So, I live in the SF bay area.
Anyone familiar with the area knows what I mean. To anyone not, it goes something like this. Salary of over 100k for new college grads, check. 3-bedroom houses in ok areas with a small yard for over $1m, check. Cheapest real estate is around $350k for a townhouse/condo/apartment with an HOA/condo fee.
There are a few investment strategies around me, depending on how much money you have. The cheapest I've seen, posted by another person from the MMM forums, was to take a large but crappy house in a crappy area of SF, get a bunch of government approval as a first-time home owner who plans to live in the house and help fix the area, and rent out rooms. It's a valid strategy, but it means your part-time job is now dealing with crime and blight. Doable, but much less passive than I'd like; besides, it doesn't scale - you get to do this once.
More expensive strategies are basically limited to buying homes with cash ($1m+ in cash) or building apartments/townhouses (good luck building anything in the bay area, and that's not exactly a passive investment.)
Having done a bit of research and a bit of driving, it's quite reasonable to find relatively inexpensive properties (under $50k) several hours' drive from the bay area. Around 3 or so hours for me is where I found a place I'm quite interested in exploring.
How would you folks get started?
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Personal details, some important, some not:
- 23, just graduated school
- Want to get into the business within 5 years, preferably a bit sooner
- Goal is financial independence, but not early retirement: will keep working regardless of investment income
- Cash flow is king, but open to investments with less cash flow potential if they provide other returns; however, I don't want to bank on appreciation so cash flow is probably still king
- Assets: 10k cash
- Liabilities: 38k student loans - or rather, will pay 38k including interest as I pay them off in ~3.5 years
- Income: 105k
- Net worth increase: ~35k/yr in tax-advantaged accounts, ~9k/yr in loan repayment
- Plan to improve that ratio asap. I know 40-45% saved isn't that great. Currently around 30k taxes and 23k rent. The more I reduce, the more money I will have to invest into this in the 5-year period. Planning 30-50k available cash.
- I will continue to invest the majority of my cash into tax-advantaged accounts - 401k, roth ira, hsa. I'd like real estate to be 25-35% of my net worth.