Investment property in San Leandro

[Harish Maiya]

Hi BP folks,

Currently considering to purchase a SFR in San Leandro, for my budget of 600K (20% down mortgage finance). My initial study showed fair appreciation and healthy rental proposition. Low crime rates, decent demographics and commute accessibility. I preferred this area since its drivable (no need of property manager), and no HOAs (like condos/townhomes) to hurt cap rates.

Visited couple of houses in Bonaire/Bal they are 1940/50s built and market looks warm.

Before pulling the trigger, would like to get inputs from the community on few points

1. Potential of area San Leandro. I considered Oakland (pricey), Richmond (safety) they didn't fit my bill.

2. Does investing out of state makes sense, (with property manager etc). I feel bay area/CA is at its peak, Atlanta/Orlando seems reasonable,  but I know little about areas there.

Please share your thoughts. 

[Tracy Maddox]

I work in real estate in the East Bay and what I'm hearing is that our market is still going strong and will most likely for quite a while due to lack of inventory.  San Leandro is a good bet, because many buyers are being squeezed out of Oakland and are moving south.  I think you're right on track!

[Harish Maiya]

Good to hear that! Its getting a little competitive over in San Leandro now. 

Thank you, Tracy. 

[JingJing He]

I am not sure why you think San Leandro is cheaper than Oakland.

San Leandro is hot! Oakland is hot! I have been making offers for clients and getting rejected left and right with 60-100k over asking. Market is really tough for buyers right now. Go after cosmetic fixers and back on market ones. Those will serve you better.

[Harish Maiya]

I did realize, got priced out of San Leandro for buying in this spring season. It does not quite look lucrative to invest in bay area i think.
JustGot into a contract for a multi unit property out of state.

[Sam Shueh]

If your budget is 600K max, it sounds more like a condo/town home budget suggest you go elsewhere. Monterey County, Sacramento.  But they are just less competitive. Still sell at or over full price (e.g. 4 offers vs 12 offers etc).

[Harish Maiya]

@Sam Shueh yes if i plan to go that far (Sacramento/Monterey) from Silicon valley, i would need property managers; no much (local) leverage. At this point California markets have already seen way much appreciation so buying for upswing would be mere speculation. Average growth of Income increase vs house price shows huge difference (sign of bubble)

There are many U.S. cities with solid fundamentals (population growth, employment, strong local economy) where I can see potential (still below peaks from 2008s) and decent cash flow/cap rates. 

Unless it is primary residence i would not advise to buy property in SF bay area.