Investing in Condos in SF Bay Area

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Investing in Condos in SF Bay Area

Kayvon Ghaffari
Cupertino, CA · Member since 2014 · 4 posts · 4 votes

Hi all,

I have a question regarding investing in condos in the Bay Area. I have been living in Cupertino with my parents since I graduated 2 years ago and I've been working full time since. I recently switched to a new job in SF, and with the 2 hour commute each way (driving + Caltrain + walking), I've been looking into closer options to my job. 

I've come across several condos for sale in and around the city with prices from $450,000 - $550,000. (I'm looking at this one for example: Condo in South SF). I know that investing in a single / multi-family home in the peninsula is completely out of reach for me. I also know that I'd prefer to not spend $1-1.5k in rent in the city. Lastly, I know that I'm a complete noobie when it comes to judging good real estate opportunities from bad ones. What would you all do if you were in my shoes? Stay in Cupertino rent-free and invest somewhere more lucrative? Your help is greatly appreciated - thanks!

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J. MartinPro Member
Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
Originally posted by @Kayvon Ghaffari:

Hi all,

I have a question regarding investing in condos in the Bay Area. I have been living in Cupertino with my parents since I graduated 2 years ago and I've been working full time since. I recently switched to a new job in SF, and with the 2 hour commute each way (driving + Caltrain + walking), I've been looking into closer options to my job. 

I've come across several condos for sale in and around the city with prices from $450,000 - $550,000. (I'm looking at this one for example: Condo in South SF). I know that investing in a single / multi-family home in the peninsula is completely out of reach for me. I also know that I'd prefer to not spend $1-1.5k in rent in the city. Lastly, I know that I'm a complete noobie when it comes to judging good real estate opportunities from bad ones. What would you all do if you were in my shoes? Stay in Cupertino rent-free and invest somewhere more lucrative? Your help is greatly appreciated - thanks!

If you think you are going to spend $1-1.5K/mo for rent in SF, you must be sharing a room w/ someone. Event a 300 sq ft micro apartment in the Tenderloin is more than that. WAY more expensive. I recommend looking into buying a duplex or 4plex, possibly with FHA if you don't have a lot of cash. I believe limit is $1.2MM for 4plex in Bay.

I think SF condos are a good bet for the long term, especially if you're living there.. @Amit M. , care to chime in with your SF condo experience?

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  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y
    Originally posted by @Kayvon Ghaffari:

    Hi all,

    I have a question regarding investing in condos in the Bay Area. I have been living in Cupertino with my parents since I graduated 2 years ago and I've been working full time since. I recently switched to a new job in SF, and with the 2 hour commute each way (driving + Caltrain + walking), I've been looking into closer options to my job. 

    I've come across several condos for sale in and around the city with prices from $450,000 - $550,000. (I'm looking at this one for example: Condo in South SF). I know that investing in a single / multi-family home in the peninsula is completely out of reach for me. I also know that I'd prefer to not spend $1-1.5k in rent in the city. Lastly, I know that I'm a complete noobie when it comes to judging good real estate opportunities from bad ones. What would you all do if you were in my shoes? Stay in Cupertino rent-free and invest somewhere more lucrative? Your help is greatly appreciated - thanks!

    If you think you are going to spend $1-1.5K/mo for rent in SF, you must be sharing a room w/ someone. Event a 300 sq ft micro apartment in the Tenderloin is more than that. WAY more expensive. I recommend looking into buying a duplex or 4plex, possibly with FHA if you don't have a lot of cash. I believe limit is $1.2MM for 4plex in Bay.

    I think SF condos are a good bet for the long term, especially if you're living there.. @Amit M. , care to chime in with your SF condo experience?

    2Reply
  • Manch Hon
    San Jose, CA · Member since 2011 · 160 posts · 167 votes
    12y

    2 BR 2 BA condos with ocean view near the Candlestick ballpark is selling for around 500K. Granted there is not much bar scene going on around that corner of SF I like that area. Maybe I should buy one for myself. :)

    0Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    12y

    Kayvon,

    Welcome to Bigggerpockets.  That's a beautiful condo.  You now have competition because I'm considering buying it for myself.  Just kidding.

    I agree with J Martin about $1k-$1.5k for housing.  How much do you think you can rent 1 of the bedrooms out for?  That should help you with your monthly debt service.  Based on my experience, the mortgage deduction would likely pay for your property tax and insurance.  

    Good luck.

