Condo (CA-Bay Area) vs SFH (CA-Central Valley) (Investment Prop)

[Anurag D.]

Hello Everyone,

> Option# 1:

Condo/Townhome

Location: California - Bay Area (South/ East(Pleasanton)/ North(San Francisco)/ Oakland)

Price: $400-500K ; HOA: <$400

> Option# 2:

Single Family

Location: California - Sacramento/ Fresno/Stockton (Decent School District 7+), (Tier 2 cities in CA)

Price: $400-500K ; HOA: 0 ; Mello-Roos: ~$350

> Plan: Keep the property for 15+ years.

> Assumption:

• Single Family prices are stable and would rise faster than Condo.
• Bay-Area property price would rise higher than CA-markets (usually).

> QUERY:

It is not possible to determine which option would be a better option:

- in terms of price-appreciation in long-run(10+ years).

- better rent-opportunities.

Please share perspective.

Thank you for your cooperation.

Best…

A

[Katrina Razavi]

As a general rule and given past experience, I always prefer to buy SFR's vs. condo's, but like Justin noted, condos can turn out to be great investments.

My reasons for not liking condos as investments: 

1/ more volatile than SFR market (i.e. look at how condo's in the city of SF are doing right now vs. SFR's)

2/ HOA fees aren't tax deductible and can go up at any point in time, making it a big variable in cash flow

3/ HOA boards are always a mess, lots of restrictions and less control over your property (i.e. many boards disallow Airbnb or STR's and other issues you don't deal w/ when you have your own home).

Given the pandemic, folks are also looking for more space and w/ Sacramento being a growing city and having a foundational job market due to gov't jobs, the SFR would be my vote. But depends on the #'s and your long-term goals.

Good luck!