Long Term Investment in Bay Area

[Aleksandra Faust]

Hi there,

just starting out as an investor and considering Bay Area as one of the markets. I'm looking at a long term appreciation, and in the interim serve as a second home / STR or even LTR. Probably 2bdr.

I already live in the area, so I'm reasonably familiar with the area.

What areas on the Peninsula, South or East Bay you'd recommend for the appreciation?

Any other advice or thoughts?

Thank you!

Sandra

[Becca F.]

I don't know much about the Peninsula or South Bay but I have seen some deals in the East Bay in the high $600,000s to $700,000 range. I would try to avoid Berkeley and Oakland because the laws heavily favor tenants and who knows what local regulations could be passed. 

As far as a second/vacation home and STR would you consider MTR to travel nurses/business people? My thoughts:

East Bay:

- Close to a BART station to traveling medical worker/corporate person could hop on a bus/BART to work: El Cerrito, San Leandro, Hayward, Fremont, Walnut Creek, Pleasant Hill, Concord, Dublin, Pleasanton

- Maybe Richmond, Antioch and Pittsburg but some parts have a lot of crime. 

- Going further out Brentwood and Oakley have appreciated quite a bit and have pretty good schools

- Something with potential to add value: ADU attached to the main house or separately in the backyard in the future to get additional rent. Not sure what price ranges you're looking at but if you get a 2 bedroom and can somehow add another bedroom later on, that would help with appreciation.

Further north:

- Sacramento gets a lot of corporate people traveling there. It's not a typical vacation spot but STR or MTR could get higher rent. Also people moving up there from the Bay Area are already driving up property values as they get priced out in the Bay Area. This is something I'd consider in the future.

Out of state investing:

- Nevada has low property tax rates. Reno: can drive there in less than half a day. Vegas: short flight away. You could have your Nevada vacation home there :) I think STR is oversaturated in Vegas so maybe MTR to traveling business people or LTR. More landlord friendly than CA. I would also consider Nevada

- Midwest:  affordable but know the difference between Class A, B, C and D. Definitely fly out there and get to know the area. I invest in the Indianapolis metro area - Class A suburb (bought 11 years ago) and Class C East side of Indianapolis.  I could write a novel about this but I would stick with Class A or B near good schools and go for appreciation. Class C cash flow on paper in reality is losing money each month.