Sensible investing in California Real Estate?

[Steven Davis]

After 30 years of working my *** off to get an extra percent or two in the stock market, I've finally realized that I should be investing in real estate.

Better late than never.

First of all, Thank You to all the posters, formum-ers, podcasters, and writers on this site. You've helped jump start my education in real estate investing.

Who I am...

• 50 years old. 
• Wonderful wife and 2 small children.
• Decades in the high tech field (IT security).
• Self-employed for the past 15+ years with my own business with an excellent partner.
• Lots of experience on large projects in the software / IT world... and had enough of it.

What I've learned so far...

• I'm not a flipper or wholesaler or other exciting things. I'm pretty much what I was with stocks - a long term, buy-and-hold investor.... Woo Hoo, income and long term capital appreciation!
• I am interested in solid cash flow plus reasonable appreciation (aren't we all?).
• I am mostly interested in multi-unit residential and commercial properties.
• I will probably be "hands off" - using property managers for properties.
• I'm not interested in "turn key" deals unless I do the key-turning.

My challenges...

• I live in the San Francisco Bay area. I don't own my house and, given the market here, that isn't happening any time soon.
• California real estate is (cough) rather fully priced as a whole. 
• I would like to be able to visit the properties that I buy, especially at first. Without getting on a plane, a train, or spending a day or more driving.

Where I'm at....

• I've found my initial market here in California with what I consider reasonable cash flow and appreciation.
• I am (initially) looking at 4-plexes and more-plexes as well as smaller mixed commercial/residential properties. These properties seem the most inefficiently priced as they are too big for residential purchasers and too small for big money dudes...  more on this later.
• I have several properties in my target market that I like. I am getting pre-approved so I can write an offer.
• I am also going to set up an IRA LLC (Roth) soon to purchase properties as well (I've been a good boy an put money aside for years and done pretty well in stocks)... more on this later as well.

Observations...

• This stuff is fun. It is like researching stocks but not having thousands of other people doing the same thing you are. Less competition = more opportunity.
• You start saying you are investing in real estate and all of a sudden, people want to talk to you about it... hello syndication at some point.
• Finding small commercial loan providers seems to be a challenge (also more on this later). Everybody wants to help me finance a 150 unit deal. I look forward to that too!

Glad to meet you all. Happy hunting.

[Michael Boyer]

Great opening post Steven! Sounds like a sound plan that fits your lifestyle...That is a neat area of the country. And you get some wild swings in real estate valley in just a few hours drive.. Probably what you are on to already--but I would use a "drive East" strategy till you find well situated properties that pencil out well.....Be it out past East Bay, even into the Central Valley.... In fact, I ended up living in one of the commuter I-80/ I-5 tract home subdivisions, and all the people got up like 4AM or 5AM to commute into the Bay Area (so the bedroom community may be one niche, those like you who commute to find affordable housing, them as renters and you as owner/landlord).... On a long weekend you could even tackle a turn around or get some oversight....Of course, the best management possible and right property are key. Also, in the 2-4 unit property, you should be able to get some of the best financing out there (with commercial kicking in at 5+ units). Best of luck!