How to get started with multi unit investment in Bay Area

Question

Hello BP Family. Though I'm not new to real estate investing in Bay Area (I own 2 SFH in South Bay), however I am new to commercial investing. I want to learn how to spot and analyzes multi unit family rentals, how to search for good property managers and learn more about commercial loans. Where do you recommend I start?

If I want to start investing in multi unit family in south bay, what's the minimum cash I require?

Note: I don't have time to flip or add value to the property. I would prefer buy and hold strategy.

Blake Edwards · Answer

@Swati Patel - Congrats on looking into the MF space.  There are a lot of opportunities here in California and the "sticker shock" scares off a lot of people who throw their hands up and immediately write this market off.  Here's a couple tips we (The @David Greene Team) tell our investor clients here in California and the San Francisco Bay Area.

1.  Are you pre-approved?  I only ask because if we have seen many people do a lot of due diligence while analyzing and searching for deals and in the end were not able to get pre-approved at the appropriate price point.  This makes them sour on investing as they were emotionally attached to a property without being able to act.

2.  Why commercial and Multi Family?  I know for buy & hold, but what are your other goals?  For appreciation?  Cash flow?  Having a clear picture of what you are after can really nail down your search and your property type.

3.  Are you strictly going after multi families?  I ask because to the trained eye, you can squeeze out a surprising rental income number out of a single family home.  We often work with our clients to find a SFH which many have overlooked that has great rental potential.

4.  Multi Families are very present in the East Bay, and Oakland area.  The South Bay, San Jose area they are few and far between.  The ones that do pop up are in not spectacular areas and are usually overpriced because of lack of inventory in the area.  That is why we like to expand our search and look for properties that have great potential.

When looking, we run numbers, comps, look at pending sales, rental numbers, and analyze for our clients.  That is something a halfway decent real estate agent should be doing for all their clients.  Because of this, we have made great contacts in the area and I believe the best way to search for property managers, contractors, etc is by word of mouth.

We also hold a number of meetups in the Bay Area fairly regularly and would love for you to come out!

Hope this helps, and good luck!

Tj Hines · Answer

@Swati Patel The first thing I would do is educate myself on multifamily. There is ton of material out there including books, podcasts and multifamily bootcamps that are being offered by credible syndicators/sponsors that are active and credible in the industry. Good luck

Pradeep Tiwari · Answer

There are many options, in more traditional way, you can attend classes conducted by gurus to understand the process, people has opinions about these classes but most of the time it’s 2nd hand info.

same could be done on own but it will be super time consuming.

other option is to find someone from your network who is doing it and pay some money and learn and invest with them.

MF is a big beast and principles always look for investors- this will be expedited learning and you’ll earn too.

Even if one has lot of money (million+) to invest, better to invest in multiple properties to help with diversification.

Value add really helps to multiply money and in case of MF you can have partners manage it for you.. say you can onboard 2-3 partners with less cash contribution but commitment to manage reno and other things..

Bjorn Ahlblad · Answer

@Swati Patel welcome to BP. I lived in the Bay Area for over 30 years-moved away in 2017. I would suggest that you start with OOS developments unless of course you do not want to make any money. I had rental properties in San Mateo but that only made some sense because I had bought in 1970's. In my opinion Bay Area it is strictly a market appreciation play. You could buy a duplex in the area for perhaps 2 million but you would never make any kind of a return by renting it out. I made out OK because I was able to hold the properties for a long time and they were paid for. Other than that I have no idea how it could be justified. I also invested OS and those properties did well. All the best!

How to get started with multi unit investment in Bay Area

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