Best strategy for a long-term Bay Area investment?

[Tyler D.]

Hey BP,

I'm considering buying a property to first owner-occupy, and later rent out in the Bay Area. I'm looking to accomplish a few things:

1) Take full advantage of Prop 13, by buying a fixer at a low price and locking in my tax rate at a low value.

2) Buy in an undervalued area that is expected to grow in the future. I'm looking at the East Bay, in particular.

3) Not buy at the top of the market. I am wary, seeing the amount of people leaving the bay area, at the current sky-high prices. The alternative would be to simply rent in the Bay and invest elsewhere.

4) Deal with the minimum amount of hassle with rent control/ tenant protections. For this reason, I am thinking my best option would be to buy a SFH and rent out rooms.

What are your thoughts on this? As said in #3, I am very wary given the current market conditions. That being said, I would like to take advantage as historically, the Bay Area has been an excellent place to invest. Should I go for it, and if so, what would be the best strategy to use?

[Arlen Chou]

@Tyler D. I think you need to do a deeper dive into the history of the Bay Area market, and maybe that will sway you one way or the other. If you look back to what people have been saying in each of the past 4 decades, and probably longer, the masses of people have been saying the exact same words as you posted. Most people fear the market is at its peak because they have not done the research. Fear is based upon not knowing... Maybe we are at a peak, but depending on a persons time horizon it may or may not matter. Consistently the successful OG REI people I meet in the SF Bay Area are people who got in and have held for a long time. They weather the down cycles through good fiscal management and reap the benefits on the up swings. I am not advocating you go out and buy because I don't know your specific financial situation in detail. However, I will tell you that I sold 1 property last month but I used those funds to pick one up next month, and I hope to close on another one in January. I wish you the best of luck on your journey.