Bay Area Investor Looking for Advice on Where to invest

[Jie Li]

Hi 

This is Jie from Fremont of Bay Area. I'm new here on BP. I hope I could find out BP before I invested. There are so many discussions and good advice on the forum.

I actually invested 2 properties in Antioch/Pittsburgh/Oakley area on 2013. However, the timing was not very good, and the price is already high. With so many investors buying in that area, it made it very difficult to actually close on deals. And even harder to get the property fill in with good tenant( even with the help from property manager). I've tried to look for 2-4 unit deals close to where I live, however, they either give every low cash flow, or at bad neighborhoods with lots of deferred maintenance.

I just sold one property that had negative cash flow and looking for replacement properties for a 1031 exchange. I'm still looking for a turnkey property for the price of $45k-$65k. I also plan to sell the other one once the lease is over at the end of this year. This one gives me a little bit cash flow, with some appreciation. However, it has a terrible HOA, and the bad experience with this HOA made me try to avoid any investment property with HOA.

Because of the unsuccessful experience I had investing in the bay area (even though I'm a realtor and have better access to the inventory on the market), I've switched to investing out of state turnkey properties for cash flow for the past 1 year. I had some bad lucks in ND due to the oil price drop (I learned my lesson on not to invest on single industry here). I've also been investing in Chicago for single families & 2-4 units, and getting 8-10% of returns. 

I was planning to switch to other markets for more turn key properties, like Dallas, Huston, or FL to diversify my portfolio. Then I saw the debate for buying for appreciation in the bay area vs. cash flow out of state in a newbie's post for the last couple of days. Now I need some advice on my investing. Because I've tried both ways, and had bad lucks on investing locally Vs. 50/50 chances on out of state turn key investments. Where should I invest now? Especially bay area and Dallas are all at the record high prices now.

Thanks for taking the time to read my post! I'm open to other markets too as long as they make senses.

Thanks!

Jie 

[Jay Hinrichs]

@Jie Li

  the Bakken oil play was a high risk reward scenario.. so I don't think you can hold that one against yourself.. it was more of a risk capital investment than a cash flow or long term investment... many folks in Australia dumped big dollars into those deals and lost it all. As they were attracted by the really high proforma numbers.

Here are some alternatives you may want to consider that will give you cash on cash as good if not better returns than rental houses.

1. Link up with a GOOD and reputable Hard money lender there in the Bay and invest in their deals.. in CA you can do multi bene  loans and or they will have a PPM fund you can invest in.. usually need to be accredited.  returns will be 7 to 12% on these

2. Crowdfunding .. you have one of the top portals int eh US right there in SF its called Realty Shares you can go over there and see what they have in person and I can give you an intro if you like. CF ing portals are doing short term debt deals and paying 7 to 10% as well and they have equity deals that pay more but its based on performance not a stated return.

3. Syndications.. you have one of the top syndicators right there in the bay area I can give you a referral to them and you can walk in and talk to the their team.. again accredited status is required.

4. Reits  are an option for totally passive.. and good liquidity since they are traded on the stock exchanges.

5. You can look at buying notes... ( I know many like non performing but this is a lot of work and some risk) I like looking at performing notes.. there are exchanges you can look at to get a sample  FCI exchange for example is a listing service for all sorts of notes.. AGAIN extreme caution when buying a note from a 3rd party.. lots of risk but if its a note in your immediate area you can drive by look at it and see if the values hold true.. notes out in the mid west and other areas you must be EXTREMELY cautious of the stated values.

6. You could look to some JV type partners for fix and flips.. I am personally doing this in Sacramento and we are do quite well..

7. You could look up here in the Northwest our prices are far more affordable and it offers cash flow and appreciation.. although competition for the great deals is keen but its same time zone. and only 1.5 hours flight for 200 dollars. Plus great place to visit.

You can then look at all the different turn key companies you can compare them side by side and then get references and refferals like you will get on BP ..  Most of the markets frankly are interchangeable.. its all about the team on the ground... from your rehabber to your PM and PM being absolutely critical to your success in these markets.. Like here in Portland you can just have an agent put a tenant in for a fee then self manage.. with less than 1% vacancy factor its pretty easy here even from afar.

There you go ping me off line if you want referrals to the bay area companies I mentioned and I would be happy to make those for you.. at least you start at the top  !!