Renting in Silicon Valley

[Shevon Coorey]

Hello All, 

I have been reading books and listening to BP podcasts for a while and would love to start out in my RE investing world. However, I've been stuck because of my current situation. I live in the Silicon Valley, CA (highly expensive housing market) and I'm renting a 1 bedroom apartment with my wife. I'm stuck in between buying our first primary home, which might take all of my current savings for a down payment, or go for a RE investment (most likely a buy and hold) out of state while renting. I need some honest opinions/advise. Thank you! 

[Michael Strachan]

I agree with @Frank Wong about the incredible opportunities that exist when it comes to out of state investing. However, I would also challenge you to think about how you can own your primary residence in a way that doesn't completely end your dream to own rental properties. If you haven't read up on house hacking, I strongly encourage you to do so. While our market is definitely challenging to enter, you need to take in to account the amount you are currently spending on rent (paying someone else's mortgage for them). If you can purchase a duplex for example and live in one unit while renting the other and generate enough income to get the monthly mortgage payment out of pocket to be less than or equal to the rent you're currently paying, that would be a huge win. That way every payment goes toward your equity in your own home rather than someone else's. Of course there are other factors to take in to account as you'll be responsible for maintenance, property taxes, vacancy, etc but the point remains. The high prices in our market are a barrier to entry but that also means that over a long period of time you could find yourself sitting on millions of dollars in equity for simply paying the same amount you would have as a renter. Good luck and happy investing!