Real Estate Broker
CA DRE #00957311
Single Family Homes Gilroy
157 Pending (if trends continue as they have been 42% will actually close)
327 Sold in the last 6mo
Hollister as mentioned by Sam is further ahead as far as the correction goes. Salinas is dicey at best. A bad area in Salinas is really bad (drive bys ect) . Also as mentioned by Sam multiple units will spread out your risk, another benefit is that you will usually see a higher capitalization rate (in this example; a higher return on your investment in annual income)
Something you may want to ask yourself is what goal are you trying to achieve?
Are you more concerned about cash flow or future value?
This is a link to a great tool authored by Gary Tharp. I like the second one down (5 yr). It is an Excel worksheet
One way to get information on how the rental market is doing is to call a few local property management companies and ask. That would also be a good time to interview property managers because until you are fairly well versed in landlord tenant laws the 7-10% you would pay them from the rent could save you $ and unnecessary headaches.
Best of luck to you and take your time.
What is the projected ROI based on a big downpayment? Only newer homes have the potential to go up fast in price after the next rebound. Assuming you are only interested in 3 or >3 br SFH and 10 years or younger, there are 111 homes to make offer to. As for rental market there are 54 SFH (3 or >3 br) or 41 (4 br) you will be competing with. Some are vacant home off the sell market and looking for renters.
If you prefer more affordable homes I suggest Hollister, Salinas as the cost of homes are signifantly lower in relation to rents. When the tennent moves out you have 100% vacancy rate with a SFH. With a duplex it reduces your risk etc....
Even Section 8 renters are good tenants and the neighborhoods are acceptable.
The east side of Monterey past the railroad tracks are considered working class neighborhoods.
The homes along Monterey and westward are older homes, many are hisorical.
North west quadrant of Gilroy are many newer developments.