San Francisco real estate looks great on Instagram.
The financing behind it? Not so simple.

This is Episode 3, and a true story about a four-unit property, a parent helping a college-age child, and a deal that almost fell apart — even with a 30% down payment.

If you’re a Millennial buyer, investor, or future homeowner, here’s what you actually need to know.

🏙️ The Situation (Quick Version)

  • Buyer: A college professor buying in San Francisco
  • Property: A four-plex
  • Plan:
    • One unit for his daughter
    • Three units rented out
  • Goal: Offset high student housing costs while investing long-term

Sounds smart, right?
It can be — if the numbers are real.

🚨 The Big Mistake Many First-Time Investors Make

Assuming a large down payment = a safe deal

Even in San Francisco:

  • Prices rise faster than rents
  • Rent control limits income growth
  • Expenses always increase
  • Many multi-unit properties only break even

A big down payment helps — but it doesn’t magically fix bad math.

💡 Lesson #1: Cash Flow Matters More Than Hype

Before buying any multi-unit property, ask:

✔️ Do rents actually cover PITI?

  • Principal
  • Interest
  • Taxes
  • Insurance

✔️ What happens if:

  • Insurance goes up?
  • Repairs are needed?
  • Rents can’t increase?

If the deal barely works on paper, it usually doesn’t work in real life.

🧠 Lesson #2: Big Banks Aren’t Built for Creative Deals

The buyer spoke with several lenders.

Result?

  • “The numbers don’t work.”
  • “We can’t approve this.”
  • “Guidelines won’t allow it.”

Why?

Big banks:

  • Focus on standard loan boxes
  • Offer low rates — with strings attached
  • Aren’t flexible with complex properties

Creative financing isn’t about the lowest rate — it’s about structure.

🔧 Lesson #3: The Right Loan Can Make or Break the Deal

This deal closed because:

  • The loan was structured properly
  • Real expenses were used
  • A lender with flexible guidelines was involved

Same property.
Same buyer.
Different outcome.

⚠️ Lesson #4: Last-Minute Renegotiation Is Risky

After loan approval, the buyer:

  • Re-ran the numbers
  • Got nervous
  • Tried to renegotiate everyone’s compensation

At that point:

  • His 3% deposit was at risk
  • Walking away = real money lost

Once contingencies are removed, decisions become expensive.

🕰️ Lesson #5: Real Estate Is NOT a Get-Rich-Quick Plan

The buyer sold the property two years later.

Result?

  • No real profit after commissions
  • Lesson learned the hard way

Real estate builds wealth:

  • Over time
  • With planning
  • Through strategy, not shortcuts

🧩 What Millennials Should Take Away

If you remember nothing else, remember this:

🔹 A big down payment doesn’t guarantee a good deal
🔹 Cash flow > purchase price
🔹 Rent control changes the math
🔹 Creative loans exist — but not everywhere
🔹 Experience matters more than rate ads

✅ Final Thought

San Francisco real estate rewards people who:

  • Ask better questions
  • Get realistic advice
  • Work with professionals who understand complexity

Buying smart today protects your future options tomorrow.

If you want a loan strategy — not just a quote —
that’s where the conversation should start.

🔎 BROKER’S EDGE – Smarter Real Estate Lending
🤝 Looking out for your Best Interest, and Helping Homeowners, Investors & Small Business Owners since 1990

📞 Steven Hook | Residential & Commercial Mortgage Broker

📱 415-260-9376 | 📠 415-449-3428

🎓 MBA | CMPS | CMA

👉 Schedule a Call
🌐 SanFranciscoLoanOptions.com
🌐 shook@Uamco.com or smhloans007@gmail.com

🆔 NMLS #303544   Ca DRE #00987187

This content is provided for informational purposes only and is not a loan commitment or guarantee of financing. Loan programs, rates, terms, and conditions are subject to change and borrower qualification. Individual results may vary.

Posted in blog, Tips and Tricks