You first need to determine how much of a down payment you can make, since the size of the mortgage is completely dependent upon that. Can you provide more information on your price range and current cash position? Also, have you talked to a financial planner or CPA to verify how a particular range of down payments could effect your personal cashflow and tax situation?
I recommend you don't contact a real estate agent until you've consulted with a financial planner and tax pro.
There are many bank owned properties in Sunnyvale, Milpitas, Santa Clara to name a few
That I just passed on to some of my investor clients below $400k last week.
Banks will likely require at least 25% if you wish to get a good rate. With a 5 year fixed loan at 3%
for investment properties on a conforming loan you will do just fine.
Blossom Valley and Santa Teresa also represent value but rents can be slightly low.
Closer to Silicon Valley better the rents.
There are also terrific Condos and Town Homes in Mountain View and San Mateo County and
Of course Santa Clara county.
As others have mentioned, it's harder to make positive cash flow on single family homes, but it's still possible. If you're looking for the highest returns, then townhouses and condos are your best bet.
If you're really looking to stretch your returns, you'll have to get friendly with some East Bay communities which offer single family homes with strong positive cash flows even with just 20% down. Those require more legwork and management time.
The other investor I worked with was also looking at 2bed 2 bath condos in Los Gatos, Cambrian, and Campbell. For investment properties expect to put down 30% then run the numbers. We found a condo with a Los Gatos address (not schools) for less than $300,000 which could rent for $1800 per month.
Now one factor many investors fail to consider is the entire vacancy, maintenance, and loss of interest on the initial investment (down) There are assumed equity factors. I use an Excel Spread sheet to run some scenarios. It is important for you to understand your ultimate goal when purchasing. Do you want tax write off, cash flow, someone paying your mortgage, a portfolio of property, and what is you strategy, Buy and Sell or Buy and Hold.
I agree with John the importance to talk with your tax adviser, they will be able to look at your portfolio and determine with you your risk factors.
All the Best to You.
Today, there are no places in the bay area where the rent covers the mortgage for single family houses unless you are prepared to make a very large down payment.
When Real Estate prices were most severely depressed back in 2009 there were some places in the Blossom Valley Area , North San Jose, Pacifica and Daly City where you could do that, however that was two years ago.
Real Estate prices in the Bay Area have recovered to the point that in the Bay Area you can no longer do that.
It is my sad duty to tell you that you are two years too late.
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I would be investigating the Downtown San jose and North East San Jose through to the Fremont border.
Remember, you are not looking to buy a property you might want to live in. You are looking to buy property thet people less fortunate than you will be happy to live in.
If you have to have a positive cash flow we need to talk about the variables that play into that scenario.