My biggest real estate regret was not buying a two bedroom, two bathroom, double balcony condo with a view of Manhattan’s Chrysler Building in 2001. I was 24 and could have put down 10% on the $760,000 property that is worth over $2,000,000 today. Now I’m almost 40 and no longer have a desire to “grow into my debt” through aggressive hustle. Instead, I’m all about paying down debt and simplifying life.
I’m a huge fan of real estate because you only need to do four things to grow your wealth: 1) come up with a downpayment, 2) pay your mortgage on time, 3) try not to buy at the top of the market, and 4) own your property forever. If you do these four things, I’m confident that thanks to inflation, your net worth will be healthier than if you just rented.
As I just finished refinancing one of my properties, I decided to put together a “progress chart” to see where I stand with this one. A couple folks mentioned $850,000 is still quite a large mortgage. I agree. That’s why I’ve come up with an accelerated pay down plan. I’m all about creating goals, making charts, consulting with others, and tracking my finances to make sure I’m on target. You should do the same. It’s very enlightening.
What I realized from this latest exercise is that perhaps I’m spending too much time trying to build wealth with too many different asset classes. If I just focused on optimizing this one property in my portfolio, there’s a good chance it alone could make me a multi-millionaire!
Why You Should Buy Real Estate
When it comes to building wealth, everybody wants simple. Understanding real estate as an investment is about as simple as it gets.
1) Real estate prices move in 7 – 10 year cycles.
2) There’s a natural tailwind due to inflation.
3) You want to own real assets because money is only a medium of exchange that loses value every day due to inflation.
4) With inflation, rents naturally rise. If you stay a renter, your costs will always go up quicker than a homeowner’s costs, making retirement a little more difficult to manage.
5) Despite inflation, interest rates keep coming down. This is the goldilocks scenario for all real estate investors who get to take advantage by refinancing their mortgages or getting record low mortgage rates for purchase while also raising rents. Credible is my favorite lending marketplace to get pre-qualified lenders competing for your business for free in under three months.
6) Humans are undisciplined savers and spenders. Having a mortgage forces you to save because each month you are paying down principal.
7) After you’ve finished paying off your property, if you wish you can add the full value of the property to your net worth. Everybody should make this calculation to see what their minimum net worth will be.
8) Living in your house doesn’t require investment work. Living is just life.
Here’s my progress chart for a property I bought at the end of 2004 for $1,525,000. For the six years prior, I saved and invested 50-75% of my after tax income in order to one day break free from an unsustainable career. The numbers are estimates within 10% of true value/cost.
Housing Chart Analysis
* In 2005, I’ve already been an adult for 10 years. I missed my opportunity to buy a place in Manhattan at age 24. At 26, I finally bought my first property in SF, a 2/2 condo. The place was nice, but I regretted not buying to my maximum potential because I was afraid. Therefore, at age 28, I went all-in and bought a single family home for $1,525,000 by taking out a $1,220,000 mortgage. It was kind of nuts to have over $1,600,000 in debt at such a young age. But I felt bullish about my future, having just received a promotion at my firm. No risk, no reward.
The total cost to own after deductions was about $4,800 including property taxes, insurance and maintenance. Given you can only deduct $1,000,000 in mortgage indebtedness, my goal was to get the mortgage down to $1,000,000 sooner. However, after the $305,000 downpayment, I had practically nothing in the bank so I didn’t make extra principal payments the first five years. Instead, my immediate goals were to work hard at my job so I wouldn’t get fired and to replenish by savings account by saving 70%+ of my after-tax income.
If you take on huge debt, your motivation to work hard will shoot through the roof!
* There is an opportunity cost to sinking $305,000 into a downpayment. In my case, I would have only invested this downpayment money in more conservative asset classes like CDs, treasuries, or muni bonds yielding ~4% at the time. So yes, I could have made about $1,000 a month risk free, but I wanted to swing for the fences while I was still young. I was either going to blow myself up or get rich sooner, rather than later.
Related: Invest In My 401k Or Save For A Downpayment?
* I had two good years of property price appreciation until the financial meltdown chopped off ~22% from the 2007 high. I estimated my property’s value declined to $1,400,000 – $1,450,000 in 2010 because that’s the value I was able to convince the city to agree on to lower my property tax bill for several years. The downturn didn’t feel good, but it didn’t hurt my lifestyle. I still enjoyed living in my place with a fixed payment. I just locked down all superfluous spending. My $6,000 vehicle named Moose was good enough! When you never plan on selling, devaluations don’t hurt as bad. Financial Samurai was born during this time of turmoil.
