Time to sell for max appreciation in Bay Area?

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Time to sell for max appreciation in Bay Area?

Jack Hou
Member since 2018 · 5 posts · 4 votes

Hey all!

First time post but I have been following BP for quite some time. I'm facing this dilemma of whether or not I should hold on to my million dollar, unrealistically tiny town house. Here's the situation:  

Situation

Own a townhouse since 2016, in the booming silicon valley town - Sunnyvale. Mortgage is 90% paid off. Seen the peak appreciation 2 years ago where my gain would be close to 40%, now it's came down to 30-ish% and dropping. The property was meant to attract young tech workers with <1 kids, however given the new COVID remote work situation there seems to be less need to live "close" to work

Strategy 

The play has always been holding it and generate cash flow once as we move out to a larger space and better school house in 2021. Was betting on the continue tech growth in the area for future appreciation as well. I have a full time job so my effort in RE is always somewhat secondary / passive, not looking at strategy as sell it and obtain 3 BRRR.

Questions

- Do you guys see the housing price in bay area evens out with the remote work future? Understand this can be total opinion but it's ok.

- Is sell now the best way to maximize the gain? Or would you recommend holding and generating cash flow as everything in the bay area seem to have generous return long term. 

- What's your play for the next 6 - 18 months? Banking on the dip and enter the market? Would love to hear some thoughts! 

    Appreciate the feedback and looking forward to the discussion! 

    1Reply
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    Most Popular Reply

    Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    6y

    keep

    long 

    term

    —————-

    3words/1chart

    11Reply
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    • Kevin Hunter
      Rental Property Investor · Carlisle, PA · Member since 2013 · 1k+ posts · 543 votes
      5y

      @Jack Hou, I am with @Amit M., keep it long term.  Look at that chart.  Which are you more likely to say to yourself in twenty years: Man I wish I didn't sell that property or Man I wish I would have sold that property.....

      0Reply
    • Maria D'Aura
      Real Estate Agent · Livermore, CA · Member since 2016 · 173 posts · 74 votes
      5y
      Originally posted by @Kevin Hunter:

      @Jack Hou, I am with @Amit M., keep it long term.  Look at that chart.  Which are you more likely to say to yourself in twenty years: Man I wish I didn't sell that property or Man I wish I would have sold that property.....

      I think it depends on how you invest the appreciation when you sell. I may find myself thinking... man if only I hadn't sold! However, by selling and reinvesting into a property with much higher cashflow it has significantly improved my financial position today. Currently saving that cashflow and if the market takes a hit in the next year or two I'll buy again in SV for future appreciation. 

      @Jack Hou - I'm curious... what you have decided to do?

      1Reply
    • Kevin Hunter
      Rental Property Investor · Carlisle, PA · Member since 2013 · 1k+ posts · 543 votes
      5y

      @Maria D'Aura, fair point and what you highlight is that it all depends on your goals and needs.  If you need cash flow right now, then of course you should sell.  If your goal is to build long-term wealth, a property in a high demand, high entry price area with 90% equity can be held and leveraged to build that wealth.

      1Reply
    • Maria D'Aura
      Real Estate Agent · Livermore, CA · Member since 2016 · 173 posts · 74 votes
      5y
      Originally posted by @Kevin Hunter:

      @Maria D'Aura, fair point and what you highlight is that it all depends on your goals and needs.  If you need cash flow right now, then of course you should sell.  If your goal is to build long-term wealth, a property in a high demand, high entry price area with 90% equity can be held and leveraged to build that wealth.

      Absolutely. A lot depends on ones age and stage of life.  I also think there are some areas where you can have a balance and get both appreciation and build long term wealth. I didn't realize perks of getting a balance of both when I sold in Silicon Valley and bought a multifamily in the Central Valley. My goal was primarily to gain cashflow, but to my surprise the property has also gained quite a bit of value in just the 10 months since I've owned it. Who knows if it will hold or not for the long haul, but even if it doesn't it was the right move for me.

