Figuring out which route to go: Flip houses or Rental Properties

[Justin Christian Macabenta]

Hi BP!

My name is Justin and I am new to the forums. Been eager to post and also get started with investing but wanted anyone's thoughts/suggestions/Pros&Cons on which route to go being brand new:

Is it better to buy & flip in the SF Bay Area or invest in rental properties out of state?

After reading a few of the REI books, listening back on the podcasts, and attending a few REI meet ups, one of the main things that always stood out to me was when people would mention to "pick one niche and master it".

Personally, I like hands-on work and am very interested in construction which is why feel I would rather enjoy the process of a buy & flip but with the costs of properties in the Bay Area, I feel like it is unattainable. If a deal is good, I'm open to partnering or seeking private lending but am also considering hard money. On the other hand, there is the aspect obtaining passive income through investing in rental properties but after reading around the forums about how that can be difficult in the Bay Area, it would work better to invest out of state.

Sorry if this seems all over the place but I am pretty torn on which route to go. I know there are risks either way and different financial benefits but am curious to know all your thoughts and if you've experienced this fork in the road.

Thanks again!

[Arlen Chou]

@Justin Christian Macabenta as @Houston Garcia has pointed out, there are deal all along the East Bay.  What you have to better define is your idea of "cash flow".  Do you mean that the property will give you money every month with you living in 1 unit for free?  If that is the case than you probably are SOL.  However, if you are looking at properties knowing that you will be "paying rent" for the space you will occupy than there are many properties that make sense.  It is all about perspective.

I helped a friend of mine put in an offer on a triplex in Hayward last night. He will live in the smallest unit and continue to rent out the others. The "rent" he will be paying will be higher than his current rent.  However, he will go from renting a room with 3 other guys to having a 1 bed/bath all to himself. Some people would say he is loosing money because his out of pocket expense have risen.  Others would say that he is "paying" more rent for a more valuable rental. Either way, he is getting debt pay down on the property through the other tenants. He is locking down his property taxes. Also he has the option to move into one of the larger units if he gets married.

If you are ok with living in the hood, deep East Oakland is also an option. My good friend @Account Closed is killing it down there with both appreciation and positive cash flow.