* By mid-2011 things started to recover. The S&P 500 bounced off its lows and people were interested in buying property again. Interest rates declined, and I refinanced my property before I left my day job in 2012. 2012 was the time I seriously thought about selling my house given I didn’t have a steady W2 income anymore and Facebook had just gone public. Having $1,075,000 in debt just from this house without having a day job was concerning. Still, all I thought about was simplifying life! Thankfully, I didn’t sell because a nice five year bull run ensued. In retrospect, I should have bought more property in 2012.
* In 2015, despite having over $1,000,000 in equity in a property that I valued at $2,300,000 compared to online estimates of $2,800,000, I still couldn’t refinance my 5/1 ARM 2.625% mortgage because I didn’t have two years of freelance income under my belt. I was disappointed, but felt strongly that another opportunity would arise before the fixed rated adjusted in June 2017.
* In 2016, I finally refinanced my mortgage to 2.375%. The cost to own dropped to only around $3,000 a month after deductions (mortgage interest cost of $1,682, property tax of $1,600, $200 for insurance, and $200 for maintenance). Meanwhile, estimated rent for the house now ranges from $8,800 – $10,000. It is a blessing to be able to lower costs through a refinance and raise rents.
* From 2017 – 2019, the real estate market declined as global growth softened, private tech/internet company valuations declined, layoffs increased, more new condo inventory filled the market, and poor performing IPOs.
* By 2025, I plan to completely pay off the $1,220,000 original mortgage. I’ve always had a goal to pay off this property by age 50. The ongoing cost to own this property will drop to around $2,000 a month post-deductions. $2,000 is still a lot largely due to property taxes, but it’s less than the $10,000 a month it would cost to rent the property. Further, I have the option to sell.
* If I do nothing else, this property alone will make me a small fortune. I’ll need it, because in 10 years, $4 million might be the new $1 million. Sure, there might be a massive earthquake, a fire, or another huge economic collapse between now and 2025 that will destroy my plans. Thank goodness for insurance and risk-free assets. But if I stick to the program, there’s a real possibility that the scenario I’ve created in this chart will come true. Now it’s your turn to create your own scenario.
Update 4Q2019: I decided in mid-2017 that I couldn’t take being a landlord anymore so I sold my SF rental house for $2,740,000, or 30X annual gross rent. I was getting $9,000 a month for the place but when I looked for renters for 45 days, the best two offers I got were for only $7,500. The influx of new construction luxury condominiums is really putting a damper on prices.
I ended up using $550,000 of the $1.8 million in proceeds and bought 18 real estate crowdfunded deals in cheaper parts of the country with much higher net rental yields. Managing tenants was too much of a PITA after my son was born in April 2017. I’d much rather make money 100% passively.
Automatic Wealth Building
I’ve made my bet about where real estate prices are going over the next 10 years. Now it’s time to make bets elsewhere for diversification purposes.
When we are young, time is on our side. But once we hit middle age, time starts becoming our enemy. We lose our enthusiasm and energy the older we get. We need time to ride out the cycles. We need time to build equity. We need time to take advantage of refinancing opportunities. All I want to do as a 42 year old fella is relax! Once we’re past 55, it becomes harder to justify buying a property because we might die before we pay it off.
Save as much as you can, figure out where you want to live for the next 10+ years, and get long inflation by buying at least one property as young as you possibly can. If you don’t invest a single dollar in any other asset class, at least you’ll end up with a fully paid off property within 30 years to provide some financial security. If you can build a diversified net worth, all the better!
Recommendations
Explore real estate crowdsourcing opportunities: If you don’t have the downpayment to buy a property, don’t want to deal with the hassle of managing real estate, or don’t want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.
Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. For example, cap rates are around 3% in San Francisco and New York City, but over 10% in the Midwest if you’re looking for strictly investing income returns. Sign up and take a look at all the residential and commercial investment opportunities around the country Fundrise has to offer. It’s free to look.
Less than 5% of the real estate deals shown gets through the Fundrise funnel
Take advantage of lower rates. Check out Credible, one of the largest online lending platforms today that will get lenders to compete for your business. Fill it your needs and get real quotes from qualified lenders in under three minutes. The process is easy and free.
