6500 thats pre taxed.....CA tax on income is around 10% plus the poster seems to have high income...
I would rather earn $6500/mo extra and get taxed on it than NOT earn $6500/mo extra.
He isn't actually earning that.. that'd be the gross rents, if he rented out all 4 units. Then you'd pay taxes, expenses, mortgage, etc. And be cash flow negative several thousand a month. Would you rather that?
Renting out all 4 units shouldn't be a problem in any semi-decent Bay Area neighborhood. Assuming he finds a 30-yr fixed jumbo mortgage at about the national average rate and has $$ for closing beyond the $40k he mentioned such that the down payment is 5%, the mortgage would be about 4.7% or $3682/mo. On gross rents of $4850 ($6500 minus the $1650 he currently pays for his apartment), that's doable, though I agree just barely once you factor in PMI, property taxes and insurance. That said, the rent would go up every year while the mortgage, PMI and taxes would stay the same; the insurance might also stay the same for a while though it would eventually go up a bit. My only concern would be whether there's money for any repairs that may need to be made, but since the OP is being Mustachian and socking money away, there probably would be unless a major repair came up in the first year or two of ownership.
There are major risks there, for sure, but I don't evaluate rental properties that you're going to live in by the same scale I use to evaluate pure rentals--especially not if they're in a high-COL area. The reason I don't is that rent goes up every year or two as a general rule, so if you're renting the place you live, you're already pissing money out the window every month and can count on pissing away more and more as time goes by--but if you can own a place AND rent it out, you can steadily increase your rental income and thus steadily decrease your own cost of living. Of course, a rental that is only barely doable like this one is much higher risk than one you can easily afford, but it's nearly impossible to find properties that meet the 1% or 2% rules in high-COL areas, and one advantage of most if not all high-COL areas is that they are usually high-tourism areas too. So if you're without a tenant for a month or two, you can make ends meet by putting the vacant rental on Air BNB.
If he's currently paying $1650