Newbie From Bay Area, California

[David Affonso]

Hi BP Community,

I'm a newbiew to BP and real estate although I've been interested and researching for almost a year now.  I've recently moved back to the South Bay (Palo Alto, Mountain View, Santa Clara, Sunnyvale, San Jose) area working my dayjob in the IT staffing industry as a recruiter and account manager with Apex Systems.

I've done some research over the last year and I'd love to be able to set a 1-2 year goal of buying a multi family (2-4 unites) with an FHA or other subsidzed first time home owner loan.

My target area is in Santa Clara in between the University and the Cal Train station.  This is close to my work and my girlfriend could caltrain into downtown Palo Alto (where she works) and I think it would have long term value as the Bay Area gets moer congested.

I know Silicon Valley is a tough market for newbies, but I'm really curious if anyone has had any success with this recently.  I'd live in 1 unit and rent out the others, but really my goal would be to find something at least cash flow neutral if I decided to move out and rent all units. 

I haven't seen any properties yet, but when I do some napkin math based on trulia and other appraisal site it just doesn't seem possible in this market.

Either way I've been to a few local REITs and really look forward to getting more involved in Bigger Pockets.  Any advice for the above scenario would be fantastic but also just a warm welcome would be nice.

Thanks a lot Brandon and Josh for the great podcasts, really helps with the afternoon commute.

Best,

David Affonso

[Arlen Chou]

@David Affonso welcome to BP and the REI world that is the Bay Area. You have picked a tough market, but one that can be lucrative. You just need to do some serious leg and back work! I got a seriously exciting deal in the East Bay that I am closing on at the end of this month, but more to your target market, I closed on a couple of nice ones in Mountain View back in 2013.

Both the MV properties were 4 plexes that needed a TON of work.  They are all 1/1 units with individual car ports and a small laundry room.  At the time of purchase they were renting for an average of $900 per unit.  After 16 months they are renting for $1675 each and I have not completely renovated all of the units.  I think I am still under market rents but I am taking a slower approach to hold on to the renters this I like.

I have done most of the renovations myself, everything from demo, to plumbing, to the install of cabinets and tile.  I did not know anything about renovation at the start of the process.  But I learned and got faster as I went through each unit.  My first renovation took 2 months of part time work.  The last one I did took me 3 weeks of part time work. I became smarter about my purchases and my construction techniques. Keep in mind that I did not do anything that was structural.  All work was done with permits that I pulled on my own.  All of this while I holding down a W2 job that has me traveling every month.

My point being is that it can be done in Santa Clara County, but you have to seriously be willing to put a ton of effort into finding the deal and repositioning the units.

Hope to see you at one of the many meet ups in the area.

Good luck!

-Arlen