Investment Property in Bay Area in Hayward

[Romil S.]

Hi Everyone,

New member here :) I am interested in investing in real estate in bay area. This will be my first investment property. Thinking of SFH (Single Family Home), as HOA regulations in some places restrict the use of property for rental purposes, which defeats the purpose of investing.

2 Areas that I can think of are Hayward and Livermore. I am capping my budget at 650-675k for closing a house . I have roughly around 300k saved up and putting that for downpayment for a SFH in those areas would mean having rest of amount in loan. ( 350-400k)

Question : 

1) Are both areas worth the investment?

2) Which one is better? and Why?

3) Pros / Cons of each area

Livermore has decent schools but it seems far away, so unsure about rent income potential. Hayward historically has pockets with high crime rate and bad school rating. This leaves me in very confused state in initial research. Looking for some input and suggestions. Thanks.

[Sandeep S.]

Yes, the Hayward hills is a good area.  There are also several nice condo and townhouse communities near downtown and Castro Valley border.  You need to go drive the neighborhoods.  Some areas near Chabot college are very nice as well.  

You are right that HOA can add rental restrictions later. However, in such cases - the already rented units are grandfathered and exempted. The restrictions are for new sales. That said, I agree that HOAs can and do create HASSLES. So everything else being equal - buying SFR is better. However, many times the rental value of a condo is higher (or say the purchase price is lower) that can make the hassle worth it. All I am suggesting is that do not rule out Condos as a category.

(FWIW - I achieved financial freedom and left my hi-tech job last year just on the basis of rental income coming from my condos in Hayward!)

Splitting $300k over two investments could produce higher return (due to the leverage) for you.  So you buy first with $150k down (and rest loan).  And after some time - if and when you feel good about your first investment - you can buy the second one with the remaining $150K (and loan again).