Praveen, Home Buyer in Mountain View, CA

Does buying a condo in Mountain View (Whisman area) make sense from an investment perspective?

Asked by Praveen, Mountain View, CA Mon Apr 1, 2013

What kind of rental growth and appreciation rates can one expect?

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Lb’s answer

Of course it all depends on your situation and it is always good to base your decision upon facts.

Here's some information and some numbers to give a general idea.

1. If you want to invest in Mountain View, the best bet is to invest in a newer townhouse. When I say invest, I mean buy and then put it for rent. The reason is that tenants tend to like newer modern places to live.
2. To me, single family homes in mountain view don't make sense to buy or rent. If you really aren't getting a nice backyard, what's the point? Most of the single family homes in mountain view have relatively small backyards. When I lived there 5 years, I was completely fine NOT having a backyard. I knew my reasons to be in Mt View were being close to work, and that I just like Mt View feel. for info, I lived in the whisman area

1. Let's say you buy a condo in whisman that is about 1200-1400 sq ft. It will cost you closer to 850k. I am not kidding.
Look at the last townhome sold in that area for 819 last month…
If you wait another month or two, it might be closer to 875k and will probably peak at 900k in my opinion.
Even if you buy at 850, lets play with the numbers assuming reasonable conditions

1. You need 170k down. Do you have that much?
2. The best rate you might get for a 3% (15 year loan). I don't believe in 30 year loans. To me those don't make sense. I am assuming you are mid 30s, you have an idea where you might be at 45, not at 60. That to me just doesn't make sense.
3. Your HOA will be about 250$ or so and property taxes about 8500$.
4. Total expenses, 4695.96 for mortgage, about 700$ for taxes, 250 for HOA =
5. You can easily rent that place for about 3400-3700 a month. Assuming the 3600 or so, you still need to put in 2000 a month.
Overall, you put in 170k cash and then on top put in 2k a month, for what?

Well, at the end of 15 years, the property is yours. Willing to make an investment for the next 15 years where total cost to you (530k which is 170k cash and 360k in keeping the property)
At 45 or so, you will now make 3500 or so every month.. GREAT

Scenario 2
You still put in 170k, but get a 30 yrs loan, your payment is 2866.91, total cost is 2866.91 + 700 + 250 = 3816. You will make most of that from rent. In short, you put in 170k and another 100-200 a month to buy a property. This is the scenario where ppl say someone else is making your payments.
This might be great for some people. I don't really like this. Why?
because, the property really isn't mine until I am 60-65. Not sure what that means. I can't see that far out.
The only way this sort of thing makes sense for me is I understand fully that I am taking a chance.

I pay 20% down, I own the property, someone else pays the mortgage.
Somewhere along the line, when property is up 30-40%, I sell it.

Then there are other factors, maybe you just keep the property so it is a source of income when you retire and can pay for things like kids marriage, college, etc.

I am just throwing this info out there so you consider everything before you buy.

BTW, I own a property in mt view area and plan to keep it as a rental property until I get at least 10% compound rate of return. I am fine just thinking I bought this for my kids if I get less than that.

Also, 10% might sound low, but don't expend a much higher rate on properties in a long term cycle. A daly city house bought for 108k in 1978 sold for 600 or so recently, that is only 5% rate annually.
Whisman station houses are about 20-25% up from their value 7 yrs ago. (around 3% rate annually) from a long term perspective.
Only think of houses as a quick money making machine if you plan to sell within 1-2 yrs when it goes up and it (might be) at the peak

Hope this helps
1 vote Thank Flag Link Fri Apr 26, 2013
Thank you all. It's really useful to hear all your perspectives. It does seem like a good option to invest in the Silicon Valley, esp. if you're in it for the long haul.
0 votes Thank Flag Link Tue Apr 2, 2013
It depends. What I can tell you is that OVER TIME, bay area real estate has proven to be a very, very good investment.

Rental growth and appreciation rates have been up and to the right but they do not go at nice steady pace. There are peaks and valleys along the way.

Good luck!
0 votes Thank Flag Link Tue Apr 2, 2013
I would say it depends on how much cash you have. IF you have high down payment in cash, it would be good to invest it, because you will get increasing rental incomes without the pressure of up-and-down market. In the other case IF you need to loan a great amount of money and wait the housing price up to make capital gains, this approach will be somehow risky.

