What are the best value areas in San Francisco to buy a home?

[Kusum Chanrai]

Hi everyone! 

My husband and I are looking to finally buy a home in SF. We've saved up and now that we've had twins - we think its time to make a purchase at $2-3MM even though this overheated market is a little terrifying. I'd love folks opinion on the following: 

1) Which areas are likely to represent the "best investment" in the next 5 years? I.E. Considering both the purchase cost of the house and appreciation rate, where would one buy for the highest ROI. We have 2 schools of thought. Buy in either:

- Established, affluent areas: Pacific Heights, Presidio, Cow Hollow, Sea Cliff OR

- Tier 2 areas that might become more affluent: Mission Bay, Potrero, Dogpatch, MAYBE "Outer Sunset" (although yes - it's probably in a lower tier than the others) 

2) Are we likely to make money if we invest in a cosmetic renovation of an older place or is the cost of labor and materials in SF likely to diminish our potential profits to a negligible amount. 

Look forward to hearing any and all opinions!