    1Reply
  • Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    those condos are well done for the price. Neg is that they are out in the boonies. BUT, candlestick is getting torn down and replaced with a new shopping center. You're also not far from Bayview and the new Shipyard redevelopment, which will be massive. If you plan to hold this for at least 5 to 10 years, yeah I think it'll appreciate significantly. But you'll have to be cool living a bit in isolation....no hipsters, cool gals, etc. nearby for a few years :)

    Also, the idea to rent a room out is good. A- You'll need the company and  B- you can probably get $1200 +/- for the second room (remember, this is still SF.)  Chaa-Ching!

    1Reply
  • Manch Hon
    San Jose, CA · Member since 2011 · 160 posts · 167 votes
    12y

    @Amit M. I don't quite understand the premium the extreme south of SF is fetching compared to Daly City. Is it stigma? Cool factor? What is it? 

    Newer condos like these are exempt from rent control, is that right? The thing that scares me the most... :)

    0Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    12y
    Originally posted by @Manch Hon:

    @Amit M. I don't quite understand the premium the extreme south of SF is fetching compared to Daly City. Is it stigma? Cool factor? What is it? 

    Newer condos like these are exempt from rent control, is that right? The thing that scares me the most... :)

    SFR and condo's are not under rent control. I think it's 1986 construction that stops rent control for multi's.

    0Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    12y
    Originally posted by @Kayvon Ghaffari:

    Hi all,

    I have a question regarding investing in condos in the Bay Area. I have been living in Cupertino with my parents since I graduated 2 years ago and I've been working full time since. I recently switched to a new job in SF, and with the 2 hour commute each way (driving + Caltrain + walking), I've been looking into closer options to my job. 

    I've come across several condos for sale in and around the city with prices from $450,000 - $550,000. (I'm looking at this one for example: Condo in South SF). I know that investing in a single / multi-family home in the peninsula is completely out of reach for me. I also know that I'd prefer to not spend $1-1.5k in rent in the city. Lastly, I know that I'm a complete noobie when it comes to judging good real estate opportunities from bad ones. What would you all do if you were in my shoes? Stay in Cupertino rent-free and invest somewhere more lucrative? Your help is greatly appreciated - thanks!

    With a new condo you want to know who is living there.  If it's mostly investor owned with tenants it won't be as good as mostly owner occupied.  Big risk here is the new neighborhood and what will happen to candlestick.   You could score really big or not so much.   You should always run all the numbers and always try to get the best area possible at the best price.  Is the only thing going for these the cheap price?  Not so good.  BAY view is nice but is that protected and will the road below turn into a bigger horrible road to the new development.   Ask for the sales history since completion.  Compare that to a different area. 

    Don't buy crap just cause it's cheap.  Look for the story about the girl/girls that got left in this neighborhood by a party bus and ended up killed about 10 years ago.  I looked at the new Bayview Hilltop development back in 80's surrounded by ghetto.  New, nice but glad I passed.  Look up their sales history.

    1Reply
  • Mark Pedroza
    Real Estate Agent · Sacramento/Placer ~ San Francisco Bay Area counties · Member since 2012 · 1k+ posts · 743 votes
    12y

    Well at least your away from airline flight paths (somewhat). On the other side of 101 there's the SF city dump. Any chance of the stench drifting east-ward when the fog rolls in?? Why don't you look at Crown Colony in Daly City (shuttle to BART) or Shelter Creek in San Bruno (flight paths).

    0Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    12y
    Originally posted by @Mark Pedroza:

    Well at least your away from airline flight paths (somewhat). On the other side of 101 there's the SF city dump. Any chance of the stench drifting east-ward when the fog rolls in?? Why don't you look at Crown Colony in Daly City (shuttle to BART) or Shelter Creek in San Bruno (flight paths).

     The city or the airport can provide a map of the ILS (instrument Landing Signal)  You do not want to be within 2,000 feet of that within 8 MILES out  because it's one plane every 2 minutes 24/7.  Supposedly planes are getting GPS? style equipment that will keep them off the ILS freeway into the airport. 

    0Reply
  • Kayvon Ghaffari
    OP
    Cupertino, CA · Member since 2014 · 4 posts · 4 votes
    12y

    Thank you all for the valuable advice! I'll do some research on all of your points to see if the numbers make sense for my first real estate purchase.

    0Reply
  • Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    @Manch Hon  1- I'm not sure candlestick park area is more expensive than DC (apples for apples, i.e. new condos). 2- I prefer that to DC personally. DC is now as expensive as D10, and for what?  Fog belt?  The older part of DC. Near mission st is more interesting to me, as it seems like an extension of SF.  It's like Excelsior+.  I still favor SF proper. 

