Where should I invest in the Bay? Is Oakland an option?

[Wang Windy]

Hi biggerpockets friends,

It's my first post on the forum and I would like to get some help on starting my first investment property. I have around 250-320k cash to invest.

I live in the South Bay where houses are extremely expensive and difficult to find cash flow. However, I don't really want to invest in a property that I have to pour a lot of money into every month. 

Option 1: After researching, I found the only place that has the potential to cashflow is in the Oakland area. However, I've heard so many horror stories about the area that I am still a little hesitant to buy there.

Option 2: house hacking in San Jose, but even then I probably still gonna have some negative cash flow. Maybe a mid-term rental will provide me with better CF? Would love your insight on this.

Option 3: Out of the Bay, potentially looking into Salt Lake City, UT, Fresno, CA, or Savannah Georgia. 

I am young and I have a lot of free time. What do you think is my best strategy?

[Becca F.]

@Wang Windy

If I were you, I would lean towards Option 2 or 3. If you can house hack in San Leandro, Hayward, El Cerrito, or other parts of the Bay Area, that might be a good option. Richmond is a bit more affordable. I saw a listing for $299,000 but it needed a lot of work. I don't know much about the South Bay. 

I bought a condo in Oakland intending to live in it for a few years then rent out. It was in a great location for commuters near bus stop, easy access to 580, walk to shops and restaurants. Oakland also has high property taxes with 25 Special Assessments compared to San Francisco with 4 Special Assessments. I've also heard from other landlords it's difficult to get non-paying tenants out and they can squat for years. You also can't discriminate against rental applicants with criminal backgrounds (except sex offenders). I wound up selling it because of the high HOA fees with a badly financially managed HOA and the increasing crime in the area (building broken into 3 times).

I invest in S.F. and Indianapolis metro area. Indy is very affordable, landlord friendly and I'm cash flow positive but the appreciation is slow compared to California. The RE market is pretty stable in the Midwest and doesn't go up and down a lot compared to other markets. Property tax rates are 2.77% and 2.78% so a little high. I'm paying almost $5000 tax on a house worth $285,000. 

Have you considered Sacramento? I know a few other Bay Area investors buying in the Vegas area and Phoenix (Casa Grande). The property taxes in Nevada and Arizona are low. I'm considering those areas in the near future. You could buy several properties out of state with the amount of cash you have.