To protect your cash savings against inflation and possible stagflation/recession, what types of properties would you invest in?
Would you focus on Class A/B/C? Single-family/multifamily? Fixers/non-fixers?
My husband and I are in the Bay Area and looking for where to best
put our cash savings in real estate. We initially wanted to look for
fixers, but construction/labor/materials costs are through the roof
(especially in the Bay Area) so it makes it not as appealing. So we’ve
been thinking to focus on pricier newer Class A SFHs. This would be to
avoid any costly repair/maintenance and also mitigate the risk of
tenants being unable to pay in a downturn since our renter pool would be
higher income. What are your thoughts on this strategy, and what would
you do in our situation?
I would first really crystallize what your goals are, as well as how much of a time commitment you can make to running the properties once you've acquired them. Owning rentals on your own may not be the best fit for your goals, but there may still be plenty of real estate investing strategies that fit.
Either way, I would focus on other markets outside of CA due to factors you mentioned, as well as the landlord-tenant laws in CA.
I'm investing in B and C class multifamilies over 125 units in select markets which meet several criteria. My market criteria are first and foremost focused on the local economy and its growth and health, as well as the general business-friendliness of the state & city.
With the current rout happening in tech, migration trends, and remote work taking over I wouldn't take it for granted that SF will always have a large base of high income professionals. Additionally, a rental that is top of market in price will struggle the most to find tenants when economic times get tough. That's why I prefer B & C in growing markets with diverse economies.