Second, you'll need to discuss your needs with a financial advisor so she can understand your definition of "good".
Strictly speaking, property investors don't chase illusory concepts like "bargains" or "easy renting". At my firm, we work with property investors who look for quality and industry benchmark cash-on-cash returns, not just a property that merely returns a positive cash flow. So, as long as the property is within the investor's financing capability and generates the proper rates of return, it's a good deal, simple as that.
Of course, the devil is in the details. You'll need to account for multiple factors like current rents, expected vacancy rates, maintenance costs, utility expenses, management overhead, etc. Start looking for properties that meet those criteria or seek assistance. Professional advise is much cheaper than lost income and opportunities learning from the school of hard knocks.
As others point out it depends on what your objective is with the particular investment. With that said there are some great opportunities downtown San Jose, East San Jose, Berryessa, and of course South County. Under the 350K price point, I think downtown is the best opportunity because of the college and the fact that many lots have R2 zoning which may allow for a second rental on one lot in the future.
I am happy to help you evaluate different options. No-obligation.
There are definitely some good bargain for under $400k, but you will have to decide what is important to you (i.e. large home in ok neighborhood or smaller home in good neighborhood?).
I'd be happy to give you my professional advice on what makes a great investment purchase for you, based on your expectations and your goals for the future. Would you like to meet to discuss this?
Feel free to call me anytime if you have questions.
Vicky Le, Realtor
Intero Real Estate
1) What's the goal? Cash flow? appreciation? Both?
2) Have you owned rental property before? Are you going to get professional management?
It's really easy to lose money in income property if you don't have great support. Also, not sure whether you are a beginner of a seasoned investor. It really is a business and you have to go into it with a solid business plan.
I am not a big fan of east valley - even though they cash flow with 20% down. I do like downtown. The values are good and there is much redevelopment. I also like some areas of Sunnyvale and Mtn View along 82. South San Jose is always a last resort for me - even though I went to Santa Teresa High :-) The numbers work but the rental market is soft.
I do have a bank owned duplex coming up on 10th street. It should cash flow with 20% down and it's in the path of growth. If you are new, it's a great place to start.
Some areas with good renting potential are:
Northern Sunnyvale (as you have already mentioned) - close to major high tech employment (AMD, National Semiconductor, etc.)
Mountain View - convenient to the South Bay and the Peninsula, and of course software companies in Mountain View itself,
Berryessa/Milpitas/NorthValleySJ - convenient to high tech employment near Montague/Tasman/North1st (Cisco, SanDisk, Altera, Cypress Semiconductoer, etc.)
Added bonus to Berryessa/Milpitas/NorthValleySJ - close to Ranch 99, McCarthy Ranch, Mayflower, Great Mall, Walmart, etc.
Nice areas of Sunnyvale and Mountain View are still priced in the single family residence above your parameters. Most REOs listed around $400K in Sunnyvale are gone as soon as they get on the market (note a home on Santa Paula last week).
I would have caution with South San Jose, although you can quite literally get into Evergreen/Silver Creek below $200K. One home went on the market near Eastridge Mall last week for $179,000. Good floor plan, three bedroom, two bath home with RV parking but real close to the mall (needed a new kitchen). With $36K down, that's about $850 monthly payment. You cash flow right away.
What I look for is decent schools and safety. There is a great crime locator for the city of San Jose where you can type in the address and look at the amount of police calls (and sorts of calls). This provides some good information when braving some of the lowest priced neighborhoods.
Anyhow, I really like North San Jose and Milpitas and we are starting to see pricing that does cash flow with a 20 percent down payment like the home on Holly, mentioned in the introduction.
Let me know if you would like more help!
Erica M Nelson
Silicon Valley Investment Specialists
Intero Real Estate Services
"Proven Results through Teamwork
Monday I was asked to manage a property in good part of South SJ, I was surprised how many homes were
available for rent. There were 3 rental homes that I was even involved in selling (no dice) are still looking for someone paying the mortgage. Many are offering incentives like 1st month rent for free etc. If you wish specifics please contact me directly.
To buy a residential investment property that would have a good potential of gaining value and price less than $350 I would only recommend Down toen San Jose. you have to buy a REO home and you may have to spend around $30K on it.
I just went into contract for a Single Family home in Down Town (North of 280) for $250K. I am sure it can be rented for over $1600. There are more homes like that out there. Go and get them!
Best Regards, -Steve
South SJ- there are bargains out there but each neighborhood is different. Do you like McKeon, Kay homes? Arcadia & Ponderosa homes have not dropped that low yet.
Dec 18 (Thur)- I visited an office on Almaden X-way chatted with sev. agents. They showed me the chalkboard with ~20 homes sold in Blossom Valley/S. San Jose. The price sold a fraction what they went for in the mid 90s. They sort like what homes were sold in the late 80s. Bernal (MH School district) is now a depressed area but the rent remains the same. Hitachi(old IBM campus) will be dotted with high concentration condos and there will be enough jobs to keep home price going up. I would avoid Senter/7 trees etc.
My advise is Blossom Valley, Santa Teresa areas. Too much yard work ? Look for a town home.
The tax benefit should be substantial assuming you are in 25% or higher tax bracket.
My name is Allyson, By your discription you would do well with purchasing an REO. I do specialize in bank owned properties and have extensive experience in helping buyers purchase REO'S. Also I know and have worked with most of the REO Agents, and that gives my buyers an added advantage because they alert me to pre-market REOs. The areas you have chosen have some very nice and not so nice REO'S, but the prices are right.! Your price range is definitely doable and as the other agents so rightly pointed out it depends on your investment objectives.
Now is the time to REALLY look because inventories are still high and Banks are looking to close deals NOW. As you have seen, the interest rates are very low.
I have the experience you may be looking for. I have a web site where you can check me out and if you would like to put in a search just for bank owned properties it's FREE!
You can check out my web site at http://www.homesbyallyson.com and set up your search or just email me with your needs and wants: what price range and areas you would like to search in and I will set it up for you. You will receive up-to-date listings as well as any changes in price or status.
If you need any assistance or questions anwered feel free to email or call me.
I say Brentwood and Mountain House. Both have been crushed and have very good possiblities when the market shapes up, especially Brentwood.
Contact me if you are interested in learning more and going over in detail what I can do for you.