Officially a speculation market!!
This "investment" property just went pending at 643,000 here in Oakland. It's a 2 unit each 1 bed 1 bath. Realistic rent on each unit is max $1800. $43200 gross - taxes of $9452 (actual tax for this house) insurance of ~$1500. Maintenance, capex, utilities, and vacancy of ~ $9000 (napkin math ).
Net : $23248 for a cap rate of 3.61%. Assuming max market rents and low Maintenance, capex, utilities, and vacancy.
Someone help me understand how these numbers work out for the buyer?
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@Jay Hinrichs "Many like me personally owe our whole careers to Bay Area appreciation."
I'm in exactly the same camp as you :) I started as an (innocent) home owner in SF in 1994, though I was innovative by buying a 2 unit building as a TIC with a college buddy (back when TIC's were a lot less common.) So I did get an education in city processes and tic to condo conversions. But back then I was deep into my tech career, and home was just a home.
Fast forward 9 years, I'm burned out on the ups and downs of the tech life, and meantime I make a killing on my condo by just living in it. When rates dropped super low in 2003 and I refied, it was like hey, I can just pull cash out and buy another property. Ok, maybe I'll do that. I did just that, and I never looked back
Fast forward to today- some savvy purchases, repositioning/condo conversions, correct targeting of neighborhood gentrification, survival of the Great Recession and 5 SF buildings later, I've acquired some serious cash flow, not to mention more equity than I know what to do with. Outside of optimizing my current projects, I'm ready to stop buying property and coast for awhile. So yes, Bay Area RE was (and is) everything to me. Otherwise I'd still be stuck at the tech game ;)