Starting out in the bay area questions/concerns

[Michael Rojas]

hello everyone! I am just getting started in real estate investing, and I am a young man  born and raised in the bay area. I understand the bay area is one of the most expensive markets in the U.S. but i would love to stay local. I have very low capital and want to know everything i need to know about bay area real estate investing. Currently my short term goal is to gain passive income, still figuring out my long term goal as i gain more knowledge and experience in the business.

I really like the idea of getting starting in a duplex, triplex, or quadplex.

Any info will be helpful! Thanks!

[Ryan Landis]

@Michael Rojas FHA loans are used for owner occupants so before you head out to Sacramento and try the close to 90 mile commute each way, make sure that is something you really want to do (and the cash flow pays for the gas).

All jokes aside, the East Bay is much more favorable for someone looking to do an FHA loan. The Peninsula and South Bay do have opportunities that arise where an FHA loan can be used, but all things considered, there is not that much inventory over here (2-4 units) priced under FHA loan limits. And, when they are priced below FHA loan limits, there tends to be a lot of competition for them. There are a number down in San Jose, but you likely will not be cashflowing the ones that are currently on the market with a FHA 3.5% down loan.

For someone looking at purchasing with not too much capital, the monthly rent as a percentage of the purchase price is a good quick gauge. If you are getting 0.25% a month, that is probably not something you are going to get excited over. In contrast, if you find something in Oakland or Tracy that is getting 1.5%, then you can start to look in deeper and decide if the location/etc. is an area you want to invest in. This should be used only as a gauge, and not drive your decision one way or another.