      0Reply
    • Christina Mao
      Real Estate Broker · East Bay, CA · Member since 2019 · 10 posts · 9 votes
      5y

      I agree with Sean on this.  Holding is the best way to build wealth here getting the cash flow by adding doors to the properties whenever possible.

      0Reply
    • Carlos Ptriawan
      Member since 2019 · 7k+ posts · 4k+ votes
      5y

      Here's the crunch number  that most people doesn't see
      - Silicon Valley is still the affordable place for appreciation in relation to wage growth. Affordability index in this city is 33%. When it's reaching above 40% like Miami yes it's to sell, currently it's not.
      - From my research, most pro outthere have projection as following :
      2021(7%).2022-2024(each 2-3%)
      - So if you want to sell, hold it until 2022, and that's what I will do.

      Bay area housing market will not crash as long as there's no dotcom crash 2.0

      0Reply
    • Ian A.
      San Francisco Bay Area · Member since 2020 · 8 posts · 0 votes
      5y

      People flock to Silicon Valley for jobs. The biggest and brightest tech companies are situated in this area to attract the best talent. Pricing may fluctuate temporarily due to changes in supply and demand, but I believe it will bounce back to new highs.  

      0Reply
    • Carlos Ptriawan
      Member since 2019 · 7k+ posts · 4k+ votes
      5y

      I have seen the crash in 2001, 2008 and twice the dotcom boom. My summary is as long as FANGTM stock and second-tier tech name like PANW/Appian/Crowdstrike/Redfin is still having their HQ in Silicon Valley, the sky is the limit......we just hope that the appreciation is not moving exponentially, just 2-3% is ok in parallel with the wage growth. 

      But the impact is nontech wage earner is almost never able to buy a house. Hence I understand many people are leaving the area too.

      0Reply
    • Ike Patel
      Member since 2020 · 8 posts · 4 votes
      5y

      @Carlos Ptriawan Redfin's HQ is not in SV. But that's besides the point. A lot of companies are going towards remote work permanently, or permanently moving their HQ out of CA due to taxation and regulation. Look at Musk for example.

      I personally know A LOT of tech earners that have left the area and still more are planning to leave. SF 1b1ba rents are going for <$2k. Brace for impact.

      0Reply
    • Carlos Ptriawan
      Member since 2019 · 7k+ posts · 4k+ votes
      5y

      @Ike Patel You say brace for impact I'll say bring it on.

      The net immigration that you mentioned only be felt in an apartment where there's a dip of rent from $2800 to $2550 per unit, but this is only temporary. More data is showing apt rent growth starting mid-2021.
      For SFR there's no impact of net immigration at all. There's modest employment growth, wage growth, rent growth and home appreciation at least can be seen until 2023. The growth is around 2%.

      One thing that people forgot is when the gov. prints money like today with 30 year fixed rate is between 1.5-2% that makes an expensive home in Silicon Valley is suddenly becoming much more affordable. There's even more demand these days prior to covid. 

      Week ago I found a $700K TLC house in San Jose. I thought it's small rehab only but turn out it's a ruined property, I thought nobody will buy it. The same house is sold for $870k in market where good house is 950k.



      0Reply
    • Felicia Feliciano
      Member since 2021 · 41 posts · 14 votes
      5y

      Theres only one persons opionion that MATTERS.   Its Chuck Schwab.

      You think he doesnt know what going on on in the SFO HALLS OF NO JUSTICE.

      Last i heard he is Leaving.

      0Reply
    • Carlos Ptriawan
      Member since 2019 · 7k+ posts · 4k+ votes
      5y

      Use data and not opinion. We live in Silicon valley anyway :)

      0Reply
    • John Corum
      Rental Property Investor · Ailey, GA · Member since 2019 · 33 posts · 9 votes
      5y

      I use the large markets for network and wholesale. I plant my money where I buy at 50k and get 700+ rent or more. spent 45k and im getting 735 a month. Thats 19% and the market is great. Small town, 5 major hubs for distribution and assembly and deals are here all day if you look. We should connect and ill show you around my honey hole. 

      0Reply
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