All Forum Posts by: Amit M.

short answer: it depends. In my case it absolutely was. A- I got major appreciation. B- I was able to pull cash out to buy multi units. It was my main start to RE investing.

I'll start by quoting you: "The real estate market here never ceases to amaze me"

Why do you think that will change in the future? Will the tech juggernaut disappear? Will there be more land? Will the Bay Area somehow become undesirable? Answers: No.

You made a good move buying this in 2008. $4500 income, your mortgage, taxes and insurance are probably around $2000-2200? So this cashflows like a ****! I'd keep it and refinance to pull cash out, which you can use to buy another house here to meet your needs. If you want to maximize investing, try buying 2-4 units again (with a good enough unit for you/family.)

Only way I'd sell this (better to 1031 exchange of course) is if you want to move out of state. But why, you're establishing an asset base in a very prime area. That's what I did in SF. Worked like a charm, and now I live off my rentals and get to play on the internet, take nice walks, extended lunch outings, etc.

"Also I feel in the Bay Area you have to bank on appreciation"

That's because there is a ton of appreciation in the Bay Area. As @J. Martin

Some here pooh pooh appreciation as being speculative, but that is wrong. You live here, you know about the housing crush. I invest in San Francisco and live off my properties. Of course SF is super intense and crazy with all the new tech $$$ pouring in, and the battle over rent control continues unabated. But I managed to position myself with a few non rent controlled condos, and having those in this city is basically like printing money.

My suggestion: focus on local areas, learn them well, and figure out how to profit from future appreciation. I'd skip flipping; maybe buy 2-4 units that needs some work, and where you can increase the rents afterwards. (Use FHA for low down, so you have cash for the renov.) Do that in an upcoming area and you will do well in the next two years, and create a base for future acquisitions.

you're talking about a 4 plex in SF? How do you plan to deal with rent control in your bldg? Do you have a plan/idea for future upside on the bldg? I highly doubt you'll break even with 3.5-5% down.

as I told another budding LA investor asking the same thing: cash-flow pays the bills; appreciation makes you rich.

I live and invest in San Francisco. I own 2 small buildings, one converted to condos, the other in process. I live comfortably off the income (av rent over $3200/unit.) I have a ton of equity, and will be making another purchase soon by leveraging part of that equity. I hardly spend any time on prop mgmt, as my tenants are stable and all professionals. It's a cinch.

Whenever I go to local RE clubs, there is a reason why so many out of state investors looking to raise capital frequently come to pitch their projects to us CA investors; all the money is here.

My suggestion: figure out a way to buy locally. Try to by 2-4 units where you can owner occupy. You get the best rates, are close to your tenants, and can learn the ins and out of landlording. Buy in a decent, upcoming area. Even consider a larger down payment (if you can) or take a reasonable negative cashflow you can support. You'll learn a lot, and if you choose a good area, will probably reap some nice equity over the next 2-4 years, which you can later tap into to help fund another purchase.

I'm a definite maybe at this point...

biggest question: why?

It's hard enough investing out of area/out of state, but now out of continent?

You live in nor cal. I'd definitely look in your back yard first! It's quite depreciated and now turning around. San Francisco (where I invest) is on fire due to overall recovery and tech, and that will positively impact Sacramento too. Last thing I'd want to do is muck around overseas without tangible experience in specific markets.

I had a friend who "invested" in Baja, Mexico. Almost all the desirable areas, with 75 miles of the ocean, are land grants. ****, you can't even own it outright. With the recession Baja became a lead balloon. Imagine owning property you lost money on, and you don't even legally own it. Ouch.

I'm planning on living part time overseas in the future too. My plan: make my money in RE where I expertly know the markets. Then I can just buy a second home elsewhere.

hi Melvin,

Good call on buying in that cheap. Here are my thoughts:

1- I agree with j Martin that the long term appreciation for Vallejo has some headwinds. Remember, when we have another regional correction Vallejo will be one of the first areas to go down, and will go lower than more central Bay Area cities.

2- having said that, we are now in an upward market, and I personally think it has at least a couple of years growth ahead. I know SF and peninsula are on fire due to tech, so the outer areas are getting priced out buyers. So no reason to sell/dump now.

3- how much value can you get from that lot? How about subdividing and building on it yourself? What is the upside? If it's decent, that may be your first flip. And then maybe sell off both in a year? If so, I'd definitely do a 1031 exchange into another investment prop (or flip if you want to do those.)

4- If you sell/1031 Vallejo you will have sizeable cash. I'd consider buying in better markets closer in. Yes you will need 30% down to cashflow, but you will be insulated better in bad markets. And future appreciation will be more solid on the peninsula. You could consider upcoming hoods in Oakland too. But bottom line, if you can buy/hold on peninsula or Oakland, you can make real money on future appreciation. Having $300-400k cash puts you in a position to do that.

just curious, why the specific interest in medical bldgs? Did you work in that field?

Blackstone and other funds that brought discounted SFHs' en mass is one thing; Chinese 'buying up' Detroit is entirely different. 1- is that really true? (Source). Is it via organized funds, or just rich Chinese individuals speculating? If it's the latter, you can easily do the same thing- there are lots of dirt cheap props now in Detroit- have at it!

Now, if there is some concerted efforts by foreigners to buy up Detroit, that is interesting, but a huge gamble IMO. I still think much Detroit RE will be worthless 10 years from now. But probably core areas that are getting back on their feet could make a comeback. But I doubt that apply to the entire city- it's a huge place landmass wise.

Any Detroiters have opinions on this?