Newbie in San Francisco looking for buy and hold in the San Jose area

[Katherine Nguyen]

Hi everyone,

My husband and I are looking in the San Jose area to buy a multi-family home. We have a prospect that is asking $699,000 for a duplex. After looking at the open house we like that there is great potential. It needs a lot of updating though and estimate the cost to be around $70,000 for cosmetic fixing of the house only. Of course we don't know what other costs would be without further inspection. The house is 79 years old and probably hasn't been updated much since.

A few things we did see:

1. Crack in the 2nd floor fireplace

2. Hole in the ceiling of 2nd floor (although the real estate agent said that the roof has since been fixed, they never actually fixed the ceiling)

3. Crack in a few of the windows, which we will be changing out anyways because they are single pane.

4. The detached garage is horrendous and looks like it's about to fall apart with no doors

*Side question: Would it be cheaper to just knock it down or to try and rebuild it with existing structure?

5. 2 prong electrical outlets (I think this really shows how old the house is, among some other things)

*Side question: Do we need an electrician to change out the outlets or is this something can be DIY'd

My real big burning questions is whether this might be something good to start out with as this will be our very first investment ever. I like remodeling, but I'm not sure if this might be too big of a project to handle for our first time.

I know I may not have provided a lot of information, if there is something else that I need to put out there to clarify, please do ask away.

I also just want to say thank you to everyone on BP for the content you guys provide. My husband and I are both learning so much with all the information that is on here and the podcasts are great. Instead of listening to music on my way to work all I do are BP podcasts and articles now, when I'm not driving of course!

[Account Closed]

Hi Katherine,

Welcome to BP.  A lot of great advice above.  This has 135 Clayton Ave written all over it.  I checked it out last week and passed on it.  Gotta love the 4 car garage in the back.  FYI, 95110 zip code has a lot of halfway houses.  If you're going to look in that area, talk to some cops to get some ideas.  I have 2 law enforcement officers in the family.  That's why I know San Jose so well.  I have bought trustee sale properties sight unseen because of them.  You can change the building, but you can't change the location.

To me, this is a C+ neighborhood.  The price looks cheap based on the square footage, but it's cheap for a reason.  To me, this duplex will need more than $70k to rehab it to my standard.  Based on my observation, this duplex may have foundation issue.  There are significant settlement cracks in the patio/entry area.  The settlement of the driveway hinted it might have subsidence issue.  I believe the stairs leading to the back unit was done without permit.  

If you're willing to make a short-term sacrifice for a potential long-term gain, check out the 4-plex at 1131 Oakmont Dr in San Jose. Going rent for that area is closer to $2k/month/unit after you rehabbed the place. Your PITI is about $5,800/month so there is a potential of living for free while you save up for your next dream home.

Just a thought.