@Jun Yang Hi Jun. I just sold my apartment building in downtown SF and netted close to $1.5M after closing costs and fees. So I have that amount and will have another $1M to invest sometime in early 2018. Basically, I'm in the same boat you are as an investor from the SF Bay Area.
What I am doing is looking to the Central Valley (Sacramento-Stockton-Merced-Fresno corridor). Sacramento is extremely hot and everyone is trying to purchase something in that market. Cap Rates are now in the 4-5% range, which is causing me to look elsewhere for higher yields.
Based on my investment criteria of 1) Cash-on-cash return, 2) Value-Add opportunities to increase the equity, 3) Cash out to purchase a property 2x as large (and continue that process with each new purchase), 4) Take the cash flows from each property and reinvest it into "smaller" properties (~$1M range) so I can follow the same process but 1031-exchange them into larger and larger properties.
None of my goals/criteria is possible looking in the SF Bay Area. Thus, I need to look outside in the Central Valley. Ultimately, I will look into and purchase properties in AZ, NV, TX.
Depending on your time requirements (e.g. work, family) and what they allow you, you may have to look outside the Bay Area.
But it all comes down to what your investment goals are and what you want to accomplish short/medium/long-term.
If you want to stay in the Bay Area, your down payment needs to be 50% or greater in order to bring in an adequate size of cash flow.
If you need any advice or have any questions please feel free to private message me. I would be more than happy to help out.