Updated for 2020 and beyond.
It’s good to know that you should invest in real estate when interest rates are low for your mortgage. My sister has been telling me about how she came into some extra money recently, and she wants to invest in property. I’ll share this information with her so that she can look into her options for real estate brokers who can help her with this.
Wow, I had never considered the fact that rents will rise naturally due to inflation, and that means that your rent will go up faster than if you were to buy a home. My partner and I recently became engaged and have decided to buy a home together, which is something that I have wanted to do my entire life. Hopefully, we will be able to find something that will fit both our styles and that will help us feel comfortable and luxurious, while not being affected by inflation.
It makes a lot of sense how you said that if you don’t buy the property you live on then your expenses will increase at a much quicker rate. Finding an agent who can help you to find some property that would be good to build on is a great idea. That way you don’t have to worry about costs increasing the longer you live there.
I like how you advised people to buy property when they are young so they can have long inflation and build equity. My youngest brother is twenty-two years old and doesn’t know what he wants to do with his life. I think he should follow your advice and invest while he’s young and try to buy a property so in the future he is financially stable.
I’ve been planning to purchase a house near the lake. Surprisingly, my decision isn’t all that bad because according to your statement, a real estate’s price moves in 7 – 10-year cycles. Well, just in case I push through with the plan, I do hope to find a reliable real estate company that’ll lead me to my dream home.
My husband and I are planning to purchase a home near the lake, but we’re not sure if buying a property is worth it. That’s why we’re glad that we’ve stumbled upon this article; it’s great to know that real estate prices move in a 7-10 year cycle. Also, after the property is fully paid, its full value can be added to our net worth.
I did not know that real estate prices move in 7 to 10-year cycles. My dad told me that he would like to buy a new house so he can invest some of his money instead of spending it on other stuff. I will share this article with him so he is aware of the benefits of buying a house and how his money can grow by doing that.
I did not know the fact that real estate prices move in 7 – 10-year cycles. My parents are planning to buy another house but they haven{t decided what area to choose from. did a great job of explaining how having a mortgage forces you to save because each month you are paying down the principal.
I like what you’ve said here about owning real estate. I love how you said that as long as you have a down payment, pay your mortgage, buy lower on the market, and own the property for a long time, it’s a good choice to buy. My wife and I want to buy our forever-house this year, so we can do all of that!
Hi Sam – any updated thoughts about Bay Area real estate? I’m in the peninsula looking at low end condos. Prices definitely seem to be on the decline for now, Fed keeps raising rates, SALT tax changes may not fully hit until people file next year, and overdue for a recession. Still, a lot of IPOs seem to on the books for next year and you’ve convinced me renting is equivalent to shorting housing (which I don’t want to do). Any thoughts?
My thoughts are that the housing market will continue to soften around the SF Bay Area. Inventory is up 40% YoY and at multi level highs. Stock market is crapping out as well. I’d be patient and really bargain hard.
Winter is the best time to buy real estate.
Also:
Time To Worry About The Housing Market Again
But I have to imagine the IPO of Airbnb and Uber will reignite the market here in 2H2019 or 1H2020 after 6-12 more months of softening. But let’s see what the entire US economy does.
Stories about people making big profits in real estate always amuse me, because they are by far the exception not the norm. Most people are shocked to learn that over the past 100 years, average U.S. home values have barely kept pace with inflation, increasing 3.1% annually. The stock market, on the other hand, has returned an average of over 10% annually during the same time period. On average, real estate doesn’t even come close as an investment.
True, there are pockets where real estate prices get distorted due to large shifts in population due to companies moving in or out of the area, or the region suddenly becoming “trendy” for one nonsensical reason or another. But these are the exceptions, not the norm. They are also the places where real estate bubbles form and pop, often wiping people out. The 2008-2009 real estate crisis was a very localized phenomenon, as most areas of the country were completely unaffected.
I live in one such area, and we watched the 2008-2009 housing crisis unfold with complete bewilderment, much like we watch a natural disaster on the news and think to ourselves, “Good thing we don’t live in an area that experiences (hurricanes / tornados / earthquakes / floods / wildfires / mudslides / etc.)”
