Starting my REI adventure with a duplex in San Francisco Bay Area

[Harman N.]

Howdy everyone!

Long time lurker, first time poster here! For the past year, whenever I Googled something about REI BP would inevitably come up, but I finally made an account!

Since last spring '15 I was looking to buy a place to live in SF. The plan was to buy a house for myself, and then in a year or two look for an investment property in a cheaper city. In March, after 90+ open houses, I closed on a duplex in the Inner Sunset -- I figured why not get both the house to live in and an investment property in one shot!

I had this REI master plan to, every few years for the next 15 years, save money for a down payment, get bank financing, and then buy an investment property.

Well, the duplex I bought needed some work, as it had "deferred maintenance". And that rehab is taking longer (ie, still not done!) and costing more than I anticipated (ie, cutting into those future investment funds). I was getting bummed out.

In the meantime, having finally bought my first place, I was now hungry for more. I started learning as much as I could. I read about the 10x rule in one of @Brandon Turner's books, and it was a lightbulb moment for me! No longer was I content to follow the conservative 'save, save, save for years --> conventional financing' route. I was going to look at the renovations not as an expense, but as value creation, as future equity that I could tap into.

My current plan is:

1. (a) Finish the rehab, increase value of the house
2. (b) Tap into the equity from (a) to help finance the addition of a legal unit in the garage
3. (c) Tap into the equity from (b) to help finance more real estate investments

Not sure exactly what (c) will be. I'm leaning towards small multi-family. But I have some time to figure that out! Until then, I'm here to read, listen, network, catch up on BP podcasts, go to @J. Martin's meetups (went to my first one on Thursday!), go to Johnson H's meetups, and just talk shop with all of y'all! 

- Harman

[Amit M.]

All you aspiring SF investors on this thread, do yourselves a favor, and search on BP for the numerous threads dedicated to "cashflow vs appreciation."  Look for posts by @Account Closed @jay hinrichs and myself. Spend a couple of quality reading hours on this, trust me, you'll learn a lot.