Which city in San Francisco bay area should i start

[Atish Shah]

Hello bay area dwellers,

I have been thinking of getting started in real estate by investing in a (MFR) in the bay area. I crunched some numbers to come up with cities that offer highest rent/price ratio (in theory) when looking from high level.

I have only included BART cities in the east bay to limit my search to fewer markets. I have not included Oakland as I think that it's own beast with may sub-markets. Following is a compilation of data I came up with by using city-data.com.

Pittsburg, Richmond, Hayward, Concord and San Leandro seem to be viable options for cities with median price ratio below $500,000, with Pittsburg offering highest rent/price ratio and no rent control. Rent control rules for all these cities are as follows:

Pittsburg - None

Richmond - Multi-unit homes (including duplexes) built before 1995 are rent controlled. Single family homes, certain small second units (“granny units”), and rental of a room within a home are NOT controlled.

Hayward - A landlord must own at least five units in the City of Hayward for the Hayward Rent Ordinance to apply. a tenant who rents a single family home after January 1, 1996 cannot be covered by the rent protection

Concord - No

San Leandro - No rent control. But rent review board ordinance applies to complexes with three or more units

Of course, good and bad deals can be found in each of the above cities. But, would love to know what others think on the ease of finding good MFR deals in any of the above markets? Any suggestions on how to chop up Oakland neighborhoods will also be appreciated so I can add it to the table above.

Thanks much!!

[J. Martin]

@Atish Shah,

With your target GRM and desire for low-crime, good-school district areas, you sort of want the best of both worlds - high cash flow, and a good area likely to have strong single family home appreciation. And I want to be rich and famous. But we both have to struggle with reality hehe You would either need to go somewhere else, or decide which is more important to you (or at least compromise).

Like @Brian Burke is saying, you're looking at single family home prices, but trying to buy more than one unit. You probably need to go even further than what Brian is saying, and compare how much in rents you can get with $X00,000 of a multi-unit building in city 1, vs city 2, vs city 3, etc. Or just call up an agent that deals with them, and they should be able to give you a range of GRM's. CBRE and other commercial real estate brokerages also publish data on GRMs for large multifamily in different cities. You will have a higher GRM for 4-unit buildings and under than for large multifamily, but I think the proportions across different cities will be similar - as a place to start.

If you can get a vacant 4 unit in Richmond, you might be able to get close to 1% / 8-9 GRM(ish). Maybe in Vallejo also, but that's getting further out, and the city's all f**ked up after the BK and high taxes. (Richmond could be going that way too though! lol) @Diane G., play nice with the other kids in the sandbox ;) Atish is trying to learn. I could still buy under a 10 GRM today (especially after some transitioning). @Arlen Chou did the same last year in Oakland, when everyone said it couldn't be done.  Given, they aren't in Silicon Valley... 

@Arlen Chou