Cities near San Jose, CA with rental properties for $100K

22 Replies

Hello members,

This is my first post.

I'm planning to buy my first property to give out for rental. My budget is about $100K purchase price, financed with a conventional loan. I live near San Jose, CA where property prices are sky high. I started looking at out of state properties (e.g. in TN or AL) and even ran the numbers on a few properties (positive cash flow), but I heard in the BiggerPockets podcasts again and again that you should invest in a property that is within driving distance. So now I'm looking for cities in about 2-hour radius of San Jose where I can buy a decent rental property for about $100K.

Know any such cities? Are Modesto / Fresno / Merced good cities?

Don't hesitate to critique my approach. Better to hear criticism now than make a mistake and regret later.

Nav.

Those people that say you should invest close to home typically don't live in expensive markets like San Jose. If your interested in investing for appreciation then San Jose is probably your best bet. BUT it's dam near impossible to get a start around here with such high purchase prices. I live here and tried to invest with a condo in Milpitas and a townhouse in Gilroy and failed miserably. I've now made the leap to out of state investing for cash flow and suddenly it all makes sense to me. I use reputable turnkey companies in Indianapolis and Birmingham that help me in more ways then one. Tirnkey companies are a one stop shop for real estate. They can find, rehab, sell, manage, and network for you with all aspects of real estate. They are also a great resource for information on the local market and in my case were a definitely asset to help me learn the basics of investing.

@Nav Singh

Welcome to the site.

If you are considering self management I would try to go a lot closer than 2 hours. Anytime you need to go there your looking at a minimum of 4 hours. Too far for me. 

No more than 15-20 min away for us.

Good luck to you and see you around the forums. 

@James Wise

  nice thought but 20 minutes from Campbell put you in  NO particular order Los Gatos 1 to 10 mil for a house.. Saratoga  1.5 to 20 mill... ?Cupertino ( my home town ) 1 to 3 million.

San Jose  600 to 2 million... the aforementioned Milpitas  were I bought my first home in 1976... for 90k.. a princely sum in those days.  now would be 600 to 1.5 mil. and so on and so forth.. maybe Alviso  LOL...

for Bay area folks to buy in the 100k range they need to drive ... and on top of that there 20 minutes in the bay area is like running to the 7  eleven.. Not realistic by any stretch.

@Nav Singh

  you may want to talk with Joel... there are some under the radar folks that are keen on customer service in many markets.  although CA is still a prime place to invest regardless of cost.. but if you cant swing it.. then maybe look elsewhere.. but find the right folks.

This post has been removed.

The closest city I know of with those prices is Los Banos.

@Assaf Furman

  I built new construction homes in Los banos in 1990... selling for 125 to 150k in the day  fond memories

Merced or Atwater. CV towns with a low price point but solid employment base due to the UC in Merced or the companies and prison operating at the former Castle AFB. Google leased 60 acres and is building their auto program there.

Are we all forgetting about the glorious California "high speed rail" joke going from Merced to chowchilla, Its gonna be RTE 66 all over again. LOL.

I'm in the same predicament. I already used my FHA and I don't have enough equity yet, so i'm partnering up but, primarily saving my 20% for my next purchase, should I choose to go in alone.

I like the turnkeys out of state, I've done it before and plan to do it again. I like the OH model that has been presented here.

I have been greatly discouraged from the "dust bowls" in our Hi-desert, Cal City, Victorville, Landcaster, Palmdale etc... 

What I have noticed about the areas outside of the metro is that the ROI and appreciations are slow to grow and not to mention extended vacancy.

But the idea of owning 5 acres of dust and sand is tempting.

Just saw this in the market place, might wanna give him a call.

http://www.biggerpockets.com/forums/517/topics/204028-experienced-investor-looking-for-properties-in-northern-california

@Nav Singh

Hi and welcome to BP.  I live on the West Coast, and all my investing has been out of state, primarily turnkey buy and hold rentals.  Two of the first properties I bought, in the same area, were a little below $100k, but those homes are now worth considerably more.  Still there are many areas where you can buy around or even well below $100k, and get something that is nicely renovated and in a good neighborhood.

