If you are a new (or even experienced Santa Clara investor) you may wonder which makes a better investment, a condo or a single family home in the Silicon Valley? The answer is either, depending on your goals.
The most important question is are you more interested in cash flow or long term appreciation?
Here are the facts:
1. Rents are more effected by bedrooms and square footage than lot size. Dollar for dollar you will get a higher rent per dollar spent with a condo than a single family home that costs the same amount.
2. Condos have HOA fees that Single Family homes do not have, but much of the HOA fee goes towards expenses you would have to pay if it was a single family home such as insurance, landscaping, often water and garbage, and exterior repairs.
3. In the Silicon Valley the value of the land is far superior to the value of the improvement on the land in most cases. So, as time goes on and the improvement depreciates having more value in the land will bring in more appreciation.
So in general, if you are more interested in cash flow a condo may be a better option, and if you want long term appreciation a home would be a better investment.
If you want a balance of both, buy a rental home on a the smallest lot available, which means you would be spending more of your dollars on the cash flow producing part of the investment while still having the land which appreciates.
If you have any questions about buying or selling investment properties in San Mateo or Santa Clara County please feel free to contact me.