A year after your question and homes continue to appreciate in the Livermore area. But what's most interesting is the rise in the rental market as a result of the increasing home prices. With the affordability index in the Bay Area being 21% over Two-Thirds of the population CANNOT afford to buy a home. So what are they doing? RENTING, or living at home with their parents! So as basic economics tells us Supply VS Demand, rents continue to increase. Therefore it STILL makes sense to buy as an investor here in the Livermore area. The condo and Townhome market is booming right now with most home owners looking to sell then buying or Upgrade their homes. Our team has already sold several homes this way where our clients had enough equity to sell their smaller homes/Condo and buy and actual single family residence. This is the current trend in the Livermore area and you can see it in the market conditions.
Whenever you are searching for possibilities as an investor I look into 2 factors.
1. Typical price point of the properties you are looking to purchase.
2. Average rents for similar properties.
You can then adjust conservatively both cases and calculate the rate of return on your investment.
After potential HOA fees, Taxes, Vacancy rates and other costs you can calculate your % of profit. Typically at the moment we see anywhere from 5-6% return on your initial investment.
There are many other ways to increase this number such as, Paying Cash (if you have it), or increase initial down payment, upgrading the property to insure top rental dollar, and so on and so forth.
Real estate investing is a great way to invest your money especially if it is a long term decision. The best part is that one day the property will be paid off and you will still have it as an asset to sell if the market is right thus increasing your net profit well over the initial 5-6%.