I have represented a lot of buyers / sellers (40+ Infintiy, 20+ One Rincon Hill, Metropolitan, Watermark, etc.) in SoMa / South Beach and hope I will have the opporutnity to show you what SoMa has to offer. If you give me 2 hours of your time I will give you back a personal tour of SoMa, and the reasons why I think SoMa is so great.
Your SoMa / South Beach Super Broker
It is part of one of the best neighborhoods in America http://www.mensjournal.com/the-best-nabes-west
You have direct access to the best running/walking waterfront path,
There are delicious restaurants in Mission Bay (Tsunami, etc), the Dogpatch and Potrero Hill,
They are putting in a great new waterfront park with pedestrian shopping streets,
Simplistic example...say you buy a place in Mission Bay for $500/sq. foot for sake of simplicity. Unless the supply/demand curve is bad (which it could be now), any new development would likely sell for more than the old...so say a new development comes online at $550/sq. foot. True the old one might not increase to the $550 amount, it will certainly increase somewhat. Consequently, in a more typical scenarios the new developments could INCREASE the value of the old...not decrease like your used car scenario.
Your hypo really only works if the newer developments sell for the same price as the old ones did which really only happens in a flat or depreciating market...that's a function of SUPPLY/DEMAND NOT the fact there's new versus old.
I can see the Radiance out my window from another new development in Mission Bay.
Are 2 bedrooms a better investment? Yes, I think so. In San Francisco, we often have couples with double income. This puts a premium on having the second bedroom.
Are you going to lease it out? I love the Radiance however, as it is a premium building, it might not be as good as a rental. Renters want to have closer access to public transportation: the train station. Also closer to shopping. There are other premium buildings that I think are better for rentals. If you contact me, I'll be happy to arrange a tour for comparison. 415-756-5730
Radiance will be a good investment, I believe, if you are willing to wait for the area to grow with you. Mission Bay is a planned "city within a city" and currently a very hot area. With the University of California and commercial buildings going up, I think it will stay that way for years to come. If you do not plan to stay there or keep the condo as an investment property for at least that 5-7 year period then I do not think you should buy there. Real Estate has always been cyclical with up and down period thus
I agree with Gregory that 10 years would be better.
Most people want a two bedroom unit. However, they both sell well. You should buy the largest unit you can COMFORTABLY afford - especially with the new short-term $729,000 conforming rate loans. You should not have a negative cash flow or get an interest-rate only loan. If you are thinking of renting your unit in the future, you should keep that in mind when you structure your loan.
Lastly, with the fears of recession, the soft market and a plethora of condos in South Beach, Mission Bay, SOMA and Dogpatch, remember to ask for concessions from the developer! Please contact me if you want to know more. Otherwise, I wish you the best of luck in your search!
Considering you are planning on holding the property for 5-7 years I would say that yes, the Radiance is a good investment. Most of the adjustable rate mortgages are coming due this year and that will have its affect on the overall market in the short term. However, San Francisco is a wealth city with high salaries and a history of real estate values that consistently beat whatever happens during a downturn. That being said, I think that there are some better buildings investment wise.
The Radiance is convenient, has all the ammenities, and has some retail development planned, but I would be concerned about the heavy supply of Below Market Rate Units coming into the area. Places like One Rincon Hlll, The Infinity, and the Millenium have more unique features and should be the better investments for the long term. Any structure that is closer to the financial district would be a better long term investment in my opinion.
As for a 2 vs. 1 bedroom? Statistically, there is not much difference in the appreciation rates. However, I would recommend the 2 bedroom just for the simple fact that if something happens and you need the rental income, the 2 bedroom has more potential.