San Jose: Steady, Increase, or Pending Drop?

9 Replies

San Jose Investors.  What do you folks think? I hear some say SJ is still growing with potential new IT space attractive to some companies.  Like the new Google facility at Diridon.  I see others say SJ may be headed towards a decline.  

What are your predictions and why?

@Gary F - Have you checked with the San Jose EDC? I looks like someone is building about 500 units on Winchester Blvd.

Personally, one of my investing objectives is to make sure the property cash flows. I haven’t found that in our area. For this reason, I have purchased out a few hours.

Let me know if you want to grab a coffee. I’m in South Bay too. Cheers

I would say it will continue to grow.

@Robert Schumacher . I am with you regarding cash flow....Can you share where and what you purchased "out a few hours"?

@Gary F. I see Bay area real estate continuing to increase over the next year due to continued strong job market and RE supply issues, despite some migration away due to affordability issues...Sometime in 2019-2020, I am speculating a dip due to effects of macro down turn (again a speculation)  but over the long haul, bay area real estate should continue to be a good investment, if you are willing to tolerate lack of cash flow upfront for a period of time.

Many tech companies are expanding into San Jose including Google, Facebook, Apple, and Samsung. the prices have jumped 20% since the Google announcement. The average price in San Jose is so far above what many people can afford that rentals are going to be strong for the foreseeable future. However, there is no cash flow without at least 40% down and I do not believe that will improve. I have a a stronger sense that prices will rise rather than CAP rate rising.

With that said I think that the south county, Morgan Hill and Gilroy, is a good place to invest now as it is much more affordable and rental vacancies still under 3%.

The only decline is housing inventory. When mortgage interest rate is over 5% expect the affordability goes down. With that being said when interest rates were two digits (up to 18.5%) good homes were sold just as quick. In 95087 1 br 1 bath condo starts 1M+, br, 1.5 bath starts at 1.3M.... $2.2M 3/2 SF homes that were 650K a few years ago with two dozen offers... People have wondered how much more local homes can go up for half a  century now.  

Updated 8 months ago

94087 correction-Sunnyvale

The average property is going up 40-70K per year,  wow !  That is crazy inflation, a great return for your cash !

Every house deal has cash flow,   Just don't be poor, and put down $600k on a $750K small house, and you RED to go, cash flow baby !

But most of don't have $600k for down payment,  the poor people like me invest in Manteca, where modest returns occur.   Over here  housing is going up $15-25K per year.  This is all I can afford.      Small house, small headaches.   I am long term buy and hold.    Hold for 30-40 years.    No time to sell,  I am getting Bigger Pockets,   out of my way, going to cash checks !     Been landlord since age 27 with no education !     Been with two houses for a while now.   See you at the bank !

Great replies. Yeah I see the market only going up as well. For equity yes. Not much for cash flow unless you put a sizable down payment. I n my case I’m sitting on “old money” having bought in 2002 and now nearly paid off. Time for a cash out refi towards something else

@Gary F. ,

My approach has been that I want to have no more than 35% equity in my rental property, and I do a cash out refinance anytime my equity goes over 50%. This allows me to take the money and reinvest in another property.

The key to make this work, of course, is that the property can cash flow positively with the new loan. There is nothing worse than you having to pay every month for someone else to live in your rental.

What do folks from the Bay Area think about the Central Valley? Properties in the bay with a 25% down don’t cash flow positive. Am a new investor and looking for options.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here