Buying first investment property in San Francisco

[Tahir Em]

Hi,

I am looking to buy my first investment property in SF, ideally a SFH, budget is ~ 1.5M. Looking to buy something that would attract white collar professionals as tenants, and is likely to appreciate (timeline is a few decades and long term appreciation is more important than short term cash flow). I live (own primary residence) in the Bay Area so visit SF once in a while but not very knowledgeable about the different neighborhoods.

- What are some neighborhoods in the city that I should focus my search on?

- Should I look exclusively for SFH, or also be open to townhouses and condos with HOA fees?

- What are some rent control or other tenant laws that I should be mindful of when searching for a property?

- I am looking for a minimum of 2BR / 2BA, should I revise this upwards / downwards?

- Is lack of dedicated parking a deal breaker in the city?

- Given that I live one hour drive from the city, should I self-manage or get a property manager?

- Any other online resources on or off BP that I should look at?

Thanks!

[Erik Estrada]

Quote from @Tahir Em:

Hi,

I am looking to buy my first investment property in SF, ideally a SFH, budget is ~ 1.5M. Looking to buy something that would attract white collar professionals as tenants, and is likely to appreciate (timeline is a few decades and long term appreciation is more important than short term cash flow). I live (own primary residence) in the Bay Area so visit SF once in a while but not very knowledgeable about the different neighborhoods.

- What are some neighborhoods in the city that I should focus my search on?

- Should I look exclusively for SFH, or also be open to townhouses and condos with HOA fees?

- What are some rent control or other tenant laws that I should be mindful of when searching for a property?

- I am looking for a minimum of 2BR / 2BA, should I revise this upwards / downwards?

- Is lack of dedicated parking a deal breaker in the city?

- Given that I live one hour drive from the city, should I self-manage or get a property manager?

- Any other online resources on or off BP that I should look at?

Thanks!

 Hey Tahir, 

Might want to start by lining up some financing options first so you can have a base to plan on. Knowing what options there are for your specific circumstance will help tremendously in narrowing down your search. 

[Alex Bekeza]

@Tahir Em, I'd recommend reaching out to @Heather Wilkerson.  She's acutely aware of all the nuance regarding investment property selection in the various submarkets of SF.  

[Alfonso Villafuerte]

look for multifamily units. try Dimond heights or Bernal heights, the misssion is starting to turn for home investments and very competitive. 

[Becca F.]

@Tahir Em

I have a SFH in SF. One of my investor friends advised me that SFH aren't under rent control (for now) and that if I have a tenant that tenant becomes the Master Tenant and collects rent from other tenants (the roommates) with a written agreement, no separate leases with me and the future roommates. If I'm renting out an in-law unit (aka studio on the other floor) it could technically become a multi-unit and could be under rent control - I will consult a real estate attorney when that time comes. I'm renting to a tenant I know personally so they're unlikely to cause problems for me. Once I get roommates in, I'm charging a garage fee (not under rent control) and whoever wants the garage space can decides who wants to pay. Another investor said I could charge $100 to $200 for each garage space depending on the part of SF and how valuable parking is.

I'm not a big fan of condos because of ever increasing HOA fees. I sold a condo in the East Bay (Oakland) because it was badly managed. I really wanted to hold onto it because of California appreciation but I cut my losses - Oakland and Berkeley heavily favor tenants and a non-paying tenant can live there for months and it's a nightmare to evict them. I'm taking the proceeds and I'm investing out-of-state now - Midwest or possibly Tennessee, which are landlord friendly. This is a bit off topic but the cash flow is much better with lower price points in the Midwest (have one SFH there) but historically the appreciation is better in California so I'll see what happens in 5 to 10 years.

If you can get a multi-unit building in SF that seems better than a SFH. Good luck!