Multi-Family Units in East Bay

[DJ Cespedes]

Hey BP Fam,

So I live in Oakland and have been on the hunt for an owner occupied multi family unit in Oakland and San Leandro with a budget of around 750k for about a month. All my offers have been beat out. I know part of the reason is that my offers have been with FHA 3.5 percent down, but I have also been beat out by cash offers or high percentages of cash down. Also, given that I am looking for a multifamily unit, all of my options are either out of my budget, or in a less desirable area (where I have also bid and lost).

I have now started looking at Richmond, CA which is also up and coming and currently provides more options for what I can afford. The thing is I dont know Richmond well and not sure what areas I should consider/not consider.

That said, any advice that anyone can share with me regarding where to look to buy in the east bay where I can get a good return on my investment in terms of appreciation and positive cashflow? Thanks!

DJ

[Kell Caro]

@Donald Cespedes

Hey DJ,

About where you at in Oakland? I was in a similar position and in fact had an FHA offer accepted only to have the financing fall out due to the Self-Sufficiency Test that is required.

FHA tends to have high standards for what they deem as habitable, and in any market with competition, sellers often set the FHA offer aside simply due to the headache of red flags the housing administration could possibly throw out during escrow. FHA multifamily is highly touted on BP but seems more effective in markets with higher days on market than the Bay Area.

The only way I've found to get around these constraints; the uncompetitive offer, the FHA standard, etc, while maintaining the low down payment for owner occupying multifamily is Home Possible with Freddie Mac.

Home Possible puts you directly into a conventional loan, instead of being stuck in your FHA. And when they came through to approve the multifamily I bought last year, even with all the delayed maintenance the property had, they didn't red flag us on a single thing.

$750k works, and is about the limit (w/o a larger % down) because the loan limit is $701,250. There are income limits, but these limits don’t apply to many areas in Oakland so you’re probably fine.

Other than that, a month isn't very long... Keep an eye on it and decent places end up popping up.

Anyways, you can find the matrix here

http://www.freddiemac.com/singlefamily/factsheets/...

And the property/income map here

http://www.freddiemac.com/homepossible/eligibility...

I’m a big proponent of continuing to invest in the Bay Area and of course in Oakland the house hack is a great way to go, so right on.