New from San Francisco

[Uuri Koh]

Hi BP community! My name is Uuri and I live in San Francisco CA. I joined BP because I want to learn more about real estate investing and could use some more open and specific advice for my goals than I've found in the seminars and reading I have done on my own.

I'll cut right to the chase of my goals and situation:

I am currently living in a condo that I inherited (along with the mortgage/debt) and I am preparing to renovate while struggling through doing the probate myself. Once that is done I plan to rent it for income. The property is in a prime location with relatively stable property values and rent. It has a lot of potential and just needs some basic updating and TLC. It's just not the ideal living situation for me.

I want to buy a single family home soon and am getting close to having a decent down payment for it (without counting on any first time home buyer benefits). I'm just trying to decide exactly where and want to make sure I know what I'm doing before I make my first actual purchase of my own. In addition, I want to own income properties for passive income, fix and flip, and just about any other viable investment.

I'm in the tough position of most likely needing to move out while I renovate, am still a bit hesitant to buy another property yet, and am not eager to throw money away on a rent lease. I have started talking to my banks about a mortgage but despite a sufficient self-employed, plus part time job income and assets to cover my purchase goals, they are basically telling me I need to go out and get a full time salary job for a year or so to get a nice looking W2 for them to consider lending to me. I'm trying to launch my own business right now and am not interested in getting a low paying, time-consuming salary job right now just to make the bank happy when I know my rental income and own business can cover that. If I have absolutely no other choice I guess I will, but not unti I am sure that's the only way.

That's a long intro, maybe I need to to start another thread that will get more visibility but I'm 100% open to suggestion and information. Thanks and I look forward to communicating with the forum!

[Mike Welch]

Hi Uuri,

Welcome to BP! I'm also a San Francisco resident living in Hayes Valley. The real estate market in SF is quite unique to say the least. It reflects the economic principle of supply and demand. With only about 7 miles width and depth, coupled with tight city coding, the city does not have enough units to satisfy demand to live here.

In addition, the social media bubble on top of explosive growth from companies such as Apple and Google has created a situation where many newly wealthy holders of stock options in said concerns are able to bid up the price of properties beyond long term value.

I could also mention the extreme bias towards tenants that exists in San Francisco. Suffice it to say, I'd advise you to become well read on local laws and ordinances that impact landlords if you choose to let out your unit. I recommend consulting the SF Tenants Union website. That organization publishes a manual (written for the benefit of the tenant) that every landlord should read.

This conditions have caused me to be a resident (and property owner) in SF, but to make my real estate investments elsewhere.

Lenders in San Francisco are, as you note, very hesitant to lend except to those who have a solid work history. It can be very difficult when you're an entrepreneur or work for a start up that does not have well established funding. Remember too that you'll be competing against many cash buyers who've just traded in their Zynga, Facebook, etc., options.

I looked into acquiring a SFR in the Bay Area earlier this year, but was overwhelmed by the amount of all cash offers (over asking) I had to compete with. In the end, I decided to: 1) keep my condo, 2) improve it, and 3) invest in real estate in other markets to create alt cash flow streams.

It is all enough to make one's head spin...In any case, SF has a ton to offer. I wish you success whatever path you decide on.