Bar area investors - How much do I need to get started ?

[Vivan Bhalla]

Hi,

I am a newbie and want to get started with real estate investing. I live in San Francisco and my goal is to buy properties that can slowly start replacing my income. However, I am getting a difficult time analyzing how much would I need to start in this market? I am open to house hacking and also looking to make this property as my primary home and get FHA loan.

My price range is 700-800K initially. I want to know whether I should increase my budget or look out of state?

[Will Fraser]

Hello brother!  If you house-hacked you might find something like this:  

You purchase a duplex for $600,000 using a 3% down conventional loan or similar product and then you would be bringing approximately $36k to closing and your monthly payments to the bank, taxes, and insurance would be around $5,100 each month.  You rent out the other side of your duplex for $2,750 (obviously you want to rent it for as much as the market will allow) and then you rent out the spare 2 rooms in your side for $900/month each.  So your tenants are paying $2,750+900+900 = $4,550 each month and you owe $5,100, so your cost of living is reduced to $550 + utilities each month.  

When you move out you can rent out the room you were living in for $900 and then you'll cash flow a bit and you will be in the magical situation of slowly gaining more ownership of that property each month over the next 15-30 years paid for kindly by your tenants.

Then with your next $36k, you start buying homes in Oklahoma City or a similar market where you are able to get a good single family for $150k or duplex for $180-200k and then you keep scaling that, always being sure to keep your eye open in your own area for deals that could be BRRRR options.

Yeh meri baat hai.  Accha hai?