All Forum Posts by: Michael Hyun

I'm confident that over the span of 10 years, the home that I buy will be worth more than it is today. I base this confidence on the history of home prices in the bay area in the last 50 years. I could be wrong, but if I'm right, my home value could increase by 200k in <4 years (The home that I live in now did so). Plus, I plan to wait out the pandemic before I buy a home.

@Johnny Hoang awesome, thanks for those examples. Your current situation is EXACTLY the situation that I'm looking for now. Its great to hear that my plan is being used by other people also. I am most likely going to take full advantage of owner occupied loans, while I still can. Thats awesome that you can cashflow on a bay area home on a 5% down payment! A couple of questions though:

1. The whole play here is the appreciation play, right? With that in mind, if I lived in the property for 2 years, and then moved to another home and live there for 3 years, then won't I have to sell the first home in order to not have to pay taxes on the cap gains (last 2 out of the past 5 years will expire soon)? What if the home prices are still going up? Why shouldn't I keep the first home still?

2. How much did your garage conversion cost? 

3. Ideally, I wouldnt want to pay the PMI that comes with a FHA type loan. I can put down around 100k, which is around 10%. Is there a way to structure the payment so I won't have to pay the PMI?

4. Is it hard finding good quality tenants? Have you ever considered Airbnb? 

5. What is your long term play? Do you just keep buying properties until you hit the FHA Limit? Then what? What do you do with all your Bay Area properties? When do you sell them?

6. How do you get a loan for the second home? After I buy one home, won't by DTI ratio be terrible? Who would give me a loan then?

@Justin I have a Zillow saved search for homes that match 3bed/2ba and 1400sqft+, at around 750k - 950k price range, anywhere from San Jose to Newark. There is a good amount of listings, but rarely do they have an "extra room" and/or garage conversion opportunity.

 Well I work in East Palo Alto, so I could take the Dumbarton Bridge to work, so somewhere around Union City/Newark/Fremont is an option as well.

@Account Closed@Joe Kim

@Joe Kim

I'd love to hear your opinions, thanks :)

Hello Bigger Pockets! 

I live in the Bay Area and I'm looking to move out of my parent's place soon. I've saved about 2 years of wages, roughly 120k, and for my first step into real estate investing, I've been thinking about house hacking in the Bay Area. Before starting this discussion, I want to share my main goal after 20 hypothetical years of REI:

1. Have a net income of $10,000 per month from rental properties.

With the context of this goal in mind, I'm thinking about starting off my REI journey by house hacking in the Bay Area. I've been looking for a SFR around the 750k-950k range, 3b+/2ba+, and at least 1400sqft+. The reason I'm looking for a 1400sqft+ SFR is because I am looking for SFRs that have an "extra room" that I can convert into an extra bedroom. The perfect property would have this feature as well as a garage conversion opportunity. I know at this price range, I'm not going to find anything in Cupertino or Sunnyvale, but maybe someplace like Newark or East San Jose.

If I bought a home at 900k (the mortgage would be something like $4500), and was able to "add a bedroom", then I could rent 3 bedrooms out for roughly $1200 each (rough estimate). My total rent would be $4500-3600 = $900 per month. I hope to live there roughly two/three years, at which time I feel like I'd most likely get married and buy another home with my spouse, and rent out my room to someone else, leaving me with both the home I first purchased (which would now break-even or even possibly cashflow) and the house that I live in with my spouse (most likely not cashflowing). 

Yes, this is not a cashflowing property, this is a capital gains play. If things go well, my first home purchase could increase in equity by $100k in 5 years (how long would this take if I spent my initial 120k on OOS rental properties?..), which I can EITHER (a) 1031 exchange into actual cashflowing properties somewhere else. (somewhere that actually cashflows). (b) Take out a HELOC to put a downpayment on another bay area home along with the money that I saved in the three years after moving out of the first home.

Worst case scenario, my property doesn't increase in value, but at least it's not negatively cashflowing. Now before anyone says that a capital gains play is a roll of the dice, I'd say I'm young and willing to take the risk, especially after seeing the bay area growth trend in the past 50 years.

So that is my 5-year plan as of now, I'd love to get some feedback or start a conversation around this strategy, to see what other people's 5 year strategies look like. Please let me know what you think!@Account Closed

I'm a software engineer who works in East Palo Alto, but I commute from San Jose to get to work, (about an hour drive).
From friends and acquaintances that I have been talking to, it seems like people are becoming more fed up with prices of rent in the peninsula, and are looking to the East Bay for rentals.

I feel this way because I've been looking to move out now, and East Bay seemed like the cheapest option that could get me a much nicer place than anywhere on the peninsula. The only thing I had to consider is the fact that crossing the Dumbarton bridge costs $6 everyday... so maybe its just more worth it to pay more for a room close to work and avoid paying for gas + bridge toll fees everyday. (Plus, less time wasted on driving back and forth).

As a result, I've also been researching East Palo Alto as a potential place to invest, seeing that Mark Zuckerberg and his wife plan to build a private school there, and are actively contributing to the gentrification of this area (check out CZI initiative). Plus, it'd be really close to work and a great place for me to house hack, since it'd only be 5 minutes walk away from work. Seems like EPA is a small pocket that's seen crazy appreciation since 2013, and I can only see it going up from here. It's literally less than 5 minutes away from Facebook and Amazon, and 10 minutes from Google. I don't think there would ever be a shortage of demand for these properties. 

@Vivan Bhalla I've been in contact with a few BP members, bothering people through messages about how they invest in Bay Area real estate, and lots of them mentioned interest-only loans. Not sure if this is applicable if you have 50k saved up, but something worth looking at and asking around about. I myself am starting my real estate journey and am actively studying the markets around me, specifically EPA and Alameda County. 

Reviving this thread. Things are moving slower now, I just wanted to gauge some discussion on the current state of the SJ market

Reviving this thread. Things are moving slower now, I just wanted to gauge some discussion on the current state of the SJ market