Home Buying in California>Question Details

Mel, Home Buyer in Los Gatos, CA

Is this a good time to buy rental/investment property in the bay area and where should it be?

Asked by Mel, Los Gatos, CA Wed Jan 16, 2008

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In recent years, I have seen clients buy property all across the nation in these so called hot spots or investor havens. Only to find out the nightmare of management (even with a property manager) is not worth the risk for the expected cash flow. While the purchase prices in the low $100K to $200K range seem attractive, they are that low for a reason. And now that more people are suffering from the turndown in prices, these properties generate large losses for outside investors.

San Jose is still rated as one of the top growth areas for rental income. And true investment properties (2+ units) have not suffered the same losses associated with under qualified buyers and spec flippers.

Avoid soft areas, single family homes, and condo's for the time being. You can find a quality long term investment in most of the bay area.

Let me know if you would like to discuss further and complete your approval process.
Web Reference: http://www.SLarson.com
1 vote Thank Flag Link Fri Jan 18, 2008
I don't think you can go wrong buying a quality property in the Bay Area, especially now as you can find some property on the edges of the city for reduced prices as many are struggling to make new ARM payments. Rents are going up and investors are seeing a spike in their cash flows. Long term I think the Bay area is the ideal place for investment properties as there are plenty of renters:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/09/16/…
0 votes Thank Flag Link Fri Feb 1, 2008
It is a good time to buy in the dallas/fort worth area. The rental rates are going up while new home builders are reducing the price of homes that they have in inventory. Most homes can be purchased rent ready and will be leased in 30 days or so.
Web Reference: http://www.homeferret.com
0 votes Thank Flag Link Thu Jan 31, 2008
Mei,

As mentioned in a previous response it depends on whether you're looking for cash flow or for appreciation. It also depends on your price point. If you want appreciation, plan to invest for at least 5 years, and you want something local that you can keep track of then invest in single family homes in the areas that are desirable in any market. For example in your area Los Gatos, Monte Sereno & Saratoga are prime. Rentals are hard to find and rents are high, of course so are the purchase prices. You could focus on the low end of these communities and make sure they are within the school district. There is a property on the market on San Benito in LG that has 3 separate units on it with potential income of $4400 per month, offered at $1,365,000, MLS: 772739. It's on a great street where many new homes are being built so down the line you also have a great lot that can be sold to someone who wants to build a new home.

Trish Forsman
Alain Pinel Realtors, Los Gatos
408/357-8655
0 votes Thank Flag Link Mon Jan 28, 2008
Hi Mel,
Well, compared to prices you're used to in Los Gatos, current prices in Sonoma County would seem like a bargain. Prices are still unstable, so you can make a good deal, however even with a 20% down, you would not have a positive cash flow after taxes and insurance are included. If cash flow is not your main objective, then, "Yes, it is a good time to buy an investment property". And the rental market is strong.
Would you be interested in a single family dwelling or multiple units? I can e-mail you a list if you'd like.
Best Wishes,
Lisa Nunes, CRS
Eco-Green Certified
Century 21 Alliance
Web Reference: http://www.LisaNunes.com
0 votes Thank Flag Link Sun Jan 20, 2008
I've recently noticed a couple of condo units that look like they would cash flow in the South Beach area, it actually surprised me! But I don't believe that this situation will remain that way into the Spring, we have several hundred new condos opening this year in the area when the construction is completed for move-in. Some of these units work for a corporate short term rental business model, which is very healthy, and would allow you to use your condo yourself from time to time should you wish.
0 votes Thank Flag Link Fri Jan 18, 2008
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