New member in the SF Bay Area with duplexes on the mind

[Casey Burns]

Hi There New Bigger Pockets Friends,

My wife and I relocated from Washington, DC to San Francisco a little over a year ago. We sold our condo in DC thinking that we would buy immediately in SF. We then got here, the prices really set in, and we decided to rent until we figured out what we were doing. Neither of us wanted to make a $1m mistake.

We're now considering purchasing a duplex in Berkeley or Oakland that we would owner occupy. This would be our first investment property. Both my parents and my wife's manage several of their own rentals (in Columbus, OH and Long Beach, CA, respectively), so we are not coming into this totally blind. We know enough to know we need to know a lot more before we pull the trigger on a deal.

I've done several rehabs with my dad. My preference would be a property that needs some work but not a total gut. We are not in a rush. We are paying through the nose for a rental in Noe Valley, but we would prefer to find the right deal instead of a fast deal.

I've been reading all the great info on the Bigger Pockets forums and other getting started pages. It feels like a good time to start seeking advice from experts, attending local meet-ups, and start interviewing real estate agents who know the east bay rental market. Does anyone have any suggestions on agents that know the east bay rental market? 

Looking forward to getting to know all of you better!

Cheers,

Casey

[Chris Mason]

Hi @Casey Burns,

Welcome. 

Four things:

- Max loan limit in our market for a 4 unit with FHA 3.5% down is about $1.2m. Yup, that can make some amazing things happen.

- Housing stock in Berkeley in Oakland, particularly multi unit, tends to be on the older side. Be cynical and plan to spend a few grand fixing things prior to closing if you want to use standard FHA. This flies in the face of the "don't fix a home you don't own" advice that I tend to agree with (when it's a FTHB innocent), but given the realities of our local market it's often the only way it can be made to work. I've gone out to the home with more than one homebuyer and ticked off a list of tings that I'd expect an FHA appraiser to call out. Generally you do that AFTER you tie it up in contract but BEFORE you spend any money on inspectors/appraisals/blablabla.

- If you want to use FHA 203k to buy a dump, the loan limit is the same but it includes acquisition cost *AND* rehab.

- FHA 203k is rarely done on a 'kind of fixer upper' in our market, because it's a little slower and there are 8 other buyers lined up right behind you. So it's either a dump and you 203k it because no one else wants it thus giving you that opportunity, or it's not a dump and you maybe put a few cheap band-aids on it to make FHA happy and allow you to close, or you do conventional and come in with a substantive down payment. Those are kind of the only three ways that it plays out in our area, when the rubber meets the road.

Hope that gave you a few things to think about!