After lurking in the background reading articles and blogs I finally decided to write my first newbie forum post. I live in San Francisco and decided to invest in buy and hold MFR to start with. After looking at house prices and ROI around in the San Francisco Bay Area, I decided to venture out of state. I located a city in the mid-west which has a diverse economy, a big university and a healthy population. I have a good realtor and property management company identified (not going the turnkey route).

Then I came across a forum post on BP which made me rethink about pros on investing locally. Additionally, investing locally will give me advantages of house hacking, doing a conventional loan for primary residence with downpayment as low as 5%-10%.

So, I started evaluating would buying a 4plex MFR locally make the numbers work in my favor. I am more interested in long term wealth building but also looking for some cash flow to ensure that I won't be bleeding money every single month going forward.

Has anyone successfully hacked a 4plex in San Francisco or in bay area in recent past? Can you please share your story? I looked at a few recently sold properties on redfin to run the numbers and came across a 5 plex (846 Shotwell St) that was sold for 1.25M. It has 3 x 2BD apts, 1 x 1BD and a studio. Market rents for these units will easily be 3 x $3,000, 1 x $2,500 and 2,000 with gross rent of $13,500/mo. Making this a 1.08% (Monthly rent/house value) and should IN THEORY yield a monthly cash flow of around $100/door. (Disclaimer: I have not included rehab cost in my calc)

Is the above still possible in San Francisco in neighborhoods like Mission, Bernal Heights, etc? Or, would it not be possible to realize the market rents for several years till the existing tenants move out since it is a rent controlled building (pre 1979)? Or, would the required rehab to bring the rents to the market rate kill the deal?

At this stage I am just trying to access the feasibility of this endeavor and if it is even worth pursuing the strategy in this market. Any thoughts will be much appreciated.

Thanks much!!

San Francisco, California

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