Home owners also tend to conveniently “forget” the enormous costs involved in owning a house: Property taxes, maintenance, repairs, mortgage interest, buying & selling costs, remodeling, etc. Plus homes can go out of style over time and thus become out of favor in the market, forcing sellers to unload at bargain prices in order to attract buyers. In many areas of the country you actually LOSE money as a home owner (although typically not as much as you would lose by paying rent).
Owning a home is a lifestyle choice, and a home should be viewed as a consumption item, not an investment. At least that’s true in the rational 90% of the country that isn’t forced to ride the real estate price rollercoaster.
Does this mean you’ve been renting? After the huge rally in the property market, I sold my SF rental in 2017 for $2.74M after buying it for $1.52M in 2005. I couldn’t believe it. I’ve got a new post about the property market now for 2018: It’s Time To Worry About The Property Market Again
The cost of ownership is often the same or cheaper than renting over time. Hence, that cost is cancelled out. Remember, the return on rent is always -100%. You get a place to live, but same with ownership, so that cancels that benefit out as well.
Don’t forget, you can own and invest in stocks at the same time. Not sure why so many against homeownership don’t believe this to be true.
Sam
I was a lifelong renter until 2011, when my wife and I bought a house together. We moved in a month before my 46th birthday. Prior to that my wife owned her own home. I should add that during my 18 years of renting, only once did a landlord ever raise my rent. This included 5 apartments: 4 in L.A. over a 13-year time-span and one in upstate NY over a 5-year time-span.
I should clarify I’m not against home ownership by any means; I just wanted to point out that it is not the automatic money-making venture that so many make it out to be. SF is a bizarro-world when it comes to real estate, as is most of California (I should know, having lived in the L.A. area for over 13 years.)
Houses appreciate much more slowly in most areas of the country. Our house was built by the previous owners in 1992 at a cost of $219K. They sold it to us in 2011 for $246K… after they had a 2-story addition built. So no, they did not realize a profit on the house. And this is a 2,400 sq ft house in a very desirable upper middle-class area with one of the best school districts in the county. But that’s the way it is most areas of the U.S. that aren’t distorted by large population inflows and outflows and the resulting supply and demand imbalances.
Home owners enjoy total control over their living space and a few other perks that renters don’t get, but it has its drawbacks as well. Where I live, renting can be a much cheaper option, assuming you’re renting a smaller apartment as opposed to a house of the same size. My current property taxes (~$9,000/year) are equal to what I used to pay in rent for a decent-sized 1-bedroom apartment (~$750/month).
Anyway, I just wanted to share my experience so that people don’t think they’re making a mistake if they don’t buy a house. Renting can be a very smart way to keep your expenses fixed while also giving you enormous flexibility in case you ever need to move on short notice.
I completely agree with the benefits of renting. I’m a math guy and I look at the total cost of home ownership and total cost of renting. Over time, I’ve saved and invested an enormous amount of money by renting very cheaply. If you are very disciplined, you can become wealthier by renting very cheaply and investing intelligently. By renting cheaply, you’re throwing less money away per month than the total cost of ownership. This difference when invested intelligently over time turns into enormous amount of money. My rent has only increased one time in the last 7 years. It is still extremely low compared to ownership costs. A house is a risk. Anything can break over time. Property taxes will go up. Maintaining a home is a headache. The biggest problem with housing is the COST to own and maintain the property. It’s far better to reduce living costs to save money, than to try to make more money by buying a house to live in and raising your living costs. I’m able to save over 50% of my income because I rent. It’s far better to look at the biggest costs, than to save pennies here and there. Being a landlord is creating work for yourself. If you buy a rental property, you will have a job to keep the rentals occupied and well maintained. Bad renters will sometimes not pay on time. It’s a big headache. Even with the best renters, there is no guarantee of on time payments. If you are not handy, you will get killed financially. I hate real estate, and every person who works in the business of buying and selling real estate or fixing and maintaining houses. This is my personal opinion. I will rent forever by choice, and I will become rich by renting. Buying a house is similar to picking a stock. You can get lucky and you can pick a good location just as you can pick a good stock. Just because you got rich by owning rental properties doesn’t mean that it is the norm. A lot of people got killed financially by the housing crisis.
Whatever is good for you.
The latest Federal Reserve Consumer Survey data shows that homeowners are 11X wealthier than renters. That has to mean something.
See: The Average Net Worth In America Is Huge!
