How did you start your real estate investing? I am a female in my 40’s (single income) and all I managed to get in the bay area is a 2 bedroom townhouse four years ago and I’m grateful I even managed to get that. I feel like I can (1) never move up or (2) never purchase a 2nd property on my own given today’s environment. I’m not high tech. How did you do it? Any advice?
Actually it is very easy to be a multiple home owner in the Bay Area. Rents are high and can cover all your expenses!
Since you got your townhouse 4 years ago, I’m sure you have built up some good solid equity. Now is time to utilize that equity to your advantage. Say you purchased your townhome for 500k with 20% down and now it is worth 750k. That is already 350k equity. Do a cash out re-fi of 80% loan to value will give you 600k - 400k which is 200k cash.
Now you can use the 200k cash to invest in a rental, or multiple rentals. Here are couple choices…
- Condos in Vallejo can sell for 150k and you can purchase all cash. $1k net income per month.
- Buy 2 condos by borrowing another 100k. Still positive cash flow.
- Buy a house in East Bay 40% down 500k value. About break even or slightly positive cash flow.
Good luck and happy investing!
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Do you necessarily need to buy physical property, with your cash out $$, you can also look at crowdsourcing type of investments like realtyshares, fundrise etc that I’m reading could potentially yield 10% per annum with more risk of course
And you can choose the investments for instance choose to invest in the south or midwest
Pool your resources… Lock up a good deal and partner with a proven flipper… Yoy need to build up equity… Flipping is the fastest way… Learn from a professional partner…
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Tapping into equity is key. As your properties grow in value, get a HELOC or cash-out refi to get some money out and use it as downpayment to buy the next one. Rinse and repeat.
I also used a lot of leverage. In some of my mortgages I only put 10% down. I am also not too picky about cashflow. As long as I am not too negative, I am fine. So being a couple hundred dollars negative is not a deal breaker for me. My theory is that my mortgage is fixed, and I can (hopefully) raise rent every year, so sooner or later I will catch up.
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I can partner!!! I’m proven!!! 
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Do you have more deals than money? Or the other way around?
@gal, I’m also female and have single income as well. Another option for you to think about is you can rent out your current residence and rent another place for 1-2 years (2 years more ideal). Then you can establish your rental income source and you can in a sense qualify for a “bigger” mortgage amount since the bank will be using your rental income to offset your PITI on your first home.
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More deals than money!!! Always cash strapped 
That is a good idea although I would definitely pull out the equity from the current home while it is owner occupied and have cash on hand
It is also more hoops to do a cash out for investment properties…
It helps to be handy too or have a knack for say gardening or designing. If you can doll up a pig, real estate is where you can really take advantage of those skills and get a nice return for your work. It helps to have a contractor contact too to help you keep remodel or repair costs down. Too many repair outfits out there gouging people. Having a good mortgage contact helped me greatly actually. I was kept in the loop when rates came down and sure while she made money (all do) she still had my back. Evidence: I have a 2.5% fixed rate and the balance is rapidly coming down.
To really do it, one has to make some sacrifices so that may mean investing in neighborhoods or cities that are marginal but from your investigations are on the cusp of turning. The early bird gets the worm again. So, imagine if you bought a home say in Oakland or say in southern or eastern part of SF a few years ago. While you live there, you build an inlaw unit that you rent out. Boom, you have income that is helping you with the mortgage and your property is hopefully appreciating over time.
Yes that is more ideal but you’d have to owner occupy it for another year for the refi if you want the lower rate (as opposed to the investment property rate).
@harriet Nope not necessary just past year as owner occupied is enough to get the low rate.
To add to @sfdragonboy yes for me having a designer and contractor who worked together really well was crucial. I could just be handsoff as a full time working professional and let them do their gig. Now, I feel it is best to do renovations at one go instead of piecemeal, I learnt it the hardway because there is less overhead and therefore less cost and everything can be planned and accommodated at one go, as opposed to doing it piecemeal and sometimes having to redo previous stuff to accommodate new changes.
Not everyone will agree with the utility of a designer but it makes a big difference having a professional design the flow and materials as opposed to myself or a contractor.
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I think in the refi agreement there’s usually a statement where you need to declare that you intend to occupy the home for at least one year from the refi close date.
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In our case we got a HELOC as owner occupied and ended up moving after 6 months and our loan officer at usbank was aware of it and didn’t make a deal of it.
Hey, in another tread I just mentioned US Bank. They got a killer equity line promo now. 1.99% rate!!!
Unless you don’t like current townhouse, there is no need to upgrade.
What you need is to build up a passive income stream. I would just build up a stock portfolio of dividend paying stocks since you’re unlikely to be actively managing the property, incurring property management fee means many places may not worked out. However, since this is a RE forum, and many already suggested the way to do so, just want to add that the first rental you want to buy should be a house that you might want to retire to if necessary. In other words, you don’t have to limit yourself to bay area, I bought some rentals in Austin since that is a place I might retire to.
Thanks everyone for the amazing responses. I would love to partner with a flipper, I don’t know any. I do have equity in the townhouse and the location is amazing and very rentable. Current rents are insane so if I did move and rented my place out, I am not sure I can save a lot of money on a monthly basis but that is an option as well I need to look into more. If I took out a HELOC to use as a downpayment, I think being single income makes that feel risky but then again, I haven’t thought of that.
Look into that US Bank promo I mentioned that is going on right now. The beauty about it is that you can just open the equity line and keep in your holster when you want or need to use it. No cost no fee. You do need to technically open a checking with or without a savings account there to get the best deal according to the contact.
According to my Tracie (mortgage broker) this is how she for herself made a killing in the condo market in the last correction. She said there were condos in developments in Hayward or somewhere in East Bay that because there were too many owner defaults at the developments lenders were not willing to lend for people to buy. Well, having an equity line solved the problem for her. She snapped up several condos for 199K each with the equity money. Now, worth easily 400-500K each. Come on, a mortgage broker who doesn’t need to sell!!! She should be on here…
I got that deal a couple of years ago from USBANK too for 1st 6 months…In the end, used up all the money to remodel our home (now a rental). Looking back, I wish I did a cash out with fixed 30 year so I can sleep at night, because now the HELOC is 4.5% (interest only )