    And yea, no RC on SFH, condos and anything built after 1979. Sweet :)

    Only neg about buy/hold on a condo there is that you're paying retail, and there isn't any renovation/upside potential. But it's probably still a good investment, especially appreciation wise in the 7-10 year timeframe, as the surrounding developments get established.  It's also an easy prop to manage. 

    @Account Closed  yeah, Bayview was narly in the 90's, buy today it ain't your moma's bayview!  Area is gentrifying rapidly. The whole hunters point shipyard and nasty projects there are getting sh!t canned and a massive new housing, tech industry, shopping, and extended bay view park are getting built. It'll house 20,000 plus people over the next 10-15 years. Also, candlestick is getting torn down very soon and turned into a shopping area in the next 2-3 years. Big changes. 

    0Reply
  • Manch Hon
    San Jose, CA · Member since 2011 · 160 posts · 167 votes
    12y

    Candlestick fits into my East-of-101 master plan. :) My then girlfriend now wife brought up buying a condo there circa 2006/7 but I said a bubble was brewing. Dodged a bullet... Anyway property value is still below peak there. Good buy.

    0Reply
  • David Trier
    albany, CA · Member since 2014 · 4 posts · 2 votes
    12y

    Bay View certainly has gentrified over the past 4 years that I have looked at that area.  I remember seeing blatant drug dealing in a pretty central location four years ago along with lots of smells of 420.  

    About a month ago I spent about 2 hours there in the same location near the Bay View library. There still were guys just hanging out on benches and on corners. However I didn't see any drug dealing in the streets nor smell anything.  There were lots of moms with strollers waiting for the library to open.  Both a worker (maybe owner???) at a liquor store and a manager at a bank (who owns a house in Bay View) said that the hood was on the up:  less crime, more police presence and more nicer businesses going in. 

    Bottom line, though, is I still wouldn't want to live there.  I would feel on guard constantly and there doesn't seem like there is much in Bay View for me to do. However, if you want a crash pad close to work, you would have that.  And I agree with Amit that in the long run, it would be a good investment.  Much development seems to be pumping in over there.  There is only so much square footage left to develop in SF.  Also, I believe the weather there is relatively good ie less fog, more sun.  

    Buying in Bay View can be a stepping stone for you.  It does not have all the elements you desire, but then again you  (nor I) can't afford all the things you  (we) want, not yet. But I imagine having your own pad in Bay View would be a step up from living at ma and pa's. Hopefully in a few years you'll have a higher paying job and a property in Bay View that you can rent for a profit, pull equity out of, or sell for a profit to make a down payment on a more desirable pad. 

    I know very little about Daly City or South San Francisco.

    Best of luck  

    1Reply
  • Account Closed
    San Francisco, CA · Member since 2014 · 22 posts · 11 votes
    12y

    @message @Kayvon Ghaffari would suggest to go in the weekend to the shipyard office at hunter's point to get idea of development happening there and plans for next 5 to 10 years. Will also give you a chance to stroll around the neighborhood. Area is still gentrifying and you will have to be patient but I think it is a good long term bet. Hubby and I just purchased condo at the shipyard for our primary residence because we wanted a base in SF long term that we can eventually rent out. We plan to rent it out after a few years and move to the East Bay closer to my hubby's work.

    0Reply
  • David C.
    Investor · Bay Area, CA · Member since 2014 · 207 posts · 190 votes
    12y

    If I was to buy a condo near SF.  I would look into Penninsula Place Condos in San Bruno.  It is next to Youtube & Walmart offices, plus a reasonable walk to shopping & BART.    Sheltercreek is nice but has rental restriction.

    1Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    12y

    Back in the day when I was your age I went through the same dilemma. I ended up buying a 2 bedroom row house in Mountain View and renting out the second room. Like @amit m. said, this is a great option. I was young, just getting my feet wet in the working world, but knew I wanted to start a RE base. The HOA took care of all of the exterior stuff, and since I lived in the place the interior maintenance was easy, no need to drive out to fix stuff etc. Besides the place was new so there really was nothing to fix for the first few years. As I was young I also wanted the time to be able to socialize. For me this was a great balance of starting in RE, saving on commute times and having a social life. If you jump into a MU or a SFR it will most likely be older, meaning that you will most likely be dealing with maintenance issues. When I eventually sold the place I got the profits tax free and then put the money into a triplex. Just my 2 cents... Good luck on what ever you decide.

    1Reply
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