Getting started in the San Francisco Bay Area

[Charlie Parce]

Hello BP Community,

I'm just getting started in Real Estate investing, and am looking for a little guidance. I currently live and work full time in the SF Bay Area. I'm interested in a BRRRR multi-property strategy, but am unsure if that is a reality given the high prices in my area.

A few questions I have are:

• How have other new investors living in the area gotten their start?
• Should I look to invest out of state, or in different markets as a start?
• What resources would be most beneficial in jump-starting my investing, and furthering my learning?

Thanks all, I'm really excited that I've found this forum, and can't wait to get started!

Cheers!

[Brent Tarnow]

Hi Charlie,

Welcome to BP and the real estate investing community in the Bay.  Those are good questions you ask, and I'll tackle just one of them -- how do new investors get their start?

Like you, I live in the Bay Area (North Oakland) and I wanted to make BRRR work here somehow. I thought it might be too expensive so I started looking around parts of California I was less familiar with -- Stockton, Modesto, Sacramento, etc. And after spinning my wheels for a few weeks, I came to the conclusion that I was better off becoming an real expert in one place that I knew really well and wanted to actually live in. So I got as deep into the Oakland market as I could -- watched it every day, went to all sorts of open houses (including buildings I knew I wasn't interested in). I also studied FHA loans and 203Ks to know what my options would be to NOT put down 20%. And you know what? There are plenty of deals here in the East Bay that will cash flow from Day 1 and provide interesting value-add or forced appreciation opportunities. You just have to be diligent and patient.

Within 3-4 months, we found our first duplex off-market, negotiated a good price, and made an FHA purchase with 3.5% down. Nine months later, we refinanced out of our FHA (and pesky mortgage insurance) and moved on to our next building -- a nearby 4-plex. We also bought that through FHA. All units in both buildings were vacant. And in the meantime, we took out a HELOC on the first duplex so we have a good chunk of change to go after the next building. I also got my real estate license in California (I had one in IL) so I could handle my own transactions, and others if possible.

I don't write this a pointless "success" story.  (And who knows how these investments will go in the future?)  I write this because it's annoying to hear people say that it's impossible to invest in the Bay Area.  You can.  You don't have to go out of state or out of your local market. And you can do it with 3.5% down, and cash flow, and have a pretty good cash-on-cash return.  Will it be as great as other markets?  Maybe not.  Is there a slightly higher barrier to entry?  Sure.  But the Bay Area is a unique place where there will always be demand, and that makes me more comfortable as a landlord and investor.

I'd be happy to grab a coffee or beer and hear more about what you're trying to do. I've found it really fulfilling to invest in the place I want to live and be part of the community for the foreseeable future.  I'd love to help you in any way I can.

Brent