Home Buying in Mission Bay>Question Details

Laura, Home Buyer in San Francisco, CA

Is a condo at the Radiance at Mission Bay a good investment?

Asked by Laura, San Francisco, CA Tue Feb 5, 2008

I am looking to purchase a condo in the city and plan on holding onto it for 5-7 years. I particular like the new development Radiance at Mission Bay. The location is convenient and the area is developing. Considering the influx of new condos in the Mission Bay area, would the Radiance be a good investment given the 5-7 year timeframe? In addition, in terms of appreciation, is a 2 bedroom condo a much better investment than a 1 bedroom condo?

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If you hold 5-7 years, I think you will be fine. I think however there may be better choices.

I have represented a lot of buyers / sellers (40+ Infintiy, 20+ One Rincon Hill, Metropolitan, Watermark, etc.) in SoMa / South Beach and hope I will have the opporutnity to show you what SoMa has to offer. If you give me 2 hours of your time I will give you back a personal tour of SoMa, and the reasons why I think SoMa is so great.

Paul Hwang
Your SoMa / South Beach Super Broker
Skybox Realty
415.216.8746
Web Reference: http://www.paulhwang.com
0 votes Thank Flag Link Tue Jan 5, 2010
Radiance is a great investment.
It is part of one of the best neighborhoods in America http://www.mensjournal.com/the-best-nabes-west
You have direct access to the best running/walking waterfront path,
There are delicious restaurants in Mission Bay (Tsunami, etc), the Dogpatch and Potrero Hill,
They are putting in a great new waterfront park with pedestrian shopping streets,
http://sf.curbed.com/archives/2009/01/27/new_nabe_alert_miss…
0 votes Thank Flag Link Fri May 29, 2009
SFisHome...personally I think your logic is completely upside down. While it's true that oversupply may mean a decrease in values, that's not what you're saying. You're saying buying in an area with many new developments is a bad investment because buyers have newer choices and will be turned off by the older developments. That doesn't make alot of sense to me.

Simplistic example...say you buy a place in Mission Bay for $500/sq. foot for sake of simplicity. Unless the supply/demand curve is bad (which it could be now), any new development would likely sell for more than the old...so say a new development comes online at $550/sq. foot. True the old one might not increase to the $550 amount, it will certainly increase somewhat. Consequently, in a more typical scenarios the new developments could INCREASE the value of the old...not decrease like your used car scenario.

Your hypo really only works if the newer developments sell for the same price as the old ones did which really only happens in a flat or depreciating market...that's a function of SUPPLY/DEMAND NOT the fact there's new versus old.
0 votes Thank Flag Link Thu Jun 19, 2008
My answer would be NO. Probably not the politically correct answer as an agent. And while I like the Radiance and think it could be well suited for someone who will live there, your question asked if it is a good investment. Strictly from an investment standpoint, I think there are many better options available.
0 votes Thank Flag Link Wed Mar 26, 2008
Hi Laura,

I can see the Radiance out my window from another new development in Mission Bay.

Are 2 bedrooms a better investment? Yes, I think so. In San Francisco, we often have couples with double income. This puts a premium on having the second bedroom.

Are you going to lease it out? I love the Radiance however, as it is a premium building, it might not be as good as a rental. Renters want to have closer access to public transportation: the train station. Also closer to shopping. There are other premium buildings that I think are better for rentals. If you contact me, I'll be happy to arrange a tour for comparison. 415-756-5730

Bill
0 votes Thank Flag Link Mon Mar 24, 2008
Dear Laura,

Radiance will be a good investment, I believe, if you are willing to wait for the area to grow with you. Mission Bay is a planned "city within a city" and currently a very hot area. With the University of California and commercial buildings going up, I think it will stay that way for years to come. If you do not plan to stay there or keep the condo as an investment property for at least that 5-7 year period then I do not think you should buy there. Real Estate has always been cyclical with up and down period thus
I agree with Gregory that 10 years would be better.

Most people want a two bedroom unit. However, they both sell well. You should buy the largest unit you can COMFORTABLY afford - especially with the new short-term $729,000 conforming rate loans. You should not have a negative cash flow or get an interest-rate only loan. If you are thinking of renting your unit in the future, you should keep that in mind when you structure your loan.