There’s a very simple explanation for why homeowners are on average much wealthier than renters. Young people or first time buyers who own homes (in high cost areas like parts of the east and west coast) on average have higher incomes and are able to qualify for larger mortgages and are able to save much more compared to young people with lower incomes who cannot qualify for a loan and cannot save much money. I’m emphasizing “young” and “first-time buyers” because past performance in certain housing markets like san francisco are not guaranteed to repeat over the next 30 years. Not everyone lives in a location that will turn out to be a great real estate investment. If you look at the family income statistics of those young people who own houses in a good location, and those young people who rent cheaply, you will find that people who own homes in good locations have higher incomes on average compared to people who rent cheaply. You cannot qualify for a mortgage in a good location as a first time homebuyer, if your income is not high enough. The most expensive homes are only affordable for the wealthiest people. A lot of renters are forced to rent because they can’t realistically afford a house with their low income. Think about the young people who graduated college recently. Most of them will rent for many years before coming up with the down payment to buy a house. A higher income allows you to save and invest more money, whether that’s in the form of home equity or stocks. A lower income doesn’t allow you to save much money and often makes it difficult to buy a house. Looking at the average wealth of homeowners can be very misleading because some very wealthy billionaires own homes and many many students and recent college graduates who have very low income are renters. Going forward, I strongly believe that your income has the biggest impact on your wealth potential, not your choice of owning or renting. My net worth is among the highest for my age and income, and I have never bought a house in my life. Doing the math, if I bought an average priced home in a good location at the bottom of the housing market after the financial crisis, my net worth would be lower today.
Real estate far and away outperforms stocks and many other investments. You can safely leverage $1 by 3-5x with real estate, you pay less taxes by using depreciation and 1031 exchange, your “dividends” (rent) are almost guaranteed to increase around the price of inflation, you pay down debt increase home value AND rents all while having more control over the investment. Meaning you can choose to repaint walls, who to rent to and how much to charge. If I buy an SPY stock I cant control president trump tweeting something that causes that stock to drop 5% in a day. So honestly no comparison. And the scenarios i just mentioned are not even if you actively invested meaning sought out undervalued deals etc.
You are sadly mistaken my friend. Only in a handful of over-heated markets that are detached from economic reality can real estate outperform stocks, and even then only for brief periods of time. Those are also the markets that crash horribly (see: 2007-2009.) Historically, real estate has only kept pace with inflation, returning on average 3%-4%, whereas stocks have returned 3X more at around 10%. Google it if you don’t believe me.
You are only accounting for price appreciation, I listed at least 2-3 other ways in which real estate outperforms stocks. And your analysis of the 10% annual return of stocks does not factor in taxes, which im sure neither do the 3-4% for real estate but the difference is there is a provision in real estate in which taxes can be deferred indefinitely which stocks do not have. Leverage will always produce greater returns and stocks cannot safely be leveraged the same way as real estate. So without question or confusion, real estate investing (NOT just real estate but the act of buying income
producing properties) will ALWAYS outperform stocks. Stocks build wealth ONLY through dividends and capital gains. Real estate builds wealth through dividends, capital gains, leverage, tax savings AND greater ability to control investment results.
Remember all data comparing real estate and stock performance dont take into consideration those extra advantages real estate has, namely the leverage and tax benefits.
Hi Sam,
I am glad I ran into this article. My husband and I are looking into buying a 2 bedroom 1 bath condo in SF. But we are worried that the market is right at it’s peak and we will need to wait out any upcoming downturn after buying. You predicted 2017/2018 the market would soften. How do you feel now that we are in November 2017? From a “buyer’s” perspective, the market is still pretty competitive but sellers pricing strategies seem to be less effective than before. Should we continue renting, saving and keep our nice cushion every month? Or should we max out our budget and buy now?
Hi, my husband and I trying to decide whether to rent or buy. We live in Orange County, and the most we can afford is a 2 bedroom condo for 440k or under. We have a one year old and another on the way. We have been getting a lot of pressure to buy from many of our family members, who have made a lot of money in the southern CA housing market. However, I am skeptical about paying so much for so little space. If we rent, we’ll probably pay 2000/month. If we buy, with a 10% down payment, we will be paying 2600-2700/month. What would you suggest doing? Thanks!
Kristina
It’s hard for me to get excited about buying California real estate right now. I just sold one of my rental houses in San Francisco because the prices are crazy in terms of annual gross rent.
