San Francisco market - 70% rule possible?

Question

I'm in the SF market and it's been crazy for the past 4~5 months. A sunset district house that is on 42nd street can be sold for over 1.5M (about 1500 sqft, 3br, 2ba). Just curious, for this market, is the 70% rule still possible? Thoughts or comments? Thanks!

Rudi D. · Answer

The 70% rule is offering 70% of the ARV minus the rehab costs. I just did an 80% rule and made an offer on a property in Oakland that needed a lot of work, but was blown away at what it ended up going into contract for by an all cash buyer. There's definitely a knowledge gap for me because the numbers just didn't make sense to me for what it went into contract for.

Jay Hinrichs · Answer

I have no empirical data and no real reason other than common sense and being born and raised in the bay area and watching what has happened over the last 60 years.

were else can you buy a structure on a stand alone lot for 250k in the bay area.. were is it going to go over the next 10 years or 20 years I suspect UP.. I also suspect once it really gets going it will be tear down heaven lots of older pretty cruddy homes ..

David S. · Answer

@Jay Hinrichs.....you said, "I personally think for a 10 year investment Richmond could be one of the best in the area for those that can't pop for a 1 to 2 mil dollar investment."

Can you share further on why you like Richmond, say over Vallejo?....Does that comment apply to multi-res too or just SFR?....Any particular neighborhoods you can suggest researching?

What is the 70% rule?

Jay Hinrichs · Answer

Not really the 110 to 130% rule does apply though.. :)  need to go to toughest parts of Richmond

Vallejo Oakland to find deals that have ARV in them once fixed up.

I personally think for a 10 year investment Richmond could be one of the best in the area for those that can't pop for a 1 to 2 mil dollar investment.