All Forum Posts by: Becca F.

@Noah Mac

That's great that you're living at home to save money and are looking to start investing in real estate at 22. I'm going to be the huge dissenter here and suggest you re-consider NorCal and house hack.

You're in San Jose which is now the most expensive housing market in the Bay Area and has surpassed San Francisco. If you're able to work remotely you could use your higher Bay Area salary and move to another part of NorCal. I'd recommend considering:

- East Bay: El Cerrito, Pinole, El Sobrante, Concord, San Leandro, Hayward, maybe Antioch and Pittsburg (has some high crime areas), Brentwood and Oakley. You could probably find some deals in Oakland but Oakland and Berkeley have very pro-tenant laws so I'd be cautious. I really like Dublin, Pleasanton, Walnut Creek - nice suburbs with great schools, a bit pricey but I think still less than San Jose.

- Sacramento area: There are some duplexes and you could live in one side, rent out the other using 3.5% FHA loan or 5 to 10% conventional. A lot of Bay Area people are moving up there who are priced out here. You could also do long-term rental on one unit and mid-term rental or short-term rental (more for business travelers vs. vacationers)

- Central Valley: Tracy, Turlock, Fresno

- Possibly Manteca

For Out-of State, what about Reno or Las Vegas/Henderson?  It's much closer and Nevada has some of the low property tax rates in the country. This is where I would buy - 7% interest rates make it difficult 

I invest in the Bay Area and Indianapolis metro area. I've had mixed results in Indiana (posted many times about this). Class A (bought in 2013, nice suburb, great tenants, good appreciation) and Class C (bought in 2023, constant repairs, AC unit stolen, unsure if this property will appreciate enough to make up for my costs). 

I'd recommend attending local meetups. There's probably a lot in San Jose area. You can talk to investors who buy locally as well as OOS. 

Feel free to DM me if you have questions :)

I agree with Nicholas and Jake's comments. Sorry the Chicago condo rental didn't work out. 

I invest in the Bay Area and out of state (Indianapolis metro area). I did live in the Indy area so I had some knowledge of the market, now much more to a detailed level. You can read many of my previous posts/comments about OOS investing. I've had mixed results. That has been experience, Class A great (bought in 2013), Class C (bought in 2023) constant repair calls by tenant. I'm -$300 to -$500 most months - I'm unsure if it will appreciate enough for my costs and when to sell. If I knew I would be negative I would have bought in Sacramento, where it would appreciate and I could drive to in 2 hours. 

It's very difficult to cash flow with 7% interest rates unless you put a huge down payment. I'd focus on the asset. I agree with Drew's property class descriptions - too many California investors buy Class C properties far away and wind up losing money. Feel free to DM me if you have any questions. 

Hahaha... I watched Ron LeGrand's free webinar a couple of years ago. Something about targeting FSBO and owner financing, lease option, blah blah blah.

If you're going to pay for something, my cat and I started a cat tree flipping course. We also have a bridge to sell in Alaska. Just Zelle me and her $200 LOL...I'm kidding. 

In summary don't pay for anyone advertising courses/programs.

I'm also looking in Vegas. I'll be comparing it to Reno. I won't be traveling in May though. 

I know several California investors who have bought there. My first impressions of Vegas from conversations since I haven't visited in person: Southwest Vegas and Summerlin are nice, property taxes are low, property tax increase cap of 8% (not common in many states, although California has a 2% increase cap), diverse industries including major sports teams (the NFL and baseball teams from Oakland, CA are in Vegas now). 

Extremely difficult to do AirBnb and Vrbo in Vegas due to restrictions. Some people do this under the table but if they get caught, there are large fines. 

I'll DM you the agents I talked to. 

I agree on the comments, location, location, location and the numbers rarely turn out to be exactly like the projected numbers. 

I ran the numbers on a renovated property (seller did renovation) with some minor repairs after the inspection and my cash flow on paper is in reality -$300 to -$500 a month. Constant repairs called in by tenant. I bought two of these class C type homes in Indianapolis (sold the vacant one somewhat recently). I don't know if this area will appreciate enough for my costs each month. 

If I knew I was going be negative cash flow, I would have bought one $450,000 to $500,000 home in NorCal or Nevada, which would have higher appreciation. 

I've had California investors contact me and show me their numbers on properties in the Midwest and the South. Without me visiting this city and neighborhood and getting to know this area in detail, I'm not informed enough to help you make a decision. 

