Or maybe even slightly cash flow negative? Greater Bay area (not South Bay or Peninsula). Planning to put 25% down but rent won’t cover expenses even after that.
What if you got laid off and no longer able to support the mortgage?
Only if you’re sure the house will continue to appreciate in value due to the area it’s in. You should also compare current rent of the house versus average rent in the area. Is it below average? Can you make some small upgrades to increase rent that you can demand? Are you inheriting tenants or will it be vacant when you purchase? And also you need to have the bank roll to fund all the less thought of things with rental property ownership, such as periods of vacancy, periodic upgrades and replacing major appliances that break, pay handyman for random things that break, etc.
No.
^^
I'm usually not a proponent of cash flow negative deals (assuming 20% down and calculating putting aside at least 15% for maintenance/vacancy/capex). This is for a couple reasons: 1. Really sucks to lose money every month when you just shelled out a large chunk of money. 2. What if there is an emergency, personal or with the property? Job loss, burst pipe, etc. If anything like this happens, you are in a really tough situation as you will need to go deeper into your pocket. 3. The main reason people do this is because they believe it will appreciate over time. It will, of course I believe this or else I wouldn't be investing in real estate. However, when? We have no idea. Its a weird market. Nobody can predict if/when. What I do know is there are plenty of other markets in the Midwest (I have 9 doors across Memphis and Detroit) that will cash flow immediately and based on the data I'm seeing, has appreciated more than areas like LA/Seattle/Bay Area in the last 5 years. (Google Detroit appreciation) Happy to chat more about investing in the Midwest if you are interested.
No.
Thanks but not looking to invest in some far off place that I can’t easily drive to. Also Midwest is unlikely to appreciate much if at all. Bay Area investments are definitely appreciation plays and that is what I am hoping for. Will continue to look for cash flow positive deals (even if only by $100) instead of cash flow negative in that case.
Better off putting in SPX
Yes! But what is Greater Bay Area? If you find a zero cash-deal in Bay, I would certainly put my money on it. Lot of people are eyeing such properties so it is hard.
Thanks! I consider 30 mile radius from S.F. or SJ to be Greater Bay Area.
There is zero chance of a zero cash deal in this interest rate environment
Do you already have a decent primary residence? Is the new house in a decent neighborhood that people will want to move to? Are you excited about owning this new property for a long time? You must say yes to all of the above before buying it.
Real money is made with property appreciation so you need to make some estimates on that before taking a call
Never. Don’t be a landlord in CA
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