Lastly, with the fears of recession, the soft market and a plethora of condos in South Beach, Mission Bay, SOMA and Dogpatch, remember to ask for concessions from the developer! Please contact me if you want to know more. Otherwise, I wish you the best of luck in your search!

Cheers,

Sally
0 votes Thank Flag Link Sat Mar 22, 2008
Yes, the Radiance will be an excellent investment. But, it's not only a question of how long you will hold the property, but how you will finance it. If you believe you will leverage 80% of the purchase price and cash-flow you better go sharpen your pencil. Start thinking all-cash or around 25% LTV if you don't want negative cash-flow. Two bedrooms or one... that's a difficult question. The Radiance gives you more square footage than the competition and that should be good enough to attract tenants. But, as always, if the rental market takes a downturn, the best mouse trap wins the tenant. With that in mind, play it safe and get the largest unit can afford, and if it has a view and patio/balcony, all the better. With all the offices surrounding the project, rental demand should be very strong. I'd estimate $4,500 to $5,000 monthly for a 2 bedroom with a water view. I think your 5 to 7 year holding period is on target, but think 10 years would maximize your return on investment because, even though SF is still experiencing appreciation, you may see some price drops in the near term. The HOA dues are around $100 to $200 per month less than the competition and that's a plus as well. With 99 units in the first phase it's a manageable project and with phase two in the works it's more than likely you'll pick up some appreciation when it comes on line. Good luck.
0 votes Thank Flag Link Tue Mar 4, 2008
I have another concern... and I know many SOMA focused agents will not agree... but given all of the new construction happening down there, think of a new construction condo like buying a new car. You get the new car smell, the latest electronics and gadgets, and the exact colors you want, etc, etc. But as soon as you drive it off the lot it starts to depreciate. Obvious cars have other issues, but part of the reason they depreciate is that there's a new model the very next year. In SOMA, South Beach, Mission Bay, etc, there will be new developments every year.... and the new ones go for outrageous prices. The price per SqFt in many of the developments in that neck of the woods make no sense to this largely northern neighborhood based Realtor. How can it be more expensive than Russian Hill or Pac Heights or Cow Hollow? Well - many of last year's model aren't more expensive, it's usually only this year's model. So is the Radiance a good investment? It will be IF the whole area appreciates.... but if it turns out to be a good, my guess is that you could skip the new car smell and buy into something that was hot a year or two ago and "buy" even more appreciation. And yes, I buy used cars since I don't think new ones are good investments :)
Web Reference: http://www.SFisHome.com
0 votes Thank Flag Link Fri Feb 8, 2008
It will take awhile for the area surrounding Radiance to develop into a real neighborhood, and it could be longer than your time frame. The Yerba Buena area took a good 20 years to build out completely and become the vibrant neighborhood it is now; South Beach has taken about 15 years (they just started their merchants association last year; and a friend who has an art gallery there began staying open on Saturdays just last year); the area of Mission Bay on the City side of the canal has coasted on South Beach. I'm with Peter that for your time line it may be better to consider something closer to the Financial District.
0 votes Thank Flag Link Thu Feb 7, 2008
Hi Laura,
Considering you are planning on holding the property for 5-7 years I would say that yes, the Radiance is a good investment. Most of the adjustable rate mortgages are coming due this year and that will have its affect on the overall market in the short term. However, San Francisco is a wealth city with high salaries and a history of real estate values that consistently beat whatever happens during a downturn. That being said, I think that there are some better buildings investment wise.

The Radiance is convenient, has all the ammenities, and has some retail development planned, but I would be concerned about the heavy supply of Below Market Rate Units coming into the area. Places like One Rincon Hlll, The Infinity, and the Millenium have more unique features and should be the better investments for the long term. Any structure that is closer to the financial district would be a better long term investment in my opinion.

As for a 2 vs. 1 bedroom? Statistically, there is not much difference in the appreciation rates. However, I would recommend the 2 bedroom just for the simple fact that if something happens and you need the rental income, the 2 bedroom has more potential.
Web Reference: http://gregorygarver.com
0 votes Thank Flag Link Thu Feb 7, 2008
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