Great point. I've been sentimental about a home that was my primary residence in Indiana - I rented it out when I moved back to California. The first vacancy was difficult since my property manager sent me videos and photos of the move-out...why's there a gouge on kitchen counter, on the wall, and a few stains on the carpet? I kept thinking of it as my house. My PM reassured me that it's actually in very good condition compared to some of the move outs he's seen. 

I'm going on almost 6 years of renting it out (Tenant #2).  I've debated whether or not to sell this home (and the other Indy house) and buy closer to home (Nevada) where there is higher appreciation and lower property tax rates. 

Great comments. I wouldn't go with the first option, pay cash for $50k to $100k property. Those cheaper "cash flow on paper" properties often turn out to be huge headaches (I've been through this as well as many California investors who bought cheap properties out of state, mostly in the Midwest and some in the South). 

I like the ideas of househacking, maybe a 2 to 4 unit. If you're living in one unit, you can get an FHA loan for 3.5% down or 5 to 10% conventional. I don't know the Brooklyn market and how much multi-family units cost.

Given a choice between the two extremes, I'd buy a $400k to $500k property. Maybe you can find something in $250k to $300k range within a 2 hour drive? 

I like the idea of NNN leases (tenant pays the property taxes, insurance and repairs on a commercial property) but this doesn't seem to be a usual first time investor move. I talked to a couple of people who do this (fast food restaurants, coffee shops, medical buildings) and it was a large amount of capital needed - pass for me.

Not a fan of syndications - talked to three of them.  I don't know enough to vet who's a good/bad operator. I asked myself if I'd be ok with losing $100k if the syndication went downhill. I'd rather own my own property and have control over it. 

I'm not an agent but these are my observations and also from attending open houses and talking to agents. Combination of both. 

In San Francisco and anywhere near Silicon Valley (Santa Clara, San Jose, San Mateo), I'd say it's a seller's market for single family homes.

East of San Francisco which has more affordable homes, a nicely done renovation can get multiple offers if it's under a $1 million and in at least a decent school district. I walked a home that was $700k and knew that it would get an offer quickly, sold for $730k. Prices are not anywhere close to the 2018 to spring 2022 prices seller's market days. 

Anywhere near the hills and fire zones have become more buyer's markets - very difficult to find insurance or it's very expensive to insure. Some of these are in excellent school districts but now are harder to sell. Especially after the LA fires, I don't think buyers want to buy in fire zones now. 

Townhomes and condos are difficult to sell and values have dropped, could probably find deals but the high HOA fees make it unattractive. I think most people would rather keep renting if they can't buy a single family home.

I have many takeaways but here are my main ones:

- The projected numbers on a spreadsheet are often not reality. Renovation costs run over and ARVs are often exaggerated.

- Out of state investing is far more difficult and costly than it appears. I have talked to so many California investors who have bought in inexpensive markets that have lost money on "cash flow on paper" properties, including myself.

- Get feedback from local investors, property management companies, and contractors. Verify an agent or wholesaler's numbers

-  Have an unbiased party (maybe an experienced local investor) walk the property and video it in detail if you can't walk it yourself before making an offer.

- Quality over quantity. I'd rather have 5 solid appreciating properties than 20 inexpensive properties. 

I'm in the Bay Area and invest locally and out of state (Indianapolis metro area) - I lived in Indiana so I didn't pick a random market.  

If your budget is $150k to $200k, meaning downpayment and rehab costs, you could consider other parts of NorCal like Sacramento, or Reno or Las Vegas (Iow property taxes and appreciation).  If you mean $150k to $200k purchase price, that would be challenging for the western states.

- Wouldn't recommend doing BRRRR for first rental unless it's local. I've done a local renovation where I was onsite constantly and I'm not comfortable doing a renovation in another state. Maybe something minor like paint or new floors, no major rehab far away

-  Risks are the projected numbers on spreadsheet look good but in reality renovation costs run over, repairs, vandalism or break ins with vacant property, tenant issues, risk of being ripped off by contractors, property managers etc.  Are there cities you like to visit, have family/friends, have lived in previously? 

- Visit the area multiple times. Meet your potential team members in person and ask local investors for recommendations for agents, property managers, and contractors. Find out about local meetups before you fly or drive there.

I'll end it here since I don't want to type a 5 page essay lol... DM me if you have further questions or you can also read some of my previous posts.