What are my options as a first time home buyer in the Bay Area?

[Kevin Le]

Hi everyone!

My girlfriend and I are starting to looking to make our first home purchase at the beginning of 2022. We have about $190k saved up. Ideally, we'd live in the home (Santa Clara/SJ area) for at least 2 years and then rent it out.

House-hacking is our plan A, but assuming it is too hard to find a deal in the area we're looking, which option would you choose, or is there a better way to use our cash?

1) Save up for a SFH in the $900k to $1.2 million range

2) Buy a condo in the $700k to $800k range with HOA fees less than $400. Invest all leftover cash.

     3) Another option you come up with!

I am leaning towards option 2, with the idea that I can put the extra cash into the stock market or even consider out-of-state investing for cash flow. Then, when we need to upgrade to a larger home, we can use any equity built to fund that purchase. I don't love the idea of tying up all my liquidity in an expensive SFH, but the Bay Area is a fairly high appreciation area. We both have fairly high incomes, so we're more concerned with saving for the down payment than the monthly payment.

What do you all think? Thanks for your feedback!