Nevertheless, the Silicon Valley real estate market is still very strong supported by all cashes and financially qualified buyers.
0 votes Thank Flag Link Tue Apr 2, 2013
Hello Praveen,

Depending on your investment goals, your question might be better answered by your financial planner or CPA than by a member of the real estate community. Certainly, we can provide you with some trending information, but determining rental growth and property appreciation must take into account your investment opportunity costs, taxes, associated financial risks and effect of rental income on your overall financial health.

So, while I'd like to say owning a home in Mountain View is a good investment, there are too many variables that need to be answered by you with your financial professional to determine what is or is not an acceptable investment.

I would further like to point out that if you're looking a home at Whisman Station, that you take the time to thoroughly and completely read all of the environmental disclosures for this area. The property was once an industrial area and there are important disclosures about the area that you must know, understand and disclose to your renters as well.

Good luck!
0 votes Thank Flag Link Tue Apr 2, 2013
What do you expect as a return on your investment. Are you looking to purchase to live in it and gain equity appreciation? Or are you looking to buy and rent it out and expect a return on investment?

A good investment will give you a return not only ON your investment, but OF your investment. That will depend on how much you put down. If our values continue to go up then you can expect to get an equity return. You may not necessarily get a cash flow. The nice part of investment is that you have someone else paying all or part of your mortgage when they rent from you. Also your tax advisor and financial planner will let you know what deductions will off set your tax basis.

The future is going to be based on job security, and reduction in unemployment. Plus our interest rates are so low, so if you finance part of your purchase you are locking in at a low rate. When interest rates go up the market will change. And as the old adage goes, what goes up must come down. We just don't know when that will happen with the housing prices. Inventory has stayed below 1800 units for over a year now and when our market stumbled then fell we saw inventory over 3000 units. With inventory around 1050 units we have a ways to go before we start to see prices drop.

No one has a crystal ball to tell you what on can expect. All we can do is act on what is happening today and make a decision based on the current information and if it makes sense today for you.

Mountain View is in high demand. You will need to review the HOA fees to see if that makes financial sense for your expected cash flow.
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0 votes Thank Flag Link Mon Apr 1, 2013
It depends on the amount you can invest, your financial goals as well as dozens of other factors. I would strongly recommend looking at multifamily properties.
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0 votes Thank Flag Link Mon Apr 1, 2013
Look across 101 at the companies located there. For one, Google is a huge and growing employer. They hire plenty of young people wanting to live near work.

Rent prices track the cost of housing although they move at different times. Housing investments have yielded very well over the long run. Mountain View real estate statistics can be viewed at

However you need to do due diligence choosing what you buy. The area is near the heart of the birthplace of the local semiconductor industry. There are toxic plumes in the ground which can cause problems (primarily TCE). Newer projects often have parking beneath the living quarters which provides very good ground vapor ventilation avoiding problems.

If you are trying to decide between renting and buying, you would have to be a pessimist to lean towards renting. With low interest rates not only is your payment low, but more total dollars go into equity early on.

If you are thinking to buy strictly as an investment it depends on your needs and preferences. Silicon Valley has had ups and downs but spanning decades the growth has been very strong. There have been many sharp talented people attracted to this area having limited living space. I don't see that changing. Many people have gotten wealthy from putting their money into local real estate.

Give me a call or send me an email. I would love to chat with you.

Juliana Lee
cell: 650-857-1000 email:
Top 2 agent at Keller Williams Realty

Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo counties
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0 votes Thank Flag Link Mon Apr 1, 2013
Hi Praveen, welcome to the Mountain View Ca community. Based on the trends I think you would do better owning than renting. The rents have gone up at least 10% per year for the last couple of years. So,just depends where you are right now financially. You need to sit down with a mortgage adviser and see where you stand at this time. After that pick a Realtor to give you some advice and then act according. Worse case rent for a year and check out what is going on in the Real Estate Market. Just a common sense advice there are no guarantees in life. If you want a one time free consultation contact me and maybe I can help you make a intelligent decision. Take care.
0 votes Thank Flag Link Mon Apr 1, 2013
Right now everything in silicon valley is a good investment as some values have appreciated 10-20% in just the past year.

I can't speculate on how much more it will grow but all you need to know is that it will and very fast.

So yes, it makes a lot of sense to buy right now.
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0 votes Thank Flag Link Mon Apr 1, 2013
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