Originally posted by @Jay Hinrichs :

@Assaf Furman

  I built new construction homes in Los banos in 1990... selling for 125 to 150k in the day  fond memories

 Between us there's a reason why this place is called Los Banos...

@Nav Singh

I invest exclusively in southern cal and it's worked for me.  A lot of the members touting turn key are trying to direct you to their turnkey companies they work with and get a referral fee if you invest. I suggest connecting with J. M.. He's in your area and is very knowledgable. He will also help rookie investors if he's able to. 

Good luck 

@Jeanette A.

  subliminal out of state advertising  I thought it was only me  LOL

Thank you everyone!

As almost always, the answer is not a black and white yes/no. I am leaning against turnkey property management companies though. I've been in touch with one of them, and I see that they are selling me the property they bought at $40K for $95K. They did fix it well, at least looks like it from the pictures, but that's a pretty significant jump in price, and they won't help sell the property in future.

I will evaluate a couple CA cities, but if the property is more than 2 hours away then why not choose a good out-of-state city. The advice for out-of-state seems to be (including from other forum posts on this topic) that (a) make sure you get a trustworthy management company, and (b) the investor must fly out and see the property and the area. I don't think it eliminates risk but hopefully reduces it.

I will continue to do some research, and will update you on where I end up investing. Good luck to you all, and wishing you tons of success!!

Nav.

I don't know about any other members, but I receive no compensation whatsoever for any general knowledge information that I offer. 

Thanks @Davon Lowery. Please continue to reply to posts from newbies like me. All replies are very helpful, not to mention that it's encouraging to see the general activity and active discussion.

Hi Nav,

Just curious,

if you did bought property within 2 miles drive or still debating.?

Thanks 

Originally posted by @Assaf Furman :
Originally posted by @Jay Hinrichs:

@Assaf Furman

  I built new construction homes in Los banos in 1990... selling for 125 to 150k in the day  fond memories

 Between us there's a reason why this place is called Los Banos...

 Damn you two... I may have to start investing in Los Banos just so I have a reason to go to Wool Growers.  

I am of a different opinion regarding the whole be within 20 minutes, 2 hours or whatever else - but, I think that's because I probably target a different class of property and use professional management companies to manage them for me.

Completely agreed if you want to self manage end to end, you should be within close proximity of where you invest - otherwise it's going to be a pain in the rear end, especially if you have a day job and can only attend to issues in the evenings/weekends.

If on the other hand you plan on having a property manager, turnkey or similar works - keep in mind nothing saying you can't "make your own turnkey" by just buying a good place to rent out in another city and finding your own PM to manage it. It'll take legwork to hire a realtor to search for properties, go there to view it, buy the place, vet the PM, and so on - but that should be a "one off" trip - after that you can drop in from time to time if/as you feel necessary, but a solid trustworthy PM should be able to handle it all remotely for you.

My experience with this has been in Vancouver (used to live there, now I live in the Bay Area) - still own a condo there that I have a PM manage for me. They do everything - find the tenant, collect the rent, handle maintenance issues, take emergency calls, authorize repairs (up to certain $ amt if its more they call me first), and so on and so forth, at about 8% a month. The hardest part I find about it is dealing with insurance and financing but that's because I'm out of country and the institutions there can be a bit of a challenge to navigate for the first time when you're remote; within the same country it's considerably easier.

Anyway - that's my $0.02 :) first set out your goals, then decide whether out of state works for you or not!

Sacramento might just be over 2 hours, but there's stuff in that price range there. I've been looking at a bunch of the McCuen 4-plexes (North Highland and Florin area) which have 2/1 units. Not great neighborhoods but not awful. Lots of supply, Many turnkey/leased units selling for $40-80k, with fairly low HOA (under $200). Rents tend to be $750-850 from what I'm seeing.

There's also single family around $100k in North Sac, lots of small 2/1 cottage types, of varying state of repair. 

This post has been removed.

I'm probably in a very similar, if not exact, situation you're in. I'm in the middle of trying todefine/redefine my goals and heaR the opinions of others before pulling the trigger. 

Shoot me a PM and we can try to sort things out together. Good luck!

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