Oakland, CA · Member since 2016 · 14 posts · 6 votes
Hi there,
I'm hoping to buy investment property that will cashflow and need to decide between investing close by in Richmond, CA or buying out of state. Richmond appears to be overvalued and has also recently enacted strict rent control and eviction policies. It is also known to have areas of high crime. I don't have a ton of cash for a down payment so turnkey properties are looking better everyday. Any and all advice is welcome! Thanks!
Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
10y
@Account Closed also owns some property not far from my 4plex in Richmond. Maybe he can chime in also..
Elizabeth: "Richmond appears to be overvalued and has also recently enacted strict rent control and eviction policies. It is also known to have areas of high crime."
OVERVALUED: By which measure? Some of the most affordable $/sq ft in the SF Bay Area, especially when considering that you can hop on BART and get most places quick.. It's gone up a lot, but still the best rent ratios around also. I frankly think most real estate is overvalued in the Bay Area right now, but I think Richmond is not especially overvalued relative to the others. I saw a deal the other day on the MLS that I might have made an offer on if I was in town..
RENT CONTROL: Btw, the rent control is not in effect in Richmond, although it will probably get passed on the ballot in November I am predicting.. The prior council resolution was repealed..
CRIME/REPUTATION: Also, I thought it was funny the other reason you gave was the reputation.. How much time have you spent in Richmond? Walking the streets? Talking to neighbors, postal guys, corner store guy, beat cop..?
**The reason the rent control and crime/reputation comments made me chuckle a bit is because it's what people have HEARD about Richmond. And the truth is mixed.. But most who have heard various things about it and written it off, haven't spent much time in it. Maybe you are the exception..
FERRY SERVICE: Ori, watch out how much faith you put in the ferry service. They have a difficult time with ridership justifying it, especially during economic downturns where ridership falls significantly.
Berkeley Global Campus will be huge, but being built over 30 years I believe.. Should be good for furnished rentals, Marina Bay, and that whole surrounding area ;)
Property Manager · Arcadia, CA · Member since 2015 · 37 posts · 17 votes
10y
If you can afford to invest within driving distance, you'll save yourself money and headaches. I grew up in the Bay Area and Richmond is probably going to present somewhat of a challenge for you to get quality tenants. Make sure you use a realtor for help screening your tenants. Property managers will offer the same service at 5-8% fee. If you go out of state, check out sites like JasonHartmen.com and HoltonWise. They're honest resellers and full svc mgmt companies. Email me if you want more info. All the best!
Property Manager · Grants Pass, OR · Member since 2009 · 429 posts · 201 votes
10y
Personally, I'd prefer to have property close to me. I won't invest out of state if I can help it. Whatever you do, make sure you run a full screening package (credit, criminal, and eviction) on all applicants as well as an address history report to check their past landlord references.
Oakland, CA · Member since 2016 · 14 posts · 6 votes
10y
Thanks so much for the info. I think that Richmond is starting to gentrify so I'm hoping it's a good investment (?). It's difficult to tell if it's more risky to buy locally in a bad neighborhood or out of state in a better neighborhood.
Investor · Berkeley, CA · Member since 2016 · 242 posts · 304 votes
10y
Hi Elizabeth,
I am actively looking for investment properties in Richmond. I actually think it's one of the few under-valued locations in the bay area. Richmond still has a reputation from the outside as a dangerous city, but this is a big generalization. The iron triangle and surrounding areas of Richmond are still very rough, but then there are some very affluent areas such as Point Richmond, Marina Bay and the Richmond Hills.
What I like about Richmond is that there is a lot of government investment happening. To mention two big ones:
Imagine what will happen to home prices when folks in SF realize they can have a 15 min ride from Richmond to downtown SF and live in a beautiful condo on the water for 1/3 of the price of SF. I expect Marina Bay is going to have great appreciation.
Even the flats of Richmond have great pockets here and there where new home buyers have moved in and changed the feel of the neighborhood.
I have investments in Texas that I plan to sell in order to invest more in Richmond. Ping me if you want to chat more about it.
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
10y
Elizabeth,
Welcome to BP. @J. Martin knows Richmond well as he owns properties there. I hope he'll chime in and give you his 2 cents. @Ori Skloot is absolutely correct that there are some nice parts in Richmond. Here's an example.
I've always wanted to own something by the water so I explored The Shores by Marina Bay in Richmond last summer. I was looking at buying a 2/2 condo there. Its backyard overlooks the Marina Bay. I really liked it, but didn't have much extra money to park around so I passed. It definitely has potential IMO. The same with Oakland, which has some really nice areas. If I knew what I know now, I would have bought several condos by the water at The Shores during the downturn. I suggest you spend sometime to get to know your market real well. When I say know it real well, I mean really really well.
With respect to wanting cash flow, I've learned that cash-flow will follow once you have equity. Let's put it this way. Would you rather own a property that has a $500/month net positive cash-flow, or a property with $100k equity right off the bat ASSUMING that both properties are identical?
Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
10y
@Account Closed also owns some property not far from my 4plex in Richmond. Maybe he can chime in also..
Elizabeth: "Richmond appears to be overvalued and has also recently enacted strict rent control and eviction policies. It is also known to have areas of high crime."
OVERVALUED: By which measure? Some of the most affordable $/sq ft in the SF Bay Area, especially when considering that you can hop on BART and get most places quick.. It's gone up a lot, but still the best rent ratios around also. I frankly think most real estate is overvalued in the Bay Area right now, but I think Richmond is not especially overvalued relative to the others. I saw a deal the other day on the MLS that I might have made an offer on if I was in town..
RENT CONTROL: Btw, the rent control is not in effect in Richmond, although it will probably get passed on the ballot in November I am predicting.. The prior council resolution was repealed..
CRIME/REPUTATION: Also, I thought it was funny the other reason you gave was the reputation.. How much time have you spent in Richmond? Walking the streets? Talking to neighbors, postal guys, corner store guy, beat cop..?
**The reason the rent control and crime/reputation comments made me chuckle a bit is because it's what people have HEARD about Richmond. And the truth is mixed.. But most who have heard various things about it and written it off, haven't spent much time in it. Maybe you are the exception..
FERRY SERVICE: Ori, watch out how much faith you put in the ferry service. They have a difficult time with ridership justifying it, especially during economic downturns where ridership falls significantly.
Berkeley Global Campus will be huge, but being built over 30 years I believe.. Should be good for furnished rentals, Marina Bay, and that whole surrounding area ;)
Oakland, CA · Member since 2016 · 14 posts · 6 votes
10y
Thank you all for sharing! This has been incredibly helpful and encouraging. I'm committed to buying in Richmond or Oakland, though I'd most likely have to rent out my condo in Albany and owner occupy a new property. A MFR would be ideal, but I'll have to see what's available and where I feel comfortable living. I wouldn't mind a condo in Marina Bay or a SFR in Richmond Annex or Heights. Another option is to save up a larger DP and stay in my condo. I just don't want to wait too long. This market is crazy!
Investor · Bay Area, CA · Member since 2014 · 207 posts · 190 votes
10y
Hi Elizabeth,
Welcome to BP, I like Albany, especially around Solano Ave, so hold on to your condo is a great idea. For Richmond, if there were no demand, the city wouldn’t be talking about rent control. This usually means restricted supply down the road to push rent even higher. There will be exceptions to the rent control like newer buildings etc., so you just have to figure out what to buy. Good luck.
Investor · Berkeley, CA · Member since 2016 · 242 posts · 304 votes
10y
You can still find deals in Marina Bay. I just helped a friend buy a 2/2 condo at the Shores directly from an owner. He paid $415k. Similar properties being sold directly by the Shores (there is one large company that owns a little less than 50% of the condos and is now selling them all) go for $465k. So it's not the best deal in the world, but allowed him to get his foot in the door. He could rent the place out for around $2500.
Oakland, CA · Member since 2016 · 14 posts · 6 votes
10y
@David C. I like Albany (and my condo) too! I'm about a block away from Solano so hopefully the (potential) rent would cover my expenses...especially the property tax!
@Ori Skloot The Shores look really nice and I could certainly live there for a few years. But I would mostly be buying for appreciation, yes? Or, (and forgive my naïveté) do you think keeping it for a long time, refinancing and increasing the rents down the line would generate cash flow?
@J. Martin Congrats on your 4-plex! What an amazing deal. Are there still deals like that available? I saw one 4-plex for sale, but it's 799k. I would love to hit 2%, but it sounds like I need to save up quite a bit more cash to do it. And thank you for letting me know about the postponement on rent control. :)
Investor · Bay Area, CA · Member since 2014 · 207 posts · 190 votes
10y
@Account Closed said, cash flow will follow once you have equity. In the bay area, the appreciation rate might outpace your ability to save, something to think about....
@J. Martin when did you buy that fourplex? did it need a lot of rehab work? those numbers are impressive!
I bought the 4plex on New Years' Eve 2012, so prices were lower.. Yes, it needed about $30K of work. All units were vacant. You can still buy at about the 1% rule in Richmond on 4plexes though, after you increase rents.. today!!!
I'm also doing some furnished rental stuff, so that helps a lot ;)
Attorney · Santa Cruz, CA · Member since 2015 · 345 posts · 358 votes
10y
@Account Closed, when you find a property, if you need help with the transaction, let me know. I'm a local real estate attorney writing the Purchase and Sale Agreements for the investors who buy and sell without realtors. (Saves a lot of $$$$).
Personally, I'd prefer to have property close to me. I won't invest out of state if I can help it. Whatever you do, make sure you run a full screening package (credit, criminal, and eviction) on all applicants as well as an address history report to check their past landlord references.
@Nathan, is there any specific reason why do you refrain investing out of state? As a newbie seriously planning to invest in out-of-state I am curious to hear your experience. Thank you in advance.