Trying to aquire first property in Northern California

[Adam Kistler]

Hi BP,

My name is Adam and this is my first post on BP. I am a homeowner in Southern California and I am trying to acquire my first rental property (buy and hold) in Sacramento, CA (born and raised). I am wanting to know suggestions on first, running numbers to ensure a sound investment. As you all know California is not cheap. Currently looking at duplexes and none of them meet the % rules but still produce good cash flow. For example, I have my eyes set on a beautiful duplex in a good neighborhood, asking price is $445k. With 20% down mortgage is approximately 2100-2200 with taxes/insurance. Rental income combined with both units is $3200. This is $1000 positive cash flow correct?  Even though it doesn't follow some of these rules and %'s with that much income over the mortgage does that not seem sound? Any suggestions here? 

Second,

My question regarding 20% down payment is are there other ways you would suggest getting the capital needed if personal cash was limited/ and or tied up? With properties in California, they require a big chunk of change. What would be some good suggestions. I have heard of hard money loans but do not know fully how they work. 

Thank you in advance. Looking forward to starting this new journey!

[Jon Catterson]

Hey Adam,

I'll try to help if I can. This is your first post on BP, so I'm guessing you still have some of your five free calculator uses left. I would use the rental property calculator on your property. If you don't know how to do that, I would sign up for a webinar held every Wednesday. If you can't make the time, you can watch it for a few days afterward. In every webinar, they teach you how to use the calculator. Spoiler: you probably wouldn't get $1,000 cashflow on that property at least if you're accounting for necessary expenses, vacancy, and property management.

I can't help you much with the down payment question. I do believe hard money is mainly used for fix and flip or BRRRR projects. I don't think it's used for a purchase of a turn key that you immediately set to renting. You'd have to pay the hard money lender back, right? You want to get the traditional financing, not the high hard money interest rate. So it wouldn't seem to work for turnkey, but I could be wrong about that.

Welcome to BP and I hope your investing journey goes well.