Elie Curetti, Home Buyer in 94123

Investment property in the SF Bay Area

Asked by Elie Curetti, 94123 Thu Mar 4, 2010

Is it possible to find good investment properties in the SF Bay Area ? So far, doing my maths, it seems that the rental cost to purchase price ratio is not good enough. Are there any areas that are better ?

Help the community by answering this question:


Hi Elie,

Depends on what you determine to be good investment properties. San Francisco is not a cash flow city. I have seen properties listed at nice/increasing cap rates, but when you break down realistic expenses then you are not going to have solid cash flow. The Bay Area investment landscape still really is based on the assumption of price appreciation.

However, when you get into the 1.5-2.5 Million dollar range you can pick up 8-16 unit apartment buildings that can have solid cash flow. In that respect, I'd say your best bet is going to be West San Jose because you can find solid cash flow and also be in an area that has price appreciation potential.

Feel free to shoot me an email at peter_brunton@yahoo.com if you would like to discuss.

Peter Brunton
Prudential CA Realty
One Daniel Burnham Ct. #260C
San Francisco, CA 94109
415 728 5580
DRE 01789498
2 votes Thank Flag Link Thu Mar 4, 2010
Apart from the math, you have to consider local regulations when purchasing residential investment property. San Francisco, Berkeley, and Oakland, for example, all have widely differing rent control laws. In San Francisco, where the laws have become so onerous over the last ten years, many property owners have converted their multi-family buildings into Tenancies-In-Common and then sold individual units as a way out of the rental business. My advice is that before you speak to Realtor about actually purchasing an investment property, you seek the counsel of either a competition land use or landlord attorney in the specific cities you’re considering. You may find names of such on my website under the “Resident Resources” tab.
Best of success to you,

Jason Allen-Rouman
Sotheby’s International Realty
DRE# 01831809
(415) 641-7800
Web Reference: http://www.allen-rouman.com
1 vote Thank Flag Link Thu Apr 15, 2010

If you are talking about buying property to hold and rent and be cash flow positive on the rent vs expenses, it's tough but not impossible. While rents are high in San Francisco so are prices, and as you move away from the city and prices get lower so does demand.

Over the last couple of years I have seen a number of properties that work, most notably two duplexes that I personally bought, remodeled, and immediately sold. A large part of the mix in determining to go ahead with those projects was the determination that if for some reason we couldn't sell the properties they would be cash flow positive if we had to rent.

It's much trickier in San Francisco and other areas where they have just cause evictions but it can be done. Contact info is below if you would like to dicuss it offline.

Best Regards,

Lance King/Managing Broker
DRE# 01384425
1 vote Thank Flag Link Thu Mar 4, 2010
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