How much cash flow should I expect from a Bay Area rental?

The honest answer: at current interest rates (6-7%+ on investor loans, 7%+ on jumbo), most East Bay rentals are cash-flow negative or breakeven in year 1 when you finance 75-80%.

Example math — $1M East Bay duplex, 25% down: - Purchase price: $1,000,000 - Down payment: $250,000 - Loan: $750,000 at 7% = $4,990/month P&I - Property tax (~1.1% of purchase): $920/month - Insurance: $200/month - Maintenance reserve (1% annual): $830/month - Property management (8% if used): $400/month on $5K rent - Total carrying cost: ~$7,340/month - Realistic rent for both units: $4,500-$6,000/month - Year 1 cash flow: -$1,300 to -$2,800/month

Why investors still buy: 1. Appreciation: Historic East Bay appreciation is 4-7% annually. On $1M, that's $40-70K/year of equity gain. 2. Loan amortization: Each month, your tenants pay down your principal. ~$8K/year in year 1, growing each year. 3. Tax benefits: Depreciation deductions can offset rental income for tax purposes. 4. Rent growth: Rents typically rise 3-5% annually in the East Bay. Your costs are mostly fixed.

Total return (cash flow + appreciation + amortization + tax benefit) is typically 8-12% even when year-1 cash flow is negative.

Bay Area investing is a long game. Cash flow turns positive in years 4-7 typically. Investors who need positive cash flow in year 1 should look outside the Bay Area.

What I've written here is general. Your specific timeline, equity position, and the exact neighborhood pocket your home is in all change the math. For a complete picture, call or text (510) 504-0402, reach my 24/7 line at (406) 205-9003, or email roger@grubb.net. The first 20 minutes are free and there's no pitch.