Looking to get unstuck in the SF Bay Area

[Christina Womack]

Hi everyone!

Our goals are to 1. create non-401k retirement cash flow and 2. reduce our dependency on our wage jobs over time. 

We think the right way forward for us is to buy and hold cash-flow-positive rentals, (SFR or dup/trip/quadplexes), but I'd be happy to hear other recommendations from people with experience. I don't know much at all about the pitfalls and upsides of turnkey investing, for example.

We only own the home we live in (our 2nd) but we'd like to get started on REI. We've been kind of stuck at 'we think we're ready' for a couple of years now and always seem to stall out at market selection. I have just put out a request to my broker for pre-approval, so we're on the way :)

The Bay Area is daunting cost-wise so even though markets in faraway places are less financially scary, we think it would be smart to first invest in a place we can drive to. (Are we wrong about that?)

That puts our outer limits at Sacramento to the north and Fresno to the south we think. So we'd love to chat to anyone else invested in areas around Sac, Modesto, Stockton or Fresno who might have tips and gotchas.


Appreciate any thoughts the BP community has to share on this stuff And I'd love to hear about MeetUps in the East Bay as well!

[Jessie Huffey]

Hi Christina, 

I am from the Bay Area but now live and invest elsewhere. It is smart to invest in areas that are in close proximity to you, but only if the numbers also make sense. Despite what projections are for the Sacramento area for the next couple of years, that does not mean those projections will become reality. Make sure you are asking yourself key questions before you move forward such as: What are the tax implications of owning rentals? Do you want to be in the bay area long term? How much risk are you willing to take on? I personally wouldn't feel comfortable being a limited partner because returns depend on the decisions of others. However, many people have been successful this way. My investment strategy, which has worked well so far, essentially leverages tax law to my advantage. My husband is a building contractor so that also helps increase returns. We have found it works well to buy a primary residence, live in it a couple of years and fix it up, sell it once the property appreciates significantly and then invest the profit tax free (no capital gains tax on sale of primary). On the last deal in California we bought at 350k, put in 30k in renovation materials, sold for 500k a couple of years later, and had 150k tax free to buy another property. For us, we decided to invest outside of California moving forward because of several factors including: we did not want to raise our kids there, we were not comfortable with the level of risk, cost of living was 3x that of where we live now, tax reasons. Best of Luck!