day 1, but there's almost nothing capital can't fix! Your capital will go a long ways here and help you win/renovate value add opportunities (forced appreciation). Buy a junker, fix it up, and raise rents to make the cash flow "numbers" work...

DRIP cash flow out of state can work, sure, but it won't build wealth like Bay Area appreciation; both in terms of property value and rent... Within a few years, your cash flow locally will easily trump what you're getting out of state as well since rents are mostly STATIC in turnkey markets.

Unless you can work the grounds out there like a TRUE local, you will be paying a premium every step of the way (acquisition, rehab, PM, etc)...

I guess what I'm saying is don't take for granted what you've got going for you in your own backyard. Bay Area real estate has made a countless number of people very successful and wealthy; it can probably do the same for you.