Graduations on your second kid. How do you think about the cost of housing versus the cost of raising children?
I would stay patient and try and go bargain-hunting for misprice listings or listings that have been on the market for a long time. I would not be overbearing and chasing hot deals.
See:
https://www.financialsamurai.com/why-i-sold-my-rental-home/
https://www.financialsamurai.com/real-estate-investing-rule-rent-luxury-buy-utility/
Hi Sam,
I bought a multifamily in 2010 when prices in South Florida were still very low from the recession. The price of the property has gone up by 130%, and rents are very high in the area. I don’t owe anything on it. It seems like I should just leave it alone, but a part of me wonders if we are approaching a bubble and if I should sell now while prices are high. I have not invested in stocks or anything else and wonder if I should diversify. If I do sell, where should I keep the money until I decide to buy again ( theoretically if prices come down again) . Any suggestions?
Sam, what are the areas similar to GGH you believe offer value in SF? I’ve heard Shipyard and excelsior but wanted your thoughts on upcoming area for 2018 to buy.
Outer Sunset
Parkside
South City
Are good value
20yrs old. 36k salary:20k in expenses. 16k left over each year. Have been with my girlfriend for 7 years now. Wondering your opinion on if it is worth it to buy a 300k townhown in Raleigh, NC to add to my folio and rent it out after 3-5 yrs. Either that or just rent until I’m ready to settle down in 10+ years from now.
Can you explain why you used an ARM ? I feel like that could get you in trouble if interest rates go up.
Sure. See this post: 5/1 ARM Over 30-Year Fixed All Day Long
And
How Much Can My ARM Go Up After The Fixed Rate Period Is Over
What would you recommend for low to moderate income earners? I’m currently 24 yrs old with about 20k in cash and 20k in stock/bonds investment. I earn about 30k a year but would eventually like to purchase a property with the ultimate goal of eventually renting it out. I live in Oakland and have been contemplating possible buying a property in Sacramento, hopefully in the 150k < less range. Any advice is greatly appreciated!
Hi, I have been following your blog for a while. It’s very helpful! I am 23 now and looking for buying a house in South Bay for my primary residence as well as renting it out potentially. I am now debating if I should buy a condo(actual condo, on the 1st floor of a building) in Santa Clara which would cost me $3000/month to operate(including property tax, mortgage, utility, insurance…) or should I buy a townhouse in Sunnyvale which cost me $4500/month. Both would be 3B2B ish and would generate $2600-$3000/month if I rent two rooms out. I am just wondering should I invest for cash flow or appreciation, and there is a concern that condo would not appreciate as much as townhouse.
Hard to say Angela without knowing more specifics. At age 23, have you already saved up for the 20% or more down payment? If so, then you probably can afford to buy a larger place and grow into it with your type of income and savings.
But the market is finally slowing in the bay area, and will probably continue to slow until Uber or Airbnb goes public.
I am a 31 y.o. and would be first time property buyer. I saw you eluded to waiting till end of 2017 early 2018 to buy a property. Do you think it’s a bad time buy right now? I am not in the SF market I am in Las Vegas. Things seem a bit high for here as well. I will probably stay here for another 3-5 years at minimum. Buy soon in next 3-6 months or wait it out for a while?
If you can find a good deal now (still winter) where you can rent it out for a positive cash flow after putting 20% down from the get go, and plan to live it int for 5+ years, then you may be OK. But Vegas is back to peak prices again.
The unknown is how much the 10-year yield goes up and whether Trump’s policies are helpful.
I’m personally waiting for a 10% correction in SF, NYC, Honolulu, and investing in middle America for better returns via RealtyShares. Non-coastal real estate is much more attractive now with higher returns.
See: Should I Buy A Home In A Rising Interest Rate Environment?
Great post Sam. It’s surprising to me that a Facebook IPO changes the market that much. Seems that if you’re not in the club, you’re gonna be left out of the party for quite a while. I really have no option to purchase a property in San Francisco given the savings that I have. I’ve only become really aggressive about saving recently. I started looking at purchasing a rental property somewhere else that I could afford just so I can some skin in the game. I pulled data from Zillow in order to search for properties which could give me the highest yield for my investment. Per your recommendation I created a blog on my own and wrote a post about find the best rental properties using the Zillow Research data. askadatascientist.com/2017/01/10/real-estate-investment-hacks-using-price-to-rent-ratios/