Its interesting to see the answers below. I love Ed's response. He's the quintessential shopper like us who knows where to look for value.
South Beach and SOMA have some fantastic new construction but occupancy levels tell you that no one is really buying them at these prices anymore. Arterra prices are down atleast $100K for every unit and 250 King recently had a $750K appt go on foreclosure and be listed for $600K.
Banks are calling their loans and at pretty soon these builders will have to slash rates to meet the loan requirements. I'd hang in there. Also the smaller the unit the more ridiculous the price.
Look at Cubix Yuerba Buena...at over $700/sq ft...they're selling walk-in closets calling them studios..Eventually, there will be no best time..just clinch the best deal you find...Best of luck!
I thought of you today because I just showed one of my clients property in SOMA and South Beach. Many of my colleagues have given you great advice however I think you are right on target for your investment goals. The more established traditional neighborhoods are certainly a safe place to put your money however it will be more difficult to find the tremendous bargains in SOMA and South Beach.
As an MBA, I am always looking at the numbers. The appreciation you will yield over time will be more of a wealth builder than the rent you will be able to charge. Therefore, getting a great price in an up and coming neighborhood is a very good business proposition.
Paragon Real Estate Group
SOMA/South Beach will yield you great value! South Beach is all about new construction - we have been able to negotiate amazing deals at several of the new developments. SOMA has some great resale lofts available. I recently completed a great rental analysis for one of my clients that I would like to share with you.
As for the 1031 tax exchange, we should talk about that in relation to the actually property.
Please give me a call or an email.
Paragon Real Estate Group
Comparing Potrero and Soma makes no sense. Firstly Potrero consists of the South Slope and North Slope. South slope is close to the projects and not nearly as sought after as 17th to 20th streets between say Kansas and Texas.
Any time there is room for improvement and upgrade with a very low HOA it is in your favor. Also, if you buy a unit in a two unit building with just you and the other owner there are insurance advantages. You don't need HOA insurance and can insure apart through someone like Farmers.
Also, for my bet I would feel far more comfortable buying on bedrock than on land fill. Buy on a concrete foundation and not brick.
Avoid the real estate rubbish such as the location is in the Dogpatch., and it is South of Tubbs, it isn't the Dogpatch. The moment an agent says that don't waste your time any further. We looked for two years and heard so much crap it was unbelievable. We met exactly one agent that knew what they were talking about, the rest, well I won't say on here.
Example we looked at a listing on 24th and Indiana. Says it was the Dogpatch and was a two bedroom. It was a one bedroom, by any standards of the uniform code and wasn't the Dogpatch. The Muni work site is between the loft and the Dogpatch and that isn't moving for the next 40 yrs.
Before we bought and closed I drove the area every AM and every night, weekend and work week. Soma is empty and night and not much going on, desolate. Potrero on 18th maintains a community and there are many lovely blocks.
If you can lock in at a good interest rate and a good HOA with room for expansion you'll be fine long term. On Potrero look at two unit and between $470 and $620 per square ft. Depending on view, parking and structure.
Funny that unit I looked at on Indiana was trying to sell for $550 per ft. looked at them two yrs ago and thought they must be mad. Must be worth no more than $200 a sq. ft with a $400 HOA and guess what never sold. HOA will end up being higher than property tax. This place will be upside down for many, many years. We were up sold on so many places all that have nose dived. All the places we loved have maintained the price.
Took four months and a lot of driving, do your research.
While I agree with everyone below about their opinions on the entire SOMA area, if I were doing a 1031 exchange I would buy in a more central part of town where you can purchase a multi family for the same price as a high end condo. In my opinion you have better cash flow potential and the appreciation rates are going to be comparable.....Just an opinion though :)
Rincon Hill, Mission Bay, SOMA, Potrero!
Take note of the current and future developments, Rincon Tower, Infinity, Glasswork, etc's.
Here's a link for additional research:
Good Luck -
I would go for South Beach because it is a newer "hotter" area and within walking distance to good restaurants and some shops. The Metreon & Downtown restaurants & shops are a bit further but still within walking distance. I would also look at Mission Bay and the Waterfront down by past the AT&T Ballpark. UC San Francisco and Bio-tech companies are moving in so you will have a large, built-in rental base right there. The light rail is also a big help but still has some kinks in it. Dogpatch is also up and coming and hopefully will grow in the coming years. Since there is no place to go but up or south for construction, this could be a good deal. How far down the pike, who is to know? You can go http://www.sfgov.org, the Mayor's website, and check out the areas for crime under the link to the police. You can also go to my website http://www.sallyrosenman.com and look up area demographics under my Links section. It is a real toss up between new construction and older, Edwardian building. I am finding that my clients are literally split between the two. Lastly, you will find that many young people who work in Mt. View and Silicon Valley like to live in South Beach & Mission Bay as well as Noe Valley & Glen Park because there is easy access to Highway 280 for their commute.
I hope this is helpful!
I think you've got good areas but I'd add the Inner Mission and Potrero Hill also. When Mission Bay is completed the activity and number of workers will be huge.
I believe that the best would be an older building with character and not a new condo. There is going to be allot of new product coming on.
The growth in SF is going on in Mission Bay and then along Third street. The new light rail and all is opening that up to downtown. The tech workers are still coming and working downtown, in SOMA and the area that was media gulch prior to the dot bomb. All new bio-tech and UCSF's hospital is in Mission Bay so lots of renters. The City has actually grown in the past year. We've been stable for so long now to actually see growth is pretty exciting.
If you go for somethng new be sure to get something that has a unique value to it. My feeling is in 5 years the condo market will have lots of supply and a five year old run of the mill condo will have steep competition from new condos.