Analyzing a deal in Oakland, Bay Area [ Cash flow +ive)

[Haseeb Awan]

Hello Folks,

I used to live in Los Altos and it's almost impossible to find a property in the area which is cash flow +ive, but oakland seems to be a decent area in terms of investment in entire bay area. I was looking at a property below.

https://www.zillow.com/homes/for_sale/Oakland-CA-9...

It's showing a foreclosure estimate of 407k. It comes with 6 bed. This can probably be rented for 8k if rented by the room. Mortgage on this house will be around $2000, if I paid 20% down with 4% interest. This seems to be excellent cashflow property. Just wondering if I am missing anything here. Obviously I am assuming that the property is being sold for 407k. This is just an example so may be I can learn from other people who are in buy and hold in the area,

[Account Closed]

you're right in that cash flow is much easier to find in East Oakland versus the South Bay. But most of the assumptions on your hypothesis is incorrect:

- no way this property sells for $400K. If they are 3 bedroom units (duplex), then at least $450-500K. 

- if it's occupied, it's difficult to get tenants out unless they aren't paying or you pay them to leave (no guarantees there)

- you won't be able to get a loan for 20% down. 25% yes

- rates aren't at 4% anymore. More like 4.5-5% 

- renting by the bed is very management intensive and would be difficult from you living so far away. Expect to pay at least 10% in management fees. 

Is it occupied? The biggest X-factor is the current tenants, how much they pay, and whether they are willing to leave. If you can't get them to leave, you might have a negative cash flow situation.