For those who are investing there, are you going for cashflow or appreciation?
AFAIK, investing SV has to be for appreciation, positive cashflow is impossible even for all cash.
So, is it still possible for positive cashflow for East Bay and Santa Clara? How low can downpayment be for neutral cashflow?
I only aimed for appreciation. But the funny thing is, with the fast growth in rent, all my properties are cash flowing now. The earliest buys even have strong cash flow.
So appreciation and cash flow go hand in hand, but with a time lag.
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You can not separate both as each one is complement the other.
Santa Clara will not be for cash flow. Better cash flow situation is gone out of Santa Clara by 2013 or thereafter.
Easy bay or down South may be cash flow, both are high risk. I still see cap rate 3% in some areas in bay area, but investment mortgages are (60% or 75%) are at 4.5 or 5% rang which eats away the margin.
If I look at full cash offer, I can earn better returns in dividend stock along with appreciation. For example, this year beginning I bought Boeing (BA) and Lockheed (LMT), both appreciated (50% & 24% appx) with good dividend income around 3%. With trump coming as president, someone hinted me to buy these stocks.
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Sound like no good rental property to buy in Bay Area 
Guess continue to invest in Austin (not Houston or Dallas or San Antonio 
) However, while the cap rate is still good, it has the same problem in SV, way more for rent than for sale i.e. harder to buy good property and harder to rent out, the trend is increasingly lower cap rate/ yield. Unless your current rent is way below market, is hard to increase rent, in fact, may have to decrease rent upon renewal.
With the Houston flooding, some people may look to move to Austin or San Antonio. Rental demand could get a temporary boost from Harvey.
If it’s getting harder to lease in Austin, you want to be more cautious. Is there an overbuilding of apartments?
Hard to buy and hard to rent out is a warning of peak
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But the problem is that as mortgages are easier to get now, price has gone up. If everyone can buy, you lose an advantage in purchasing. For investors, it’s becoming a better time to sell, not buy. You want to buy when others can’t get a mortgage.
When the mortgage is loose, cash buyers lose their advantage and it’s less attractive to buy real estate. But it could still be better to diversify from a heavy stock portfolio to reduce the shock from a stock market melt down.
Ironically, there could be opportunities to buy in Houston. Many flooded houses won’t be able to qualify for a mortgage, so you can buy flooded houses at a huge discount. But then it might be difficult to find contractors to do the work
A good question is, what percentage of Houston was safe from flooding? If it’s small, we can buy those locations immediately and then rent at a reasonable rent to folks whose house is under water. That would
both morally correct and market savvy.
Forgive me not doing the research since I am not super interested in buying anything right now
If you look at historical home prices, it all changed in 1973 when Freddie/Fannie became the dominant players in the mortgage market. The aim was to make buying a home more affordable and increase home ownership. All it did was make home prices start to increase faster than inflation and bury people under more debt. We switched from 15-year to 30-year mortgages under the same premise. All it did was push home prices even higher. We did all that in the 1970’s and the 1980’s had lower home ownership rates. When prices go up faster than inflation, it’s harder and harder for people to save the down payment required to buy. The only time home ownership actually increased was the run up to the great recession when lending standards vanished.
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To get any kind of cash flow, go to the “real” East Bay (not Milpitas or Fremont which are really the South Bay).
Can get about $300 positive cash flow per month with 25% down for SFH in Pittsburg, Bay Point, Antioch, or Oakley.
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What do people think of Auburn?
For Milpitas, you can still do 25% down with cash flow neutral. I still find Daly City can be cash flow positive today with 25% downpayment. You either need to find place with Legal in-law or do what everyone is doing with renting by turning legal living space into bedrooms. Last year you can get 7 CAP, but this year you can still get 6 CAP. Rent are still increasing from last year to this year.
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Disagree. Median sales price for Milpitas is 900k. Rent is $3000 per month. 25% down means a mortgage of about $3000 per month. You can break even if you don’t pay property tax. Nor insurance. But I’m sure the county and lender will go after you for that.
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Yes, I do feel the same. We can not get 6 cap or 7 cap in Milpitas.
This might be where the disconnect is, I just signed one year lease back in June for $3550, for 3/2 1400 sqft where I can buy today with 900K.
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Is your house near Calaveras and 880? Your house has similar numbers to mine in Evergreen area of San Jose.
I was referring to Daly City for 6 CAP today. Milpitas might be more of 3 CAP.
Yes. 5 mins walking to here: Google Maps
Note, you will require flood insurance in that area, that run about $1500 / year.
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Has that creek flooded before? I didn’t realize there is a small creek there…
I think Milpitas and Berryessa are perfect areas to take advantage of the North San Jose development.
Still underwater even at $3550. Property tax at 900k will be $12k per year. That means $1000 per month. Your extra $550 per month in rent will not cover! And that is before you even take fire/flood insurance into account.
Also, same story with Daly City. Its median sales price at 900k. No, you will not generate any kind of positive cash flow at 25%.
Unless you want to be a slumlord and convert your 1200 sqft house into 10 bedrooms. But why go to such extreme when you can do better elsewhere.