New investor Cali / SF Bay Area w/ $130k Multifamilies Sac, Fres

[Kevin Given]

Hey All,

Here's the breakdown:

-I've been wanting to invest in multifamilies for 5+ years

-I didn't think I had enough money until this year

-I'm ready to invest, but people are telling me the Bay Area is at the top of the market and the only stuff on sale right now is what people want to get rid of before the next recession. I'm new and afraid to buy someone else's problem property by mistake

-Trying to figure out: Do I invest in a small 2-4 plex now, maybe in Sacramento and save the rest of my money or do I think about investing trying to build a team (PM, GC, Broker, etc) in Bakers Field, or even out of state.  Alternatively, should I just wait until 2020 when interest rates are higher and prices are lower to invest?  I feel like there are so many options that I'm paralyzed and not sure what to do.

-I know cashflow is king, but it's really hard to find stuff that cashflows around me right now. This is especially true since I have no experience, and I'm afraid to invest more than an hour or 2 away from my house... I listened to some of the pod casts on investing out of state, and it sounds like a great opportunity, but quite honestly the prospect sounds daunting

Your time and consideration is much appreciated all,

Kevin

[Wes Blackwell]

@Kevin Given

I work with first time investors in your situation all the time. You're in the Bay Area, have great income and enough money for a down payment, but none of the deals locally make sense because the numbers simply don't work on paper.

You're a first time investor, so you aren't willing to take too big of a risk... that often rules out investing too far outside of state. You'd much rather prefer to invest somewhere nearby... somewhere you could always drive to the property quickly if something went wrong.

Does that all sounds about right? LOL if so then know you are not alone.

My general recommendation for beginner investors is to invest somewhere that's no more than 2 hours away from you, whether driving or flying. That way you can make a quick trip to the property whenever needed and spend no more than 4-5 hours traveling back and forth on a single day.

For Bay Area Investors, that basically leaves you with Sacramento and Stockton for driving distance (there are other options, but that's where you'll generally see the best returns) and either Las Vegas or Phoenix Metro for flying (less than 2 hours).

Wherever you decide to invest, here's the two main things you're going to need:

1) Knowledge of the Market: Just google "(name of area) real estate" and read every single news article on it from the last 3 years. It'll REALLY help bring you up to speed. A local expert can help you shortcut this process, but ultimately you should rely on your own knowledge and not just your agent's (in case you choose the wrong agent who only sounds like they know what they're talking about.

2) An agent who understands your goals: To be frank, most agents just help your everyday home buyer and seller. They're not used to working with investors and talking ROI, Cap Rates, Cash Flow, Cash on Cash Return or any other metric that might mean something to you. You need an agent who knows what they're doing and won't try to sell you crap just because it's more expensive or shows you deals where the numbers don't even work (because they should know how to calculate that once they know your down payment and interest rate -- if they can't get a new agent.)

Hope this helps. Feel free to reach out if you have any more specific questions about the Sacramento market or just buying your first investment property in general and I'll try to get